After several pivots, Toronto restaurant receives $13 million in funding to expand with a new line of products
Exclusive interview with Ali Khan Lalani, Founder and CEO of General Assembly Pizza
- Heli Brecailo
In April of 2020, founder and CEO Ali Khan Lalani had the idea of delivering General Assembly Pizza’s recently launched frozen pizza product directly to customers’ homes. Less than one year later, GA Pizza received $13 million in funding to catch up with demand. What started in 2017 as a fast-casual dining restaurant in the Toronto Entertainment District quickly transitioned during the pandemic to a food technology e-commerce business in the direct-to-consumer space.
With indoor dining closed in the early months of the pandemic, GA Pizza saw an opportunity to explore alternate routes to sell pizzas. The restaurant quickly created a premium, ready-to-eat frozen pizza line for local grocery shops, caterers, and online grocers. The company also made pizza kits available on PC Chef’s website.
Soon after, the company developed a pizza-club concept through monthly subscriptions, where it would deliver frozen pizzas directly to customers. The goal was to offer the same pizza served in its downtown location to people’s doors for a reduced price. Members have access to up to ten pizzas a month, including members-only, limited edition pizzas.
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The push for expansion came after the restaurant rapidly amassed more than 2,000 subscribers when the subscription program launched in the fall. The company successfully raised $13 million of series A funding, more than three times what was initially planned.
GA Pizza will invest the funds in a master production facility to scale production up to 5,000 units a day in Q2 and 10,000 in Q3. In addition to growing the number of subscribers to its monthly program, the company plans to expand its grocery client base across Ontario.
The business pivots haven’t stopped there, and other innovations are in the pipeline. As next steps, the company plans to develop more plant-based products, to seal brand partnerships, and to expand its target territory. Graham Smith, Senior Vice President at JLL is representing the brand as it continues to expand.
JLL Canada Retail sat with Ali to walk us through this journey.
JLL: You recently raised $13 million for your business and it sounds like you're going to be using it to expand your current production of frozen pizzas. With those funds, what changes will happen in the business overall?
Ali Khan Lalani: Well, we're definitely growing and becoming a much larger business. And as we continue to scale production, operations, and sales, mostly our footprint, as an organization, is growing right alongside it. So, we'll be looking for a master production facility. For us, that means 25,000 to 30,000 square feet of industrial space, in addition to a corporate HQ, office space, and most likely adding anywhere between 25 to 40 people to our team in the next 12 months.
JLL: Sounds like a little bit like manufacturing. Is that where you're going with this right now?
AKL: We definitely have a unique product, which is not mass produced ‒ it's made by hand, developed by our chef. But we're looking at ways to make more of them while maintaining our core menu items in a way which we feel makes our product unique and premium.
JLL: Awesome. Now, the idea of a pizza subscription program is quite innovative for that kind of product. So how did you come up with that idea?
AKL: The idea of the pizza subscription actually happened by chance. I was home with my wife, unpacking my Goodfood box in April. We were deciding what to make for dinner. I happened to have a few General Assembly pizzas in my freezer. We’d just launched our consumer-packaged goods retail program, and I thought to myself, “There must be a way we can get our premium naturally leavened pizzas to people's homes in a safe, simple way and own the guest experience and own the customer experience from making the pizza, selling the pizza, right to delivering it to their door.” Therefore, becoming a direct-to- consumer food technology company.
So, I did a lot of research that night. And along the haul, I couldn't find one. And I said, “Hey, I think this can be something,” because food delivery ‒ specifically pizza delivery ‒ isn’t something anybody hasn't heard before. Most people are very used to pizza delivery. This is just a completely different way and innovative way to have pizzas delivered to your home.
Actually, once they're delivered, they sit in your freezer, and when you're ready to make them, all you have to do is unwrap them, put them into your oven, and in under 10 minutes you have a premium restaurant-quality pizza, right in your home, on your schedule.
The idea of the pizza subscription actually happened by chance.
JLL: Sounds like a great idea. I tried to find a product similar to yours, and I wasn’t able to find that, at least in Canada. I guess you’re on the path of something great.
You currently have a location on Adelaide, and it has space for dining. Now, in Toronto, we’re in a lockdown. What are your plans for that location specifically, or for the brick-and-mortar component of your business?
