STRATEGY

Cash and Controversy

A plan to let customers pay in pesos drew death threats. But it also had a surprising impact on sales.
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If you've heard of Pizza Patrón, it's probably because of the brouhaha that erupted in January after the company announced plans to accept Mexican pesos in addition to dollars at its 63 locations. The franchised chain, which is based in Dallas and operates in five western states, received more than 3,000 protest e-mails and even a few death threats. But what may be more interesting than the controversy is the fact that the program was easy to implement and had some unexpected benefits.

Founder Antonio Swad devised the pesos promotion in order to bump up sales during a traditionally slow period. Since 65 percent of his customers are Latino, Swad hoped the promotion would appeal to customers who returned from Christmas trips home to Mexico with a few leftover pesos in their wallets. "We're trying to extend a hand to our customers," he says.

The logistics turned out to be relatively simple: The chain spent roughly $60 per store on signage and opted to fix the exchange rate at 12 pesos to the dollar--slightly higher than the going rate--to cover any market fluctuations and banking fees. Swad sent franchisees a training guide for the staff and a laminated conversion chart for them to post at registers. Cashiers made change for customers in U.S. currency.

After local papers reported on the promotion, everyone from NPR to Fox News (NYSE:NWS) called to ask about it. Swad estimates that he agreed to 250 interviews in all, many tying it to the issue of illegal immigration. The resulting "Get the hell out of my country!" e-mails, which were also publicized, only helped to underscore the notion that Pizza Patrón is a friend to Latinos. "They're a hero from the brand perspective in the eyes of their target audience," says Chrysanthe Georges Sawyer, a Hispanic-marketing consultant based in Las Vegas.

Swad says he never meant to get caught up in the immigration debate, but he enjoys Pizza Patrón's higher profile. Sales are up, too. Pesos now account for between 5 to 10 percent of sales, and same-store sales are accelerating, up 34.5 percent year over year for the first 10 weeks of 2007--versus 30 percent for the quarter before the promotion. As a result, the company decided in March to accept pesos on a permanent basis.

Last updated: May 1, 2007




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