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Pizza Patrón's big ideas

The bright and agile Texas-based chain is giving national competitors a run for their money one well-executed idea at a time.

Antonio Swad believes strongly in the 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.”

Within a few years, Swad expanded Pizza Patrón to four units in the Dallas/Fort Worth market, strategically locating in neighborhoods with a strong Hispanic demographic. In 2003, after spending a few more years developing and selling off another hit concept, Wing Stop, Swad returned to focus full-time on growing Pizza Patrón. He formed a licensing company, assembled “the best team I’ve ever had,” and began slugging it out in the uber-competitive pizza segment armed with unique positioning and plenty of creative spunk.

Some of their recent marketing moves have been jaw-droppingly bold and just as effective. They garnered the kind of national press they could never have afforded to buy when they began accepting pesos in 2007. And this summer they started selling 12-inch pepperoni pizzas for $2.99, a risky endeavor that nonetheless led to record sales.

It’s all about differentiation, says brand director Andrew Gamm. And it’s about achieving it with the equivalent of a rock in a sling shot compared to resources wielded by larger rivals. There’s no outside agency, no big R&D budget. Just a small internal team that loves a good street fight and thrives on ideas that enable Pizza Patrón to serve its niche, continue to grow and occasionally thumb its nose at the big guys.

Swad maintains a culture that welcomes input and ideas from all employees at every level, which he says he gets informally on an almost daily basis. He’s accessible, interested and insists that everyone abide by one rule when ideas are being discussed: Nothing said will ever be held against you. “It removes the fear of speaking up or sounding stupid,” he says. “I have a responsibility as the ultimate filter, but I also have a responsibility to keep that environment alive. I see my No. 1 job as creating urgency, keeping the pot stirred. If I can maintain an environment in which there is no such thing as a bad idea, good things happen.”

Among Pizza Patrón’s biggest assets is leanness and the speed with which it can shape ideas, get cross-functional input, analyze implications and bring them to market—often in less time than it takes many companies to pull together a single meeting.

A case in point: In 2007, Pizza Patrón launched “Pizza for Pesos." Hugely successful at generating publicity and reinforcing Pizza Patrón’s Hispanic brand positioning, it took the team 14 days to take it from the initial ideation discussion to rolling it out systemwide, fully supported with training guides, merchandising materials and TV ad support.

“The idea was suggested by an industry friend that summer, but it was mid-December before I said anything to the team,” Swad says. “Then we all got excited about it and decided it was timely, as many of our customers travel to Mexico to visit family over Christmas and come back with leftover pesos. Andy and his team quickly created point-of-sale materials and a currency exchange chart, got them printed and shipped within a couple of days. We wrote up a short manual for franchisees and managers on what the program is and how it works. We started accepting pesos in every unit on January 8. Because all of our creative is handled in-house we can take an idea, develop it fully and roll it out quickly.”

That one hastily executed idea garnered Pizza Patrón more national and international brand exposure than a company its size could dream of affording on its own. While pesos now account for probably less than 2 percent of sales, Gamm says Pizza Patrón garnered more than 500 million media impressions valued at more than $30 million in the months following the promotion’s rollout. The cost to implement it? Roughly $40 per store for a kit of marketing materials.

It’s exactly that type of scrappy, easy-to-plug-in idea that Pizza Patrón likes best—particularly as it fits so well into its corporate mission of providing value to its core Hispanic customer base. And it’s not a stand-alone example.

Pizza Peso. Approached to partner with Dolex Dollar Exchange, a currency-exchange company that caters to the Hispanic market, Pizza Patrón created Pizza Peso coupons designed to look like Mexican currency. For six months in the Dallas/Fort Worth market, all Dolex customers received with their receipt a coupon good for $1 off at Pizza Patrón. “It was a good way for Dolex to show customer appreciation and it worked for us to drive customers to our stores and develop brand awareness in our key demographic,” Gamm says. During the six months, Pizza Patrón garnered at least 300,000 positive brand impressions. Dolex is now working on a new credit card program and Gamm says long-term national tie-ins between the two companies are likely. “Any time we can find a partnership like this, it’s relatively inexpensive and both brands can deliver value through trade. That’s important when you have very limited resources.”

