Pappas Restaurants is not one to get caught up in the latest trends.
You won’t find any of the group’s nine concepts on DoorDash or Uber Eats. Its version of a loyalty program is a smile and a handshake from the manager. And yet the family-owned group has remained relevant in its hometown of Houston after nearly 50 years largely by doing things the way it always has.
Not that the owner of Pappadeaux Seafood Kitchen and Pappasito’s Cantina is allergic to change. During the pandemic, for instance, it started accepting online orders and reservations for the first time. It’s just that after three generations in the business, it has a pretty good idea of what works and what doesn’t.
The Pappas restaurant story stretches back to 1897, when H.D. Pappas arrived in the U.S. from Greece and began opening restaurants throughout Tennessee, Arkansas and Texas. He passed the foodservice gene to sons Pete and Jim, who went into the restaurant equipment business with Pappas Refrigeration in 1945 and opened a coffee shop called Dot in 1966. The family returned firmly to the operations side in 1976, when Jim’s sons, Chris and Harris, opened the Strawberry Patch, a prototypical fern bar sporting vegetation, brass rails and Tiffany lamps.
The Strawberry Patch would be the first of what would become a veritable empire of casual- and fine-dining concepts spanning a variety of cuisines and styles. They include Pappadeux and Pappasito’s, which turned 40 this year, as well as Pappas Seafood House, Pappas Bar-B-Q, Pappas Burger, Pappas Delta Blues Smokehouse, Pappas Bros. Steakhouse, Dot and Little's Oyster Bar.
And though it has expanded beyond its Houston roots to 80 locations in eight states, Pappas remains an icon in its hometown, where its brands have become go-tos for an array of cuisine, from barbecue and steaks to fajitas and seafood—not to mention the subject of countless hip-hop lyrics and a favorite of local hero Beyonce.
The Pappas brothers had less success with another Texas institution, Luby's Cafeteria. They took over management of the beleaguered brand in 2001 and worked for years to improve food quality and close underperforming stores, but were ultimately unable to reverse the brand's slide. Chris Pappas stepped down as CEO in 2021, and what was left of the chain was sold later that year. Pappas Restaurants itself was not involved with the Luby's venture.
“We could change on a dime before, but now we can change on a penny.” —Christina Pappas
Like most restaurants, the past few years have not been easy for Pappas. In June 2020, it permanently closed five Houston restaurants, apparently due to pandemic impacts. And earlier this year, it was forced to vacate a high-profile location at Houston’s Hobby Airport after the city decided to contract with a different operator.
And then there was the two-headed labor and supply chain monster that tied the industry in knots just as it was emerging from the worst of the pandemic. “It definitely was a challenge, but it has made us really, really agile,” said VP of Marketing Christina Pappas. “We could change on a dime before, but now we can change on a penny.”
A unique business model has helped Pappas weather the storm. While most restaurants rely on third parties to do things like deliver supplies and fix broken equipment, Pappas has always done all of that in-house. It employs more than 200 service people who can respond almost instantly to outages or issues that might otherwise temporarily halt business. This team also delivers meat, seafood and produce to its stores daily, which helps ensure freshness and enables local sourcing. It even has a hand in the design of Pappas’ restaurants: At one time, Pappas employees built the chairs that filled its dining rooms. These days, the chairs come from a vendor, but Pappas still repairs, restains and recovers them itself to ensure they last.
Christina Pappas referred to Pappas’ service staff as the “quiet backbone” of the company, especially during the recent supply chain crisis. “You very quickly realize that if your A/C goes out or your refrigerator goes out and you’re waiting for people to show up, that’s dollars on the table,” Pappas said.
“Sometimes we’re gonna be the first to jump on a new trend and then other times we’re gonna sit back and see where it goes.” —Christina Pappas
That vertical integration is bolstered by unusual longevity among Pappas’ team members. A disproportionate number of its staffers have worked at Pappas since they were teenagers, starting as servers and bussers and rising up the management ranks.
The continuity is such that people who have been on staff for 10 years are considered newbies, Pappas said. Her team alone has a 38-year veteran and multiple people who have been aboard for 20 years or more. And it doesn’t hurt that Chris and Harris Pappas remain involved in day-to-day operations as CEO and president, respectively. “We just have so much talent,” said Christina Pappas, who attributed the impressive retention to treating people well and giving them stability and growth opportunities.
That has helped Pappas maintain high standards in its restaurants, where food is scratch-made daily and subject to strict quality control measures—tomatoes must be “Coke-can red” to make it into Pappasito’s salsa, for instance.
The company’s deep institutional memory has also given it the confidence to move at its own pace. Take loyalty programs, one of the fastest-growing trends in restaurants today: Pappas has seriously discussed launching one, but has yet to find a system that matches the personal touch it prides itself on, Pappas said.
“Sometimes we’re gonna be the first to jump on a new trend and then other times we’re gonna sit back and see where it goes,” she said. “We don’t have to jump on every single additional revenue stream” just because it’s there.
“It’s never been fast grow. It’s been grow slow, grow steady, grow strong.” —Christina Pappas
That philosophy also applies to new unit growth. From 2017 to 2022, Pappas’ total store count increased by just two, according to Technomic Ignite data. It takes a deliberate approach to site selection and capital investments, given that its large restaurants are costly to build. The company also owns a good portion of the real estate those restaurants occupy.
“It’s never been fast grow,” Pappas said. “It’s been grow slow, grow steady, grow strong.”
Pappas' sales have also grown steadily. Systemwide sales rose 8.3% in 2022, to $428 million, on the same base of restaurants, according to Technomic data.
Pappas did not provide sales or other performance metrics for the current year, one in which many casual-dining chains have struggled to balance price hikes and traffic growth. But Christina Pappas suggested the company has not been immune to that pressure.
“You can sense the frustration with the consumer, but the consumer does seem to understand” the higher prices, she said. But, she added, there has been “a little bit of a shift” among consumers in the past few months. “I think we’re all getting ready for it.”
Some national chains have already turned to discounting in an effort to lure inflation-weary customers. That’s another trend Pappas is happy to buck, preferring instead to rely on its consistency and longevity as a draw.
“We’re part of people’s memories; we’re part of what their family traditions are,” Pappas said.
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