Pizza Patron filling a niche

Pizza Patron filling a niche
Tags: Marketing, Operations Management
March 3, 2008 - Richard Slawsky

While many pizzeria operators spent 2007 struggling with softening same-store sales, at least one pizza chain booked a pretty good year.

Pizza Patron markets itself as the "premier Latino pizza brand," building stores in primarily Spanish-speaking or Latino neighborhoods. The Dallas-based company has recorded five straight quarters of double-digit same-store sales increases.

"The continued sales growth is a sign that we are on the right track," said Pizza Patron founder Antonio Swad last fall when the Q3 2007 numbers were released. "Our core philosophy of providing excellent food at exceptional values every day has helped us gain valuable market share in the ultra-competitive pizza segment."

The company currently has 72 locations open in six states and has 21 new stores under construction, with more in the pipeline.

Pizza Patron staffs its restaurants with bilingual employees, and offers menus in both English and Spanish. Store managers also live in the neighborhoods where their restaurants are located.

"Our entire brand is strategically designed to fill a huge void we saw in the marketplace," said Andrew Gamm, director of brand development for Pizza Patron. "Obviously, there is no shortage of pizza outlets in the United States, but no one was specifically geared to serve the Latino-Hispano customer. That's our niche."

According to Stephen Chavez, vice president of Hispanic marketing for Venice, Calif.-based marketing firm Ketchum, the size of the U.S. Latino market is about 45 million people.

"You are looking at about 13 percent of the total population," he said. "That number is projected to triple by 2050."

Hispanics in the U.S. currently wield about $976 billion in spending power, a number that's expected to increase to over $1 trillion by 2010.

The company garnered widespread attention, along with a few death threats, last year when officials announced restaurants would accept pesos along with U.S. currency as payment for pizzas. But, the Pizza por Pesos program, as it was known, proved to be so popular it has become a permanent fixture at the chain.

"We decided to make the program permanent last year and we haven't looked back," Gamm said. "Even though less than 5 percent of our sales are transacted with pesos, it does provide a legitimate service to many of our customers, plus, it does a good job of reinforcing our core brand values to the public."

Targeting changing demographics

Swad began his restaurant career in Columbus, Ohio, at age 15, working as a dishwasher in a family-style steak house. Several other restaurant jobs followed, and Swad eventually moved to Dallas, where he opened a pizzeria in a Hispanic neighborhood.

He quickly learned that most of his customers spoke Spanish, and realized he could tap into a huge market by serving those customers. Swad recruited bilingual employees and had menus printed in both Spanish and English.

"When you have a Latino customer coming into the store or calling on the phone, it helps when someone is on the other side who can understand them," Chavez said. "Other chains may not be thinking about that."

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In 1994, Swad founded the fast-casual chicken wing chain Wingstop. By 2003, he had expanded the chain to nearly 100 locations, but decided to sell out in order to turn his attention back to Pizza Patron.

At the time, the company had four locations in the Dallas area. He then began franchising the concept, and created prototypes including a dine-in model, a "Rapidito" model for airports and malls, a "Tiendita" or portable mini-store extension and a "Lista" drive-thru concept. The company currently has its eye on markets from one end of the country to the other, Gamm said.

"California, Chicago, Miami, Atlanta and North Carolina all have significantly strong and fast-growing Hispanic demographics, which puts them high on our radar screen," Gamm said. "With the exception of California, we don't have stores in any of those markets yet, but we hope to before the end of the year."

Pepperoni still the standard

Pizza Patron's marketing efforts include a partnership with Los Angeles radio personality Piolin, who hosts the No. 1 syndicated show among the 645 Spanish-language stations nationwide.

"For them to bring Piolin on board shows a major insight and understanding of the importance of the market," Chavez said. "He's someone who's been arm-in-arm with Latino immigrants."

The company also partnered last year with calling-card issuer BlagPhone International to sell phone cards offering unlimited calling to Mexico.

Although Pizza Patron restaurants do offer Spanish-inspired toppings such as chorizo, apparently pepperoni transcends cultures. As is typical for most pizzerias, pepperoni is king, accounting for about 70 percent of pizza sales at Pizza Patron.

"There is one interesting caveat for us, though," Gamm said. "I would bet that Pizza Patron sells a higher percent of pepperoni pizzas with jalapenos than anyone else."

The next two most popular pies the company sells are the La Patrona — a deluxe pizza with everything, and the La Hawaiana — a deluxe pizza with extra cheese, Canadian bacon and pineapple.

Other pizza chains seem to be taking notice of Pizza Patron's success. In February, Domino's launched a nationwide toll-free number for Spanish-speaking customers, while both Papa John's and Pizza Hut offer online ordering in Spanish.

Despite Pizza Patron's focused business model, the company doesn't have any plans to change its strategy, Gamm said.

"Because our value-based price positioning has very broad appeal, we are often asked about opening stores in non-Hispanic neighborhoods, but that will never happen," Gamm said. "We are fanatically dedicated to making a strong connection, and doing a better job serving the Latino-Hispano community than our competitors."