Amigo Pizza. From its start, Pizza Patrón sold just one pizza size—extra-large, 15-inch pies. With one topping, they were value-priced at $5. But last year, when commodity prices skyrocketed, the chain was forced to raise that price to $6. “We saw an immediate decline in business and knew we had to do something quick,” Gamm says. “Something” was either develop a new product or adjust the existing product and revert to the $5 price point. The team chose the former, opting to develop a new line of $4 one-topping 12-inch pies that hit two targets—satisfying value-conscious customers and slipping in just under competitors’ $5 price point.

In true Patrón style, it came together quickly. “It took about three weeks from the time we decided to create a $4 pizza product until we began retailing them in our first test stores,” Gamm says. In that time, the internal team developed recipes, defined and sourced new equipment and pizza boxes and got all inventory items into the company’s distribution centers. The Amigo brand name, unique identity and core messaging were created, as were all supporting marketing materials, store displays and print advertising. Menu boards were updated, as well.

Dia del Patron. Kicked off this summer, Pizza Patrón sought to build market share with a promotion that offered unlimited fresh-baked, 12-inch pepperoni pizzas for $2.99 on Mondays, Tuesdays and Wednesdays in select markets through October. “The genesis of the idea was that we wanted a compelling way to get more pizzas out of each of our stores and into the market. We thought that the simplest way to do that was with an offer that was unique to the pizza segment, something nobody else was doing and that would likely be impossible for competitors to touch,” Gamm says. “We needed a strong hook on price and wanted it to be something from our existing menu that even at a discount would have a relatively good food cost.”

The team chose the 12-inch Amigo pepperoni pizza. Franchisees and operations personnel provided input, extra 12-inch pans were ordered and workflows were altered to handle anticipated 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 to 120 percent more sales this July and August than they did last year. Total number of pies sold overall rose by 25 percent in July and August, and some individual stores went from selling an average of 140 pies over the typical Monday through Wednesday period to selling 500 or 600.

American airlines center. One of the biggest feathers in Pizza Patrón’s cap of late is its selection as exclusive pizza vendor at Dallas’ American Airlines Center, the second-highest grossing indoor arena in the nation. Now in its second year there, the chain operates six units and this year remodeled each with vibrant colors and Latin themes designed by Gamm to replicate the look and feel of traditional Pizza Patrón units.

“Most of the people attending events there are not going to be Hispanic, and it’s a departure for us,” Swad says. “But it’s an example of a way for us broaden our base while still maintaining our brand focus. We didn’t try to dumb down the fact that we’re a Hispanic brand. Just the opposite. We turned the knob way up. If we couch this brand focus correctly, it puts a smile on everyone’s face” because people realize the Hispanic focus doesn’t exclude others.

The American Airlines Center deal is also an example of Pizza Patrón’s ability to execute at dizzying speeds. “We finalized the agreement on a Monday by phone from Las Vegas,” Swad says. “By Thursday, all six outlets were re-branded, new signs were hung, pans needed for the personal deep-dish pizzas were manufactured and shipped, and we were selling pizza.”

While the company is quick to act on ideas and opportunities, it doesn’t do so cavalierly. Ideation sessions always include plenty of discussion of worst case scenarios, of supply-chain issues and potential impact on operations. “With Dia del Patron, for instance, we worried people would trade down and check averages would suffer, that the $8 pizza we would have sold would now be a $2.99 sale,” says Gamm. “We ran ‘what if’ models: What if we lose 15 percent of our other sales? What if Thursday through Sunday we lose 20 percent of sales? We model out all of our ideas and decide what we can live with. Ultimately, however, you go into a lot of things not knowing what’s going to happen and having to take some risks.”

Pizza Patrón’s next big idea is one that Gamm says is truly groundbreaking. Called Quick Service Pizza (QSP), it’s a new business model that takes custom-made pizza into the drive-thru arena. To date, two QSP stores are operating in the San Antonio market and both are setting systemwide sales records.

Key to the success of the concept is fast-bake oven technology developed in partnership with a leading manufacturer. “It allows us to custom make a fresh pizza, have it fully cooked and finished in just over three minutes,” Swad says. “The idea for QSP evolved as we tried to get a handle on how to best leverage this new technology to build our brand. We think it’s where future growth in the pizza industry will be and we’re positioning ourselves ahead of the curve.”

In addition to drive-thru, the QSP units feature lobby and walk-up window service. And each has outdoor seating designed to meet the company’s goal of being not just convenient, but community-oriented. “Late at night, we can keep the walk-ups and outdoor seating open. It makes for a real nice community-based feel for those locations,” Gamm says. “That’s a great way to serve our core Hispanic family demographic, which remains at the heart and soul of every idea we come up with and every decision we make.”

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