With the slice app, local pizzerias get a bigger piece of the market

Over the past decade, however, he saw online ordering increase in popularity via platforms like UberEats and GrubHub, which merged with the online food ordering platform Seamless in 2013. National pizza chains were growing their businesses through digital means, too. He realized there might be an opportunity for family-run businesses like his own.

“You had Domino’s, Papa John’s, Pizza Hut,” Sela, 38, said, “but there was no brand representing the local independent pizzerias.”

So Sela combined his upbringing and his expertise to create Slice, an online food ordering platform for independent pizzerias, particularly in smaller cities where large-scale delivery services are scarce.

Over a cheese pie at Joe & Pat’s Pizzeria and Restaurant on Staten Island, which he has frequented for decades and which is now a Slice client, Sela recently detailed his path to becoming a third-generation member of the family industry. After selling Nerd Force in 2008 for $500,000, Sela shifted to building websites for the pizzerias of his family and friends. As he did so, he began to notice a change.

“I started hearing, ‘Hey, can you do online ordering for me? Can you build an online ordering system?'” Sela said.

Using the money from the Nerd Force sale, Sela began a pizzeria-specific food ordering platform in 2010, originally branded as MyPizza. Starting with a few dozen pizzerias in the Northeast, the company created and managed websites for partnering shops, listing their menus as well as delivery and pickup options.

The company grew to include thousands of restaurants nationwide, and it rebranded itself as Slice in 2016. It also created a mobile app and began providing marketing material for restaurants’ social media accounts. The next year, it hired Ryan Scott, a former chief marketing officer at Seamless and vice president at GrubHub, as chief marketing and chief customer officer.

The domestic pizza market is worth $45.1 billion, with over 75,000 establishments driving sales, according to a report last year from PMQ Pizza Magazine. And although 55 percent of pizzerias are independent, they drive only 41 percent of sales, the report found. The magazine also found that while 60 percent of Domino’s and Papa John’s sales were digital orders, 42 percent of all types of pizzerias still did not offer online ordering.

Aaron Allen, a global restaurant consultant, said the failure of shop owners to recognize the necessity of adopting digital ordering and delivery technology was contributing to the decline of mom-and-pop pizzerias. In a 2016 report on technology affecting pizzerias, Allen found that national chains’ average unit volume was almost double that of independents. The difference, he said, “equates to almost exactly the amount that the chain operators put through digital ordering platforms.”

Slice sends customers’ online orders to the restaurants through their preferred method — email, fax or phone. Restaurants deliver the meals with their own couriers. For each order processed, Slice receives a $1.95 commission, or around 6 to 7 percent of order totals on average, Sela said.

In contrast, GrubHub charges up to 18 percent of the order to process online sales for its clients.

Matthew Brick of Brick’s Pizza in Centreville, Virginia, went digital a few years ago and became partners with a number of online ordering platforms before deciding to steer more of its orders to Slice, which today processes around 30 percent of its digital sales. “I pay $2 per order with Slice,” Brick said. “For a $100 order on GrubHub, that’s 18 bucks,” he said. “That’s why I direct as much traffic as possible to Slice.”

He said that online sales through Slice are increasing at a rate of 15 to 20 percent a year.

What helps keep Slice’s costs down, Sela said, is that many of his employees, including those working on data entry, sales and customer service, are based in Macedonia, where workers are paid $2.50 an hour on average. Although far less than a workforce based in the United States would have to be paid, this amount is above the minimum wage in Macedonia, according to the website Trading Economics. (Representatives for GrubHub did not respond to requests for comment, and those for UberEats declined to discuss Slice and the competitive landscape in pizza delivery.)

Scott said the company has processed over 12 million orders since its inception, and according to company figures, its reach has grown to over 9,000 locations from 4,500 in 2016. Clients’ annual pizza sales are also increasing, the company said, and are projected to hit an estimated $200 million in 2018 compared with $40 million in 2015.

But the delivery market is continuing to evolve.

Mary Martin, a partner and managing director focusing on restaurants at the Boston Consulting Group, acknowledged that many high-profile food delivery startups close within a few years of operations. Companies like ChowNow and Placebag, which offer online ordering capabilities to restaurants for a monthly fee, are competing with Slice for the mom-and-pop market share.

Cherryh Cansler, editorial director at Networld Media Group, which includes the business-to-business publication Pizza Marketplace, said many tech and delivery companies like Slice claim they can help independent restaurants analyze customers’ behavior, but “the next step is to set up a marketing campaign using that information to drive that customer to spend more.”

“That is hard for operators to do,” Cansler said, “so any technology platform that can accomplish that will win with operators.”

This article originally appeared in The New York Times.