Mellow Mushroom has 166 locations nationwide, mostly concentrated in the Southeastern United States.
It’s the quirkiness that makes a return customer at Atlanta-based Mellow Mushroom—and, of course, the pizza.
“The dough has never changed,” Chief Financial Officer Michael Clock said of the 50-year-old secret recipe. “So, there’s the pizza, and then let’s put some individuality into it. Murals, decor, kind of a funky service style … just more mellow.”
With a psychedelic aesthetic and phrases like “it’s a higher order of pizza,” the 166-unit franchise leans in to the funky ‘70s vibe.
“Mellow Mushroom is something you have to experience,” Clock said.
There are playful pizza names, like “Holy Shiitake,” a mushroom-heavy pie; “Maui Wowie,” with ham, pineapple and jerk chicken; and “Kosmic Karma” topped with veggies, feta and pesto. Mellow Mushroom also has a plant-based menu, plus sandwiches, calzones, salads and wings.
This year, Mellow Mushroom is celebrating its 50th anniversary since founders Marc “Banks” Weinstein, Mike Nicholson and Rocky Reeves teamed up to open the first store in Atlanta. The anniversary brought on a brand refresh to attract new customers and franchisees.
The cost to open a franchise location ranges from $1.7 million to $2.8 million if a franchisee rents the property, and from $2.9 million to $4.7 million if they purchase the space, according to the franchise disclosure document.
The company closed restaurants during the last few years, for a total of 16 fewer stores from 2021 to 2023. Before the COVID-19 pandemic, Mellow Mushroom had closer to 190 restaurants.
The pandemic allowed Mellow Mushroom’s executives to take a step back and rethink the brand’s identity. Mellow’s customers gave feedback about their thoughts on the franchise.
“It all comes back to the pizza in a fun, crazy, zany atmosphere,” Clock said. “It’s kind of an experience. But nobody could identify a logo” or color scheme associated with the brand.
Mellow Mushroom is traditionally a full-service restaurant, but with the company’s refresh, it introduced a counter service model it dubbed “fast-fine” style, due to the speed of service on top of the quality of the pizza, Clock said.
It’s also for the first time doing outside advertising to bring on new franchisees, he said.
Mellow Mushroom’s specialty pizzas run about $32 for a large, but that size “won’t fit in the box of other pizza places’ largest pizza,” CFO Michael Clock said.
“We have such a great story. … Now we have the opportunity to say, ‘Hey, if you like individuality, if you like pizza, if you like restaurant operations, come and talk to us,” Clock said.
Another advancement is boosting its off-premises delivery. Pre-pandemic, about 75 percent of Mellow Mushroom’s sales came from dine-in customers. That’s no longer the case, as customers trend toward eating at home and ordering for delivery or pick-up in the last few years.
To adapt to the times, the franchise enhanced its online ordering platform, improved catering options and implemented third-party delivery for its customers. It partnered with QSR Autmations, a restaurant technology company, to upgrade kitchen display systems. The pizza franchise is working on an app to further evolve.
“Third-party has been a big growth vehicle for Mellow Mushroom over the last two, three years,” Clock said.
Average unit volume is about $2.7 million, Clock said, though the FDD doesn’t list anything in its Item 19.
A large specialty pizza runs around $32, much higher than some of the large-size pizzas at giants like Domino’s ($18.99) or Little Caesars ($10.99) in the Atlanta market. But Mellow’s large size “won’t fit in the box of other pizza places’ largest pizza, so you’re getting an abundance,” Clock said. “I think we have a breadth of offerings that resonates with people.”