Paying Pesos for Pizza

Branding by the Slice

By ROB WALKER
Published: February 11, 2007

When a chain of pizza restaurants with locations in Texas, Arizona, Nevada, California and Colorado recently announced a promotional stunt that involved accepting pesos, it sparked controversy, national news coverage and even threats. It seems predictable that the peso as an acceptable currency in Denver, say, 700 miles from the Mexican border, would have that effect at a time of emotional disagreements about immigration in America. But behind this hot-button debate is something else worth considering: what the success of a Hispanic-focused pizza chain says about Americanness.

The chain is called Pizza Patrón, and it has expanded to 61 locations in just a few years; same-store sales for the final quarter of 2006 (before the “Pizza por pesos” promotion began) were up an impressive 35 percent over the year before. Usually restaurants that focus on a particular ethnic group serve food associated with that demographic, and one of the first things people ask Antonio Swad, Pizza Patrón’s founder, is whether there’s something particularly (or maybe stereotypically) Hispanic about his pizza. Does he use habanero peppers and cilantro? The answer is no. Apart from offering chorizo as a topping, the pizzas are pretty much what you’d expect from any pizza place.

Swad (who is of Italian and Lebanese descent) was thinking about pizza, not a Hispanic customer base, when he opened his first restaurant, called Pizza Pizza, in the Pleasant Grove section of Dallas in 1986. Born and raised in Columbus, Ohio, Swad moved to Texas that year, and as he recalled recently, “My experience with the Hispanic community was quite limited.” But he knew enough about running a restaurant to make some adjustments when it turned out that half his patrons were Spanish speakers — like changing the name and hiring a bilingual staff.

That was about it for a while, as Swad developed an unrelated chain called Wingstop, which he sold in 2003. By then, census figures indicated that Hispanics had become the largest minority group in the United States, and he was convinced that Pizza Patrón represented “an opportunity” for a national franchise. Working with a marketer, Andrew Gamm (now the company’s director of brand development), Swad overhauled the graphic design of the menu boards, added contemporary Latino background music and Mexican Saltillo tiles to the stores and cooked up a new brand icon (el Patrón, a mustachioed man in a fedora), all aimed to communicate the goal of being “the premier Latino pizza brand,” as Gamm puts it. That didn’t mean a new kind of pizza, but a new context for pizza. One that sort of feels . . . Hispanic.

Swad — who says he expected the peso gimmick to get nothing more than local and trade coverage — points out that finding underserved locations is getting harder as others wise up to this segment of the pizza market. In fact, a family-style pizza-and-parties chain called Peter Piper, which operates in the U.S. and Mexico, was recently purchased by ACON Investments, whose managing partner cited the “growth and expanding purchasing power of the Hispanic population.” Pizza Hut — “America’s favorite pizza,” per its recently revised ad slogan — has just added on1ine ordering to the Spanish-language Web site that it started in 2005. Controversy aside, Mary Boltz Chapman, editor in chief of Chain Leader, a trade magazine, figures the peso promotion was a clever idea. People who are upset about it would never have patronized the place anyway, she points out, but the customer base will get the message that matters most: “This pizza is for me.”

It’s easy to think of products once associated with a particular group that then caught on with everybody else — from bagels at Dunkin’ Donuts to the prime-time telenovela adaptation “Ugly Betty.” And of course, mainstream brands have long engaged in ethnic-niche marketing. In the early 20th century, Procter & Gamble cooked up Crisco pitches meant to reach Jewish consumers, and today Home Depot offers paint colors with names like Azul Cielito Lindo to appeal to Hispanic shoppers. But in those cases, the goal was still mass participation: everyone eating bagels, or everyone shopping at Home Depot. Pizza Patrón occupies curious new territory, aiming not for the masses — but for a really big niche. And it turns out that this is a strategy that has more to do with the brand — the context — than it does with the thing that’s actually being sold. That’s why Swad changed almost everything except his actual pizza. After all, his customers’ favorite topping is pepperoni. Just as it is for everybody else in America.

 

I guess the promotion worked out for them. I think the pizza is pretty good, for that price.

Pizza Patron comps rise 34% in Q4 '06

DALLAS — Pizza Patron announced fourth quarter same-store sales rose 34.5 percent over the previous year. In a news release, the 60-unit chain did not report revenue totals or profit for the year.

"Our fourth quarter numbers are off the chart at more than 34 percent," said Guillermo Estrada, the company's director of business development.The increase came after the company's third quarter same-store comps increased more than 24 percent over the previous year. "It is a result of a number of factors," Estrada continued. "Our Lista (ready now) program is in full swing and our franchisees have been working very hard to improve store-level operations."

Antonio Swad, the company's founder and president acknowledged that "these kinds of numbers are going to be hard to continue as we grow, but it speaks to the relevancy of the Pizza Patron brand. We are constantly refining our business model to find ways to better serve our core Hispanic customer. Even our very first location, which is more than 20 years old, was up more than 20 points for the quarter. Our base is growing and so are we."