AKL: Roughly two-thirds of the footprint of our spiritual home in downtown Toronto was a dining room. The other third is a purpose-built takeout and delivery counter and entrance. We've been very fortunate during the pandemic that pizza takeout and delivery pizza was synonymous with takeout food. So, we were actually doing okay during the pandemic due to the nature of our product.
As it specifically relates to our dining room, we have full intentions ‒ when it's safe and when the time is right ‒ to reopen our dining room, and we’ll take the chance to reimagine our dining room and reimagine the way we’re providing meaningful experiences to our customers in the dining room.
We were a fast-casual model where people would line up and order at the counter and then take their drinks back to the table. A lot of our business and the way we had set it up had to do with having a lot of people co-mingling together and sharing experiences together, because pizza is naturally a very social food. A lot of people love to eat pizza with other people.
Now that things are a little bit different, we’re thinking of ways to still have a strong sense of community while being safe. We’ll probably use a lot more technology in our restaurant and in our dining room, so that we can provide people with meaningful dining occasions in our restaurant while keeping them safe.
JLL: I imagine 2020 was a challenging year for you and the restaurant industry. And by looking at your business, going to the website, I can see that you’ve tried several fronts. There are several pivots to your business. It’s great that you received funding for one of them, the pizza subscription and the frozen pizza. Should we expect new pivots or new changes in your business model in 2021?
AKL: Absolutely. Innovation has been a core part of our business from when we opened in 2017 until right now, and we're looking at new ways to open up channels to touch more customers in different markets, not only in Toronto, Ontario, but all across the country.
JLL: Where do you see your business going forward in the next few years?
AKL: We have aspirations to be a national brand by the end of this year. We also have aspirations to be a North American brand by the end of next year. For the next 24 months, North America. But we haven’t limited our expansion capability to North America, because we do aspire to be a global brand in four years.
JLL: Wow, really exciting. Is that how you describe your business? Would you say you're more of a wholesale brand? Is that the best description?
AKL: The largest chunk of sales ‒ and by largest I mean over 50% of sales currently ‒ is food technology e-commerce subscription. At this point in time, we are a full-blown food technology e-commerce business in the direct-to-consumer space.
JLL: Can you elaborate on that?
AKL: Sure. We have three distinct channels at General Assembly Pizza. We have our traditional takeout and delivery, and hopefully eventually dine-in business. We have our consumer-packaged goods grocery business. And we have our rapidly expanding direct-to-consumer home delivery e-commerce solution, which is powered through our online members portal at gapizza.com, where people can sign up for their monthly pizza subscriptions. That is the core business that we’re growing and working hard to achieve meaningful scale.
JLL: I just wanted to understand a little bit about your background, and maybe the early days because I know you were founded in 2017. I was just wondering, what made you get into the pizza industry?
AKL: Absolutely. How I got into the pizza industry takes me back to 2003 actually. I happened to be backpacking in Europe. I was 18 years old. Oh, sorry, I think 2001. It was a long time ago. I was in Naples, Italy, and I was waiting for a ferry to the Amalfi Coast and I missed the ferry. The ferry was around lunchtime. I started walking around the port of Naples and I stumbled across a pizzeria that had about 30 people, mostly Italian, standing outside, drinking wine and drinking beer. And I thought to myself, that looks great, I want to do that. Got myself a beer, got to the back of the line. By the time I got to the front, I noticed there were only two pizzas on the menu, Margarita and Marinara. I had never heard of either of them. I had never tried any of them. They were only three euros each. I ordered one of each. I think I ate the Margarita pizza for 30 minutes. And as an 18-year-old guy I had been eating pizza probably once or twice a week for the better part of the last five years. And I’d never had a better pizza experience in my life at that point. And then that moment in time, I basically spent the next 18 years obsessing about pizza as a customer, just somebody who just loved pizza as a pizza aficionado, if you will.
Previously to General Assembly, I was a multi-unit franchisee owner with Recipe Unlimited, I sold my locations in 2015. And I set out on a path to follow my passion and my ambition. My ambition was to create a fast-casual pizza brand in downtown Toronto. I also had a huge fascination with wine, so I became a sommelier. I also became a certified pizzaiolo, as well. It took the passion for pizza and wine and my restaurant experience to set out on a path to build our own brand, which was General Assembly Pizza, from the ground up. We were very fortunate to take that business to market in December of 2017. And very shortly after, again, very fortunate to receive some great press from the City of Toronto. And we’ve been an organization who wants to shape the pizza landscape. If that means hot pizzas, frozen pizzas, at the grocery store or via subscription, we’re all about the better pizza movement that is easy and delicious for our customers.
