2010 October: Niche Marketing

2010 October: Niche MarketingPinpointing a focus in the marketplace that will enable a pizzeria to flourish even in a stagnant economy may not be immediately obvious. Sometimes it takes a little time and consideration for a concept to evolve.

That was the case for Pizza Patron, a chain with 95 locations in six southwestern states. When it opened in 1986, the first store in Houston was called Pizza Pizza, and the chain’s tight focus on serving the Hispanic customer had not yet been identified. By the time a few months had passed, founder Antonio Swad had noticed that a largely Hispanic clientele was patronizing the store. That’s when he changed the name to Pizza Patron — a word which roughly translates in Spanish to “a benevolent leader” in the community — and a brand geared to the Latin community was born.

“A little light bulb went off in his (Swad’s) head,” says Andy Gamm, brand director for Pizza Patron. “He saw an opportunity to serve an underserved, if not ignored, consumer.”

Establishing a strong brand and differentiating a pizzeria from its competitors is how the industry’s fastest-growing chains, including Pizza Patron, are succeeding despite fl at sales in 2008 and 2009 in the limited-service pizza industry, according to a recent report by Technomic, a Chicago-based restaurant consulting firm.

Pizza Patron was mentioned in the study because of its focus on the Hispanic community. Other large chains cited and the areas in which they stand out include Little Caesar’s in the value category, Pizza Fusion in healthy, zpizza and Red Brick Pizza in quality product/experience and CiCi’s Pizza for its all-you-can-eat buffet.

While large chains have advantages in making consumers aware of their brands, such as the money to wage advertising campaigns, Darren Tristano, executive vice president at Technomic, says independent and smaller chains also can succeed by focused positioning in the marketplace, and developing a brand that customers will come to recognize. “I think, because of what large chains have accomplished, consumers have learned to differentiate among pizzerias based on such factors as the dining experience, the healthfulness or the quickness (of service),” Tristano says. “They use that information when deciding where to eat.”

Discovering or tightening a focus on brand may come about, as it did for Pizza Patron, from taking note of consumer behavior and acting on it. Despite their success, Gamm acknowledges that it is usually better to know your focus before you open a store.

“I think it is the first thing you have to decide rather than opening a store and then trying to figure it out organically,” Gamm says. For an operator already in business, asking customers what they like about the pizzeria can help them better discover their point of difference.

“You need to talk to customers, because when you look at yourself in the mirror you’re not as likely to see your flaws,” Tristano says.

Operators need to study what competitors are doing and also ask themselves some questions. “You have to look at your concept and ask yourself, ‘What do I do that’s different from my competitors?’ and, ‘Where do I fit in?,’” Tristano says. “You need to know who your customers are. Are you serving families or young males looking to get their fill of cheap pizza? What is your customers’ income level? And do your price points fit in?”

If the answer is quality, then Tristano says operators should leverage quality through how they promote the business. They need to use terms like gourmet or healthy in their marketing.

Gamm says once Pizza Patron identified its position in the market, it began using brand identity as a filter through which nearly every decision is made.

“Our entire brand is modeled to appeal to the Hispanic demographic,” Gamm says. “It dictates everything we do — from marketing and advertising, to what kinds of partners we do business with, to where we locate our stores. We don’t go into areas where there isn’t a significant Hispanic demographic.”

The company offers toppings such as chorizo that appeal to the Hispanic customer.

“We offer toppings that aren’t typically available,” says Gamm. “And we work with our manufacturer to make sure our chorizo has the color, flavor and spices that our customers expect.”

Catering to the Hispanic customer, Pizza Patron also developed a successful “Pizza for Pesos” marketing campaign that allows customers to purchase pizza using pesos. “That was a very successful campaign,” Tristano says.

“There was a lot of money laying around that customers couldn’t use, and Pizza Patron capitalized on that.”?

Case Study:

Toppers Pizza

Finding its focus was just as crucial to Toppers Pizza, which concentrates on the 18- to 24-yearold demographic. It has 25 stores in such Midwestern states as Illinois, Wisconsin, Indiana and Minnesota. The company is slated to open 14 more stores in the next 24 to 36 months — and expects to have 100 by 2013.

Founded in 1991, Toppers has most of its stores in college towns like Madison, Wisconsin, which is home to the University of Wisconsin.

To reach the college-age market, Iversen says the company keeps stores open from as early as 10 a.m. to as late as 4:30 a.m. It also uses social networking sites such as Facebook and Twitter to communicate with its customers and keeps its advertising fun and irreverent.

Being asked in 2006 to define their best customers helped Toppers find its identity. Says Iversen: “We were in an advertising meeting and they asked us, ‘Who loves you? Who’s fanatical about you?’ and it was easy. We said it’s the (young) people up late burning the candle at both ends.”

That answer has been a boon for the company, which is succeeding even in the down economy.

According to Iversen, projected 2010 revenues are $24 million and average per-store sales are about $950,000 (compared to the industry average of about $550,000 to $600,000).

Capitalizing on their point of difference “was huge” for the company, Iversen says. “We’ve found a niche that’s been ignored by the big guys.”

Annemarie Mannion is a freelance writer in Willowbrook, Illinois.