At InvestorPlace, we are big believers in equity crowdfunding: a novel, investment paradigm wherein — for the first time ever — retail investors like you and me can be our own venture capitalists, and directly invest in high-quality startups.
With that in mind, I’d like to introduce readers to Piestro, an exciting pizza tech startup that has the potential to fundamentally disrupt the $46 billion U.S. pizza industry with automated pizza vending machines.
That’s right. Pizza vending machines.
Make no mistake about it. Smart, robotics-powered pizza vending machines are the future. Over the next decade, machines like the one Piestro is making are going to pop up everywhere because they enhance convenience for consumers and lower costs for pizza makers.
Inevitably, I think the pizza vending machine market in the U.S. will go from essentially zero dollars today, to $4 billion or more in sales by the end of the decade.
Piestro will be at the epicenter of this pizza vending machine megatrend. And you have a chance to invest in this startup today for a valuation as low as $6 million.
That’s a steal. My numbers suggest that — in an “everything-goes-right” scenario — we’re talking about a multi-billion-dollar company one day.
Needless to say, long-term investors should consider investing in Piestro today.
Why Should You Invest in Piestro?
Over the next decade, pizza vending machines will go from essentially nonexistent to almost ubiquitous for three big reasons.
First, advancements in robotics technology have enabled companies, like Piestro, to recently construct pizza vending machines that actually make good pizza.
That is, up until recently, the technology simply wasn’t there. Of course, there are vending machines out there where you can dispense and heat-up a pre-made, packaged and not-that-tasty pizza. But a machine that leverages next-gen robotics tech to create an artisanal quality pizza in an oven, in as little as three minutes, with customized toppings?
Not possible. Until today.
Going forward, the tech will only get better. As the tech does get better, the quality of pizzas made in these vending machines will only go up. The time it takes to make the pizzas will only go down. The level of customization will go up. And, eventually, consumers won’t be able to tell the difference between a pizza made in a vending machine by robots, and one made in a pizzeria by humans.
Piestro Offers Higher Convenience
Second, these vending machines dramatically increase consumer convenience. And right now, the consumer’s relationship with food is changing to prioritize convenience above all else, with nearly 50% of consumers say they prefer carryout at quick-service restaurants.
In this world of “convenience takes precedence”, pizza vending machines are a superior solution to pizzerias.
They can be placed literally anywhere — in the hallway of a dorm room, at the gym, in shopping malls, food courts and office complexes. They are always on, so consumers can order pizza whenever they want. And they are super fast, baking a fully customized pizza and delivering it into the hands of the customer in just three minutes.
Because these vending machines are dramatically more convenient, consumers will increasingly demand more pizza vending machines over the next few years as they become more accustomed to quick-service and instant results.
Third, these vending machines also dramatically lower production costs for pizza makers, at a time when rising wages and rent are squeezing margins.
The pizza business is not a particularly high-margin game. Your typical pizzeria runs around 20% profit margins, with the bulk of the expenses driven by labor and rent. And these two expense items are only going up.
Pizza vending machines significantly reduce those costs. You go from paying for 1,200 square feet of space and 10-plus employees for a pizzeria, to paying for 24 square feet of space and just one part-time employee for a vending machine.
In this sense, Piestro believes that its vending machines can permanently improve pizza operators’ profit margins by almost 30 points to around 50%.
A Billion-Dollar Industry in the Making
Thanks to technological advancements and their ability to simultaneously increase consumer convenience and cut costs, pizza vending machines are on the cusp of becoming a multi-billion-dollar market over the next decade.
The U.S. pizza market is big ($46 billion in 2019) and growing (revenues in the industry have been consistently growing at a 3% per year pace). There are nearly 80,000 pizzerias across the U.S.
In that big market, there are essentially zero smart pizza vending machines today. That number will grow to 40,000-plus by 2030.
An interesting case study here is Sprinkles Cupcakes. In 2012, the cupcake maker pioneered the idea of cupcake vending machines. These machines were always on and required no employee maintenance. Since then, the company has rolled out both standalone vending machines and supplemental vending machines at locations where there are already stores.
Today, because the machines offer a low-cost way for Sprinkles to boost sales and customer reach, Sprinkles has aggressively expanded its vending machine presence. About one-third of the company’s locations are standalone vending machines. More than half of the locations have a vending machine.
I suspect the pizza industry will follow a similar trajectory, given similar rationale and unit economics. Broadly, there will likely be half as many pizza vending machines as pizzerias by 2030. That implies 40,000-plus pizza vending machines.
Pizzerias typically do about $600,000 in sales per year. The vending machines will do much less than that. Maybe about $100,000. At that unit volume, you are talking about a $4 billion pizza vending machine market by 2030.
Piestro Is at the Heart of This Megatrend
There are multiple pizza tech companies out there investing in next-gen pizza automation. But few look as positioned to succeed as Piestro.
Why? There are a few reasons.
First, the company’s technology is impressive. Pretty much everything about the Piestro machine is complete except for the oven, which will be completed shortly using the resources raised from the company’s current fundraising round.
Second, the strategy of creating vending machines aimed at helping restaurant owners both expand and cut costs is genius. It varies sharply from the strategy of most food tech companies, which is simply to create a robot that can replace chefs in the kitchen and only cut costs.
Third, the business model is genius, too. The company plans to both launch direct-to-consumer (DTC) vending machines under the Piestro brand, and provide its vending machines to local and regional pizzerias under the “brought to you by Piestro” banner. The DTC business is cool. The white-label business is much cooler. Piestro will not just sell the machines, but also take commission off pizzas sold at its machines and sell a software-as-a-service package which helps the Piestro machine work.
It’s a hybridized, high-margin, multi-faceted and highly scalable business model.
Fourth, the management team is strong. Backed by respected Wavemaker Labs, Piestro brings together a team of engineering and restaurant industry experts to devise a next-gen food tech solution which both works and fits the unique needs of restaurants.
Fifth, this company is very young. And because it is so young, the valuation is very attractive at just $6 million.
A Potential Billion-Dollar Company?
In an everything-goes-right scenario, Piestro could be a billion-dollar company.
Given Piestro’s competitive advantage, I think Piestro could very realistically attain 10% unit market share. If so, you’re talking about 10,000-plus Piestro units by 2030. Given management’s focus, I suspect about 70% of those will be white-label units, while 30% will be DTC units.
Assuming all units average unit volumes of about $100,000, then Piestro has a visible pathway toward several hundred million dollars in sales by 2030. Note that this calculation includes royalty revenue and SaaS revenue from white-label units, in addition to a $50,000 per unit installation charge.
Further assuming operating profit margins can scale towards 30%-plus, then by my numbers, Piestro has runway to $100 million in net profits by the end of the decade.
All you need is a market-average 17 times forward multiple on that to get a $1.7 billion dollar valuation.
Bottom Line: Invest in Piestro
Piestro is a potentially multibillion-dollar pizza tech company in the making. Right now it’s trying to raise money today at a dirt-cheap valuation.
Of course, there are huge execution risks with Piestro. Why? Mostly because the company is still in the development phase. And the pizza vending machine market is nascent and largely unproven.
But those risks are more than accounted for in the discounted valuation. What’s not accounted for? The reality that pizza vending machines are going to take over the world, and that Piestro has a visible opportunity to turn into a billion-dollar company.
As such, at the very least, Piestro is worth your attention. For more information, visit the company’s StartEngine page.
Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been rated one of the world’s top stock pickers by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he did not hold a position in any of the aforementioned securities.