Restaurant Business magazine features Pizza Patrón as November's cover story.
1. NOVEMBER 2009
STREET SMARTS FOR THE ENTREPRENEUR
INSIDE ´
THE
PIZZA PATRON
IDEA
FACTORY
How a scrappy Texas chain
built a culture where creativity—
and sales—thrive
Local marketing
done right
Finding
growth capital now
2. ´
PIZZA PATRÓN'S
BIG The bright and
agile Texas-based
chain is
giving national
competitors a run
for their money
one well-executed
idea at a time
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3. IDEAS
BY DANA TANYE R I
NTONIO SWAD BELIEVES STRONGLY IN THE
A importance of focus and the power
of a good idea. His 23-year-old
Dallas-based company, Pizza Patrón, has an
abundance of both. Sitting today at 90-plus units
and growing, the chain was founded on one big,
sharply focused idea—catering specifically
to Hispanics with festive, Latin-themed carryout
pizza shops that don’t just sell products, but serve the communities in which they operate.
It’s not what Swad set out to do; he’s not even Hispanic. His dream was simply to open a great
little carryout pizza shop. He just happened to open that shop in a predominantly Hispanic
neighborhood where customers’ young kids were often brought in to translate for their parents.
“I quickly recognized the opportunity to do a much better job of servicing this customer, of
going beyond simple things like learning to communicate,” he says. “At that moment, Pizza Patrón
was born. Patron is a word that in Spanish means a benevolent leader of the community. It was
exactly how I wanted to position the brand.”
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4. Within a few years, Swad reinforcing Pizza Patrón’s
expanded Pizza Patrón to Hispanic brand positioning,
four units in the Dallas/Fort it took the team 14 days
Worth market, strategically to take it from the initial
locating in neighborhoods ideation discussion to rolling
with a strong Hispanic it out systemwide, fully sup-
demographic. In 2003, after ported with training guides,
spending a few more years merchandising materials
developing and selling off and TV ad support.
another hit concept, Wing “The idea was suggested
Stop, Swad returned to focus by an industry friend that
full-time on growing Pizza THE EXECUTIVE TEAM FROM LEFT TO RIGHT: summer, but it was mid-
Patrón. He formed a licens-
ANDREW GAMM, BRAND DIRECTOR; ANTONIO SWAD, FOUNDER; December before I said any-
GUILLERMO ESTRADA, PRESIDENT;
ing company, assembled (ERNESTO HERNANDEZ, DIRECTOR OF OPERATIONS, NOT PICTURED) thing to the team,” Swad
“the best team I’ve ever had,” says. “Then we all got excited
and began slugging it out in the uber-competitive pizza about it and decided it was timely, as many of our cus-
segment armed with unique positioning and plenty of tomers travel to Mexico to visit family over Christmas and
creative spunk. come back with leftover pesos. Andy and his team quickly
Some of their recent marketing moves have been jaw- created point-of-sale materials and a currency exchange
droppingly bold and just as effective. They garnered the chart, got them printed and shipped within a couple of
kind of national press they could never have afforded to days. We wrote up a short manual for franchisees and
buy when they began accepting pesos in 2007. And this managers on what the program is and how it works. We
summer they started selling 12-inch pepperoni pizzas for started accepting pesos in every unit on January 8.
$2.99, a risky endeavor that nonetheless led to record sales. Because all of our creative is handled in-house we can
It’s all about differentiation, says brand director Andrew take an idea, develop it fully and roll it out quickly.”
Gamm. And it’s about achieving it with the equivalent of a That one hastily executed idea garnered Pizza Patrón
rock in a sling shot compared to resources wielded by larger more national and international brand exposure than a
rivals. There’s no outside agency, no big R&D budget. Just a company its size could dream of affording on its own.
small internal team that loves a good street fight and thrives While pesos now account for probably less than 2 percent
on ideas that enable Pizza Patrón to serve its niche, contin- of sales, Gamm says Pizza Patrón garnered more than
ue to grow and occasionally thumb its nose at the big guys. 500 million media impressions valued at more than $30
Swad maintains a culture that welcomes input and ideas million in the months following the promotion’s rollout.
from all employees at every level, which he says he gets The cost to implement it? Roughly $40 per store for a kit
informally on an almost daily basis. He’s accessible, inter- of marketing materials.
