SMB OS Operators: Part II: Slice
If you’re like most Americans, you order your pizza—at the counter or over the phone—from a friendly neighborhood pizzeria. But when you’re on your way home from work, the kids need something to eat, and you don’t have the energy to hop on the phone, you click on the Domino’s icon, hit a few buttons, and cheese-stuffed crust greets you at the door.
This is the problem, backed up by data, that Slice exists to solve. Having raised $15 million in funding just last year, Slice is a prime example of what we call SMB OS operators: companies helping SMBs compete in today’s digital economy with a full suite of solutions beyond core advertising and marketing.
To find out what’s new at Slice and how the company puts SMB OS principles into practice, Street Fight spoke with the company’s founder and CEO, Ilir Sela.
Street Fight: Slice is one company that is an exemplar of the principles of SMB OS. Starting at a high level, what is the company’s overall philosophy that drives the suite of functionality for local pizzerias?
Ilir Sela: Local pizzerias account for 62% of all pizza sales in America but only 5% of digital orders. These independent pizzerias, though beloved by consumers, are completely off the grid and not easily accessible by any means. They lack the time and money needed to communicate with customers through marketing efforts, and with today’s consumers craving convenience and wanting to be spoken to often through values and deals, it becomes challenging to get ahead. Just in the last eight years, “Big Pizza” has grown from 25% to 38% of all pizza sales driven by technology and convenient ordering — which shows a growing threat to small shops. Slice is helping these SMBs fight back by providing full-service technology, customized marketing, and industry-specific data that can help them streamline their businesses. Ultimately, we believe that independent pizzerias have a better, more quality product, but simply aren’t as accessible as large chains—and customers shouldn’t have to sacrifice quality for convenience. As we bring the technology and accessibility of a large chain to these SMBs, we believe customers will agree and no longer make that sacrifice.
How does this empower small businesses to have the functionality that was once reserved for deeper-pocketed rivals such as national companies that compete with them? Does this “democratize” high-end functionality (analogous to the way Amazon Web Services or Salesforce have done this in other contexts through enterprise SaaS offerings)? What are a few examples of Slice’s offerings to pizza shops that help them compete with larger rivals in these ways?
Slice empowers SMB pizzerias with world-class technology, including a mobile-first web platform and an iOS and Android app, which while Slice branded, is loyalty driven at every touch point. We connect SMBs to value-rich global partnerships with Google and Facebook, allowing customers to easily place orders through these widely used platforms.
Additionally, Slice offers both CRM and hyperlocal marketing campaigns to drive orders and awareness, while managing a 24/7, 365 customer service and support team for both consumers and shops. From an operational perspective, Slice also equips pizzerias with SliceOS—a system built specifically for pizzerias that aids order-processing efficiency on the day-to-day. This combination of offerings makes SMBs more streamlined and enables them to not only compete with big chains, but also grow their brands and businesses.
Tell me about the numbers of the pizza vertical. It seems like there are so many individual shops, and most of the sector is small shops instead of the Domino’s of the world. How does that break down in terms of market share? Extending from that question, it would seem that the larger segment of the space (small shops) is a sleeping giant and you’re bringing them the technology to realize that potential (data, functionality, leverage/size with ordering supplies, etc.). What would you change or add to that statement?
The pizza industry is $46B in the U.S. alone. 38% of this is “Big Pizza”—defined as Domino’s, Pizza Hut, Papa John’s, and Little Caesar’s. As far as individual shops, there are over 76,000 pizzeria locations in the U.S.—20,759 of those locations are “Big Pizza” chains, while 55,200+ are independent shops or small chains. Although SMB pizzerias account for 62% of the pizza category in the US, they still only process 5% of online pizza orders. This shows a huge opportunity for these shops to grow their businesses online. At Slice, our goal is to bridge this order gap by uniting SMBs and empowering them with the tech, tools, marketing, and data to take charge of the pizza industry. Your statement above is 100% correct—that is exactly what Slice’s mission is all about.
In the age of big data, how are you utilizing your size (operating with many pizza shops) to benefit the operations of individual shops? In other words, your network effect enables lots of good predictive data that can inform marketing and inventory management among other things. For example: knowing that in a certain region, there’s a certain day of the week that’s better for specific types of promotions that perform well. How are you taking a data approach to empower small shops? How receptive are they generally to this predictive advice on things like marketing and promotions?
We are regularly reaching out to our pizzerias through email, fax, phones, and SliceLink, our owners portal and information hub, offering shops marketing tips and tricks based on the data and user input we collect. Sharing promotional ideas, certain holidays or days of the week to run discounts, and effective discounting strategies is only the beginning. We also use specific shop performance data to customize the tips for each shop’s needs, such as topping popularity, delivery radius logistics, the value and thresholds of delivery minimums, and even allowing shops to browse user feedback and publish testimonials on their websites if desired. We only started rolling SliceLink out to our partners over the past three months, and already it’s gaining momentum in usage. However, we still push these tip communications through more standard delivery methods like fax, email, and phone to ensure all shops have access to the tools they need — even if certain technologies fall outside their comfort zone.
What’s your current market penetration of individual pizza shops (if you disclose that)? And what is your penetration goal?
We currently have over 8,000 participating pizzerias nationwide, and we want to continue to grow our platform and partner network with as many local pizzerias as possible. There are another 45,000+ pizza restaurants in the U.S. with whom we’re looking forward to partnering. From there, we hope to expand on a global scale, where 100,000+ SMB pizzerias are facing the same challenges.
One debate in the local media and advertising ecosystem is whether it’s better to cast a wide net across local verticals (i.e. restaurants, bars, movie theaters), or whether it’s better to specialize in one or a few verticals. Slice is obviously taking the latter approach. What are the advantages you see? Are there nuances in your vertical where your domain expertise, data collection, and other functions benefit from that unique focus? What other local verticals do you believe are similarly nuanced?
Having thousands of SMBs showcasing the exact same needs and operational habits makes it significantly easier for us to solve their problems and do so in a way that’s more thorough and valuable. A vertical approach allows us to build a more integrated and deeper solution for these SMBs as opposed to something wide and shallow. We don’t have to generalize our solutions to fit a multitude of scenarios. Instead, we can rely on extensive data and expertise in a niche field to give us the power to help our SMBs grow and thrive in a way that is specifically catered to their needs. There are a number of companies out there, such as HotelTonight and Lyft, which have a deep understanding of specific consumer categories and have seen success in approaching their business with a vertical focus, and we are confident this approach is best suited to solve the problems our SMBs are facing.
What functionality do you believe is still missing that you’d like to develop? Are there economies of scale, efficiencies, one-stop-shop appeal and other benefits that increase as you develop more services (e.g., payroll, HR, or other business functions)? What are the business functions you’re interested in moving into or not moving into?
There are still many things we look forward to accomplishing. Right now, our main focus is to continue growing our partner network and expand the level of services we provide to these shops. It’s about building real, meaningful relationships with our SMB pizzerias so that we’re offering something truly valuable—both to our shops and our customers. That is what differentiates us from other online ordering platforms or aggregators, and this is the direction we will continue to head in as we grow and expand.
Michael Boland is Street Fight’s lead analyst. He is also chief analyst of ARtillry Intelligence and SF President of the VR/AR Association.
This interview has been edited for clarity and length.