Latino Eateries Expanding

Besides similarities in strategy, the duo shares a Dallas-based advertising agency, Spanish Marketing Inc., which is emerging as a dominant force to help second-tier regional chains and "mom and pop" Hispanic entrepreneurs get a piece of the US market. For now, Pizza Patron Inc. and Pollo Campero are the two best-known restaurant chains targeting Hispanic markets, but that's bound to change with the hyped-up focus on the fast-growing population's spending patterns, says Abel Barron, Spanish Marketing's creative director whose 25-year track record includes setting up Tracy-Locke's first Hispanic agency and racking up a long list of awards that includes four EFFIEs.

Barron tells GSR that Pizza Patron and Pollo Campero are well ahead of the curve in claiming their ground. "I don't see anyone right now on the horizon," he says. "Pizza Patron is a small company that's on the radar screen of Pizza Hut, Cici's and Domino's. The big boys are looking over their shoulder." As for Pollo Campero, it's the equivalent of "the McDonald's of Central America," a brand loyalty that has translated into news-breaking, record waits when doors swing open on new US locations.

Both restaurant chains are expanding via franchises, but Pizza Patron has gamed out the more aggressive plan. Andy Gamm, vice president of development for the Garland, TX-based Pizza Patron, says 400 stores will be open in five years. The long-range plan also includes a push into Mexico and Latin America. Today, the chain consists of 48 carry-out stores in Texas, New Mexico, Arizona and Colorado. The chain's only sit-down site opened a couple weeks ago in El Paso, but Gamm says the team's already toying with adding some more. In a month, the ribbon will be cut on its first California location--6043 Pacific Blvd. in Huntington Beach. The development agreement calls for 20 stores in the Los Angeles market in the next two years. Meanwhile, Gamm's negotiating with a developer for the Chicago market, another Hispanic hot pocket.

Development agreements have two-year terms to fuel Pizza Patron's fast-paced growth plan. "It's designed to keep the fire stoked and to keep us from having a large territory locked up," Gamm says. When the clock runs out, Pizza Patron and the developer get to talk about expanding the agreement or opening it up to other franchisees willing to put up the upfront development fee of $7,500 per store. "There is no first right of refusal," he says. At the end of the day, franchise agreements range from $125,300 to $182,550.

At last count, Gamm had 90 stores in various stages of development in five states and that's after just two years of franchising. The only territory that's off limits to franchisees is Dallas/Fort Worth, where a fifth corporate-owned location is under construction at 2519 Hampton Rd. The pizza store will be the 19-year-old chain's third in Oak Cliff, home to a shop at 2627 W. Jefferson Blvd. that consistently sells 1,000 pizzas per night on Fridays and Saturdays, according to Gamm.

"What we love about our position in the marketplace is there isn't any competition yet," Gamm says. He realizes some nationals like Domino's are launching Hispanic campaigns and looking for sites in many neighborhoods. "Domino's is always going to be considered an Anglo brand," he says. "We feel our advantage is we're not trying to be something to everyone. We have the ability to engender brand loyalty."

Pizza Patron's savvy plan revolves on more than a bilingual workforce. "Our company's core values have always been 'service to community, commitment to value'" founder Antonio Swad says. "We are a Latino brand and our stores are truly community-based. We strive to serve the Hispanic community, not just sell to it."

The 1,200-sf stores are festively decorated in yellow, blue, red and lime green with "Viva Patron" murals on walls and contemporary Latin music. "We only have one menu item and it's pizza," Gamm says, adding it's just $4.99 for a large pie with cheese and one topping and $6.99 for everything. But whether it's franchised or corporate-owned, each store must be managed by a Hispanic who lives in the trade area. "You don't have to be a Hispanic to own or develop, but the one caveat is you have to have a Hispanic operator to oversee the store," he says. "You have to understand the vision."

Gamm says Pizza Patron's customers, by and large, are working-class Hispanics from the service industry. "They're the patron when they walk through the door," he stresses. "They're treated with respect and get great food at a great value. What sets us apart from the other brands is our customer experience when they come through the door."

When Swad opened the first store in the Pleasant Grove section of Dallas in 1986, he didn't intend to develop a shop focused on the Hispanic community, Gamm says. "He quickly realized half of his customers didn't speak English so he chose to staff the store in a way that suited the customer," he explains about the firing pin for today's concept. The product is traditional pizza, but the order board does include some extra toppings like chorizo. Fresh dough, made daily, and on-site fresh sauce made from crushed Roma tomatoes are part of the draw.

Spanish Marketing's Barron believes Pizza Patron "will own the Hispanic market in terms of pizza" with its strategy to foster brand loyalty. "That's the type of very important perception for them to be considered part of the neighborhood," he says. "They don't want to build on price, but build on being part of the community. It's long-term, depth-building relationships instead of a fast buck."

With its brand firmly established, the Guatemala-based Pollo Campero has a North Texas developer making plans to roll out 25 stores in five years between Waco and the Red River, according to Mireya Valero, president of Spanish Marketing. The first store at 3071 W. Northwest Highway created a buzz around town when at least 5,000 customers streamed through the doors on opening day and Dallas police were called to the scene to send those still standing in line home at 10 p.m. A second store will open in November, with the developer zeroing in on Oak Cliff just like Pizza Patron.

The quick-serve, fried-chicken chain entered the US market three years ago, opening restaurants in Los Angeles, Washington, DC, Houston and New York's Queens and Brooklyn. The first US opening was in L.A., with the restaurant racking up $1 million in sales in seven weeks. To date, there are eight restaurants open in California; two each in Maryland, New York and Virginia; and four in Texas, of which three are located in Houston. Overall, the 33-year-old chain has 190 locations in Panama, Honduras, El Salvador, Nicaragua, Ecuador, Costa Rica and Mexico besides its homeport and the US.

Barron says Pollo Campero is hand-picking neighborhoods with large Central American populations. It's next go-to areas will be high concentrations of Mexicans and African-Americans. He says eight of 10 Hispanics in Texas and California are of Mexican descent so it's the next logical step in the chain's US evolution. The Texas restaurants are getting salsa bars and flour and corn tortillas to lend to the draw for Mexican diners along with the restaurateur's pledge to provide "a pampering service that appeals to Latino's tastes, cares for their families and reminds them of home."

Spanish Marketing opened doors in June 2001, growing while many of its Anglo peers and longtime agencies were closing down due to the 9/11 fallout of accounts. Valero, a longtime radio broadcaster, says she started the firm when she discovered Hispanic retailers and restaurateurs in the US didn't know how to use the media to reach their markets nor were they client candidates for large agencies with dedicated bilingual or bicultural teams. With Barron on board and the Hispanic fervor picking up steam, Spanish Marketing has transitioned from strictly "mom and pop" accounts to predominately second-tier regional chains.

Barron says the firm's been getting a half dozen calls per week from US and Mexico businesses wanting to cross the border. Its new list of clients includes the 96-year-old Banco Independiente, which has opened its first North Texas location, and Soda Victoria, a longstanding soft-drink brand making its way onto US grocery shelves. The firm's also working with the Enclaves Co, a New York homebuilder planning to use Texas as a test market to develop lease-to-own, single-family neighborhoods for Hispanic families. He says Enclaves will test the concept with a 300-lot development in Fort Worth and a 75-lot project in Mesquite.