ested and insists that everyone abide by one rule when It’s exactly that type of scrappy, easy-to-plug-in idea that
ideas are being discussed: Nothing said will ever be held Pizza Patrón likes best—particularly as it fits so well into
against you. “It removes the fear of speaking up or sound- its corporate mission of providing value to its core Hispanic
ing stupid,” he says. “I have a responsibility as the ultimate customer base. And it’s not a stand-alone example.
filter, but I also have a responsibility to keep that
environment alive. I see my No. 1 job as creating PIZZA PESO. Approached to partner
urgency, keeping the pot stirred. If I can main- with Dolex Dollar Exchange, a currency-
tain an environment in which there is no such exchange company that caters to the
thing as a bad idea, good things happen.” Hispanic market, Pizza Patrón created
Pizza Peso coupons designed to look
A
MONG PIZZA PATRÓN’S BIGGEST ASSETS like Mexican currency. For six months
is leanness and the speed with in the Dallas/Fort Worth market,
which it can shape ideas, get all Dolex customers received
cross-functional input, analyze with their receipt a coupon
implications and bring them to market— good for $1 off at
often in less time than it takes many compa- Pizza Patrón.
nies to pull together a single meeting. “It was a
A case in point: In 2007, Pizza Patrón good way for
launched “Pizza for Pesos." Hugely Dolex to
successful at generating publicity and show customer
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5. appreciation and it worked for us to drive customers to our we had to do something quick,” Gamm says. “Something”
stores and develop brand awareness in our key demographic,” was either develop a new product or adjust the existing
Gamm says. During the six months, Pizza Patrón garnered product and revert to the $5 price point. The team chose
at least 300,000 positive brand impressions. Dolex is now the former, opting to develop a new line of $4 one-topping
working on a new credit card program and Gamm says 12-inch pies that hit two targets—satisfying value-conscious
long-term national tie-ins between the two compa- customers and slipping in just under competitors’
nies are likely. “Any time we can find a partnership $5 price point.
like this, it’s relatively inexpensive and both brands In true Patrón style, it came together quickly. “It
can deliver value through trade. That’s important took about three weeks from the time we decided
when you have very limited resources.” to create a $4 pizza product until we began retailing
them in our first test stores,” Gamm says. In that
AMIGO PIZZA. From its start, Pizza time, the internal team developed recipes, defined
Patrón sold just one pizza size—extra- and sourced new equipment and pizza boxes and
large, 15-inch pies. With one topping, they were got all inventory items into the company’s distribution
value-priced at $5. But last year, when commodity prices centers. The Amigo brand name, unique identity and
skyrocketed, the chain was forced to raise that price to core messaging were created, as were all supporting
$6. “We saw an immediate decline in business and knew marketing materials, store displays and print advertising.
Menu boards were updated,
as well.
The need for speed DIA DEL PATRON. ´
Part of Pizza Patron’s successful execution of big ideas is its speed. Within days the
´ Kicked off this summer,
fruits of ideation can be made into reality. Check out the stats. Pizza Patrón sought to build
market share with a promotion
BIG IDEA Description Turnaround Payoff that offered unlimited fresh-
baked, 12-inch pepperoni
Pizza for The chain began 14 days from ideation to 500 million media pizzas for $2.99 on Mondays,
Pesos accepting Pesos systemwide rollout impressions valued Tuesdays and Wednesdays
at more than $30 mil-
in select markets through
lion, at a cost to the
October. “The genesis of the
chain of roughly $40
per store idea was that we wanted a
compelling way to get more
Amigo New product: a $4, 3 weeks from Reversed declining pizzas out of each of our
Pizza 12-inch, one-topping conception to first sales after raising it’s stores and into the market. We
pizza store testing $5, 15-inch to $6 due thought that the simplest way
to commodity prices to do that was with an offer
that was unique to the pizza
Dia Del Unlimited 12-inch Less than 30 days Record sales and a
Patron
´ pepperoni pizzas between initial idea and 25% increase in segment, something nobody
for $2.99 on its rollout in test stores pizzas sold at some else was doing and that
Mondays, Tuesdays locations would likely be impossible for
and Wednesdays competitors to touch,” Gamm
says. “We needed a strong
American New units “We finalized the agree- Exclusive pizza hook on price and wanted it
Airlines at Dallas arena ment on a Monday…. vendor at the to be something from our
Center By Thursday of that second-highest
existing menu that even at a
week, all six outlets grossing indoor
discount would have a rela-
were re-branded, new arena in the nation
signs were hung,
tively good food cost.”