JLL: That's such a great story. I can see you in Naples trying their phenomenal pizza. I guess that's where you're getting your inspiration. And then you opened the business. How did the idea of frozen pizza come up?
AKL: Unfortunately, in the middle of March last year we had to close the restaurant. It was a very sad and scary time, that day. We had to lay off a lot of our staff. We had been thinking about frozen pizza for some time. We thought we were too busy to do the hard work it would take to get that to market. When we closed our restaurant, we took a decision and said, we have to make pizzas right now that people can eat at home and get at home safely, because there was a pandemic and it was the early days. Nobody knew what was going to happen in a week or a month.
So, we set out on a path to make five SKUs. We wanted a couple of vegetarian options. We wanted a plant-based option. We wanted a couple of classic options for our menu because we know that most of our customers are flexitarian. So, they eat a little bit of everything. And we wanted to make sure that we rethought that frozen pizza. We didn't want to make a frozen pizza, like a restaurant would make it, we wanted to make a frozen pizza that was built for your oven at home, completely reimagining the whole process so that our customer gets the best-quality product that's actually made for their home oven. So that was a very fun, laborious path we went on. And in two weeks, we were ready. And we had those five SKUs and we started selling them at the restaurant.
Fortunately, at the time frozen pizza was in very high demand at grocery stores. It had limits, you could only buy four at most grocery stores. So, I started approaching grocery store owners. When I was approaching grocery store owners in April when they couldn't keep pizza on the shelf, I had a very quick and easy conversation with most of them, which was “Sure, let me try the product.” Most of them by the end of the day called and placed their first orders. We started developing the name very slowly in the city, trying to build meaningful connections with other grocery owners.
Grocery owners are like restaurant owners. They're trying to innovate and find new products that will keep their customers happy and coming back. I think that we developed a pizza that was premium. It used naturally leavened dough and quality ingredients. And it stood out on the shelf because there wasn't anything else like it.
JLL: I'm really surprised that it took you such a short amount of time to come up with the frozen pizza idea. It came out of necessity. Your restaurant was closed, and you had to do something, you had to come up with a new thing. You pulled it off and now it’s such a success. I guess the most time-consuming portion is to talk to the grocers and the distribution of it, right?
AKL: Yeah, absolutely. The e-commerce platform also took us about six months to build. We launched the subscription business in September, and we had the grocery business started in April. 2020 was a lot of learning and a big journey. But, in April of last year, the things we were doing ‒ pizza kits, grocery, and building an e-commerce site ‒ none of it was temporary. We made a decision to strategically change the foundation of the business last March.
JLL: Everything that came, all the change that came after ‒ you didn't have that at the back of your mind before, it's just out of necessity, right?
AKL: Totally out of necessity. And when we did them, we said we're going to do them forever. This isn't temporary. So, one day, when we get to open our restaurant, we get to do all these other things, too. Because we know how to operate the restaurant ‒ we've been doing that for a few years. So, that'll just integrate back into the business. But we had the opportunity to find new revenue channels and come up with new products, which it was a lot of fun.
JLL: How long were you a franchisee for Recipe?
AKL: Six-and-a-half years.
JLL: A lot of retailers are going to be reading this. I'm pretty sure all of them went through this process in March. And they're still going through this process because we’re still in a lockdown in Toronto. When they read the report and your interview, they're going to be looking for insights and ideas. And I'm not only talking about restaurants, but any kind of business. There will be fashion, there will be sporting goods. There’ll be all sorts of retailers reading this article and this interview. Is there anything you can share with these people that are looking for some ideas?
AKL: I would say that, the biggest, the most interesting part of 2020 was believing in a product. If you think there's a market need for it, and you think your product has a fit, just do it. Just do it. Because those opportunities don't come around very often, mostly once-in-a-lifetime type opportunities. If it feels good, and you surround yourself with great people that have answers to the questions that you don't have answers to, that really helps you move quickly.
The other thing I would say is, this was the year for specifically food businesses to ensure they had an online presence. Because having an e-commerce presence this year was one way to keep in contact with customers or attract new customers, and still produce revenue and sell products that they may want. I think that was a big moment this year for specifically restaurants and food businesses and having that online e-commerce platform so that they can engage their customers.