Pizzeria gigante!

June 18, 2003

According to the University of Georgia's Selig Center for Economic Growth (GSCEG), in 2002, the buying power of U.S. Hispanics was $580.5 billion. By 2007, it expects that number to mushroom to $926.1 billion.

Antonio Swad wants a slice of those billions and he aims to get it with his Hispanic-focused concept, Pizza Patrón, based in Garland, Texas.

Currently four units are in operation (one is franchised), three are under construction and slated to open in the next several weeks, and 10 more Pizza Patróns could open before year's end.

Though the Pizza Patrón chain may appear short today, Swad said all the links are in place for a large-scale rollout in California, Illinois, Texas and Florida -- home to large Hispanic populations. Pizza Patrón is eyeing emerging Hispanic markets, too.

"While 100 percent of all our customers aren't Hispanic, it is necessary that any community we go to is already or will soon become an Hispanic community," said Swad, 46. "We are developing this as an Hispanic brand."

Taking wing

Though Swad founded Pizza Patrón 17 years ago, intense competition in the U.S. pizza segment convinced him to refine his concept and grow it slowly.

In 1994, he founded his second foodservice company, Wingstop, a chicken-wings-centered chain, which Swad grew to 100 stores in 16 states before selling it in January for an undisclosed sum.

Antonio Swad, founder, Pizza Patrón

Now armed with funds and national-expansion experience, Swad wants to bring Pizza Patrón to the national stage. The timing is right, he said, because the Hispanic population in the U.S. is growing rapidly; the Census Bureau predicts the group will represent one-fourth of all U.S. residents by 2030.

But while he views the potential for serving Hispanics as nearly boundless, he said it's not easy. Companies seeking to serve them must provide high-quality, value-priced products in a Latin-centered atmosphere.

Pizza Patrón does this by locating stores only in predominantly Hispanic neighborhoods and hiring Hispanics to run them. Menu prices are affordable, stores are decorated in colorful, festive tones, and the strains of Latin music echo within every lobby.

"One of the covenants of the franchise agreement is that the store manager has to be bilingual and has to reside in the trade area," Swad said. "This allows that person to be part of the community, to go to church with customers and know the kids who go to school with their kids. That builds strong loyalty."

Gary Shultz, a Burger King franchisee who signed on to develop five Pizza Patróns, said each of his Hispanic operators will get a share of their store's ownership as a hiring incentive.

"I think that will make it easier to recruit someone to work here and live in the area," said Shultz. "I think it would be a little more difficult to succeed if I were trying to maintain 100 percent ownership. Having an Hispanic partner as an owner will make a difference."

The price is right

Pizza -- Patrón's sole offering -- is sold at three price levels: $4.99 for one topping, $5.99 for two to three toppings, and $6.99 for four or more toppings (click here to see menu).

All pies are 15 inches, but customers can order a half pie (a dough skin is halved, topped and baked and carried out in a special box) for $3.49.

"There's some waste factor in that, but the food cost works out," said Swad. "And we sell at least 12 whole pizzas to every half pizza, so we make up for it."

Dough is made fresh daily in each store, and despite its Hispanic focus, toppings, other than jalapeños, are basic.

"Our pizza is basically like what you'll get at the big chains," said Swad. "But of course, we like to think it's better."

Before you assume Pizza Patrón's low prices equate to low check averages, think again. Hispanic families tend to be larger in number than American families, which yields larger pizza orders.

"They're very family oriented, so you'll see a higher average per ticket because those families enjoy eating out together," said Shultz. "Not only are their families larger, they often do things with their extended families, too."

Simple systems

According to five-store Wingstop franchisee Charles Loflin, Swad's simple system is key to Pizza Patrón's current and future success.

"He doesn't reinvent the wheel every time," Loflin said. "He takes products that are already out there and makes them the best. He focuses on one single item and makes it as easy as humanly possible to understand."

For example, Pizza Patrón's hours center on the dinner period, except for Saturday and Sunday, when stores open for lunch. It also takes cash only: no "hassle or expense with credit cards or checks," Loflin said.

Average store size is 1,000 square feet, which eliminates dining, and as far as Swad's concerned, Pizza Patrón never will deliver because it's costly and complicated.

"As the big chains were emerging some years back, their primary emphasis became delivery, while pizza became secondary," Swad said. "When I got in, I took a different approach: focus on making a product at an unprecedented value that people would get off the couch to come and get."

Pizza Patrón lobbies are painted colorfully to reflect Hispanic tastes.

Not offering delivery was an operational decision as well.

"We couldn't sell our product at the price we sell it for if we did delivery," Swad added. "And with the atmosphere we create in our lobbies, we believe we've enhanced the whole experience in the process."

The lack of delivery and dine-in apparently doesn't hurt sales either. Swad said his original store logs $800,000 a year, while another unit is "knocking on the door of $900,000. Through the first 28 weeks of this year, versus last year, (same-store sales) are up over 16 percent.

"And that's with zero expenditure on advertising. Word of mouth is all."

In preparation for national expansion, Swad has partnered with Denver-based Vistar (formerly Multifoods Distribution Group, Inc.) to ensure Pizza Patrón ingredients are available in every potential market.

"We're actually in negotiation to do very large multi-store agreements to develop entire states," Swad said. "We wanted to be sure we could open a store in Southern California and have an operator there get pretty much same price points as the ones in Texas. National is where we want to take this, and I think we're ready."

Topics: Marketing

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