pans needed for the The team chose the 12-inch
personal deep-dish Amigo pepperoni pizza.
pizzas were manufac- Franchisees and operations
tured and shipped, and personnel provided input,
we were selling pizza.” extra 12-inch pans were
ordered and workflows were
altered to handle anticipated
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6. volume spikes. In less than 30 days from initial ideation,
the promotion was in test in company-owned stores in
Dallas. “We saw positive results the first day, so we rolled
the dice and began developing support materials,” Gamm
says. “We had pieces ready to go when we got data back
from our corporate store field tests so we could pull the
trigger in other markets in a matter of days. Vendors
were lined up ahead of time with all of the pieces ready
for our franchisees to run with it.”
Thanks to Dia del Patrón, the company’s Dallas-Fort
Worth market saw record results this summer. Comp sales
rose 11.9 percent in July, and 13 percent in August over
the same months last year. Some individual stores did 115
PIZZA PATRÓN AT THE AMERICAN AILINES CENTER
to 120 percent more sales this July and August than they
did last year. Total number of pies sold overall rose by 25 Patron, for instance, we worried people would trade
percent in July and August, and some individual stores down and check averages would suffer, that the $8 pizza
went from selling an average of 140 pies over the typical we would have sold would now be a $2.99 sale,” says
Monday through Wednesday period to selling 500 or 600. Gamm. “We ran ‘what if’ models: What if we lose 15 per-
cent of our other sales? What if Thursday through
AMERICAN AIRLINES CENTER. One of the Sunday we lose 20 percent of sales? We model out all of
biggest feathers in Pizza Patrón’s cap of late is its our ideas and decide what we can live with. Ultimately,
selection as exclusive pizza vendor at Dallas’ American however, you go into a lot of things not knowing what’s
Airlines Center, the second-highest grossing indoor arena going to happen and having to take some risks.”
in the nation. Now in its second year there, the chain Pizza Patrón’s next big idea is one that Gamm says is
operates six units and this year remodeled each with vibrant truly groundbreaking. Called Quick Service Pizza (QSP),
colors and Latin themes designed by Gamm to replicate it’s a new business model that takes custom-made pizza
the look and feel of traditional Pizza Patrón units. into the drive-thru arena. To date, two QSP stores are
“Most of the people attending events there are not going operating in the San Antonio market and both are setting
to be Hispanic, and it’s a departure for us,” Swad says. “But systemwide sales records.
it’s an example of a way for us broaden our base while still Key to the success of the concept is fast-bake oven technolo-
maintaining our brand focus. We didn’t try to dumb down gy developed in partnership with a leading manufacturer. “It
the fact that we’re a Hispanic brand. Just the opposite. We allows us to custom make a fresh pizza, have it fully cooked
turned the knob way up. If we couch this brand focus and finished in just over three minutes,” Swad says. “The
correctly, it puts a smile on everyone’s face” because people idea for QSP evolved as we tried to get a handle on how to
realize the Hispanic focus doesn’t exclude others. best leverage this new technology to build our brand. We
The American Airlines Center deal is also an example of think it’s where future growth in the pizza industry will be
Pizza Patrón’s ability to execute at dizzying speeds. “We and we’re positioning ourselves ahead of the curve.”
finalized the agreement on a Monday by phone from Las In addition to drive-thru, the QSP units feature lobby
Vegas,” Swad says. “By Thursday, and walk-up window service. And each
all six outlets were re-branded, has outdoor seating designed to meet the
new signs were hung, pans needed company’s goal of being not just conven-
for the personal deep-dish pizzas ient, but community-oriented. “Late at night,
were manufactured and shipped, we can keep the walk-ups and outdoor
and we were selling pizza.” seating open. It makes for a real nice
While the company is community-based feel for those
quick to act on ideas and locations,” Gamm says. “That’s a
opportunities, it doesn’t great way to serve our core
do so cavalierly. Ideation Hispanic family demographic,
sessions always include which remains at the heart and
plenty of discussion of soul of every idea we come up with
worst case scenarios, of and every decision we make.”
supply-chain issues and
potential impact on CHECK OUT WEB EXCLUSIVES FOR
THIS STORY IN THE REPORTER’S NOTEBOOK
operations. “With Dia del AT WWW.MONKEYDISH.COM/GO/NOV09
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