Pizza chain’s peso promotion fans flames of immigration debate

Pizza chain’s peso promotion fans flames of immigration debate

The 59-unit Pizza Patrón chain, which targets the Hispanic market in Arizona, California, Colorado, Nevada and Texas, fueled a firestorm of international media attention and angry anti-immigration criticism this month when it began accepting Mexican pesos in addition to U.S. dollars.

The chain’s “Pizza por Pesos” promotion, which began Jan. 8 and is scheduled to continue at least through the end of February, became a lightning rod for the simmering immigration debate, with the chain getting calls and e-mails that included death threats.

Though Wal-Mart and other retailers operating in U.S. border cities also are known to accept pesos, and while some businesses accept Canadian dollars in parts of New York and Minnesota, several of the critics said they had targeted Pizza Patrón because its outlets operate in areas far from the border with Mexico.

Antonio Swad, founder of the chain, said its decision to accept pesos remains a business issue.

“It’s about trying to out-position your competitors, but the immigration issue has spurred a whole round of attention,” he said. The chain’s acceptance of pesos for payment became the focus of so much vitriol, he theorized, because “pizza is so easily identifiable.”

Though it might be difficult to document any real connection between a U.S. business’s acceptance of pesos and the issue of illegal immigration, the e-mail assault on the chain was rooted in that topic. “The powder was on the stove on simmer, and for a lot of folks this is all they needed to hear to turn up the heat,” Swad said.

As many as 12 million undocumented Mexican immigrants are believed to be living in the United States, and national and local lawmakers have been wrestling with that issue for a decade.

The Pizza Patrón chain began the program as a service to Hispanic customers, though some of the positive comments about the promotion were believed to come from non-Hispanic patrons who applauded their ability to buy pizzas with extra pesos they had left over from visits to Mexico.

“Many of our customers travel back and forth to Mexico regularly, and sometimes they end up with pesos left over,” said Ernesto Alonso Hernandez, Pizza Patrón’s director of restaurant operations. “Many travel back to Mexico during the Christmas-New Year’s holiday.”

The chain’s executives now say the peso acceptance program may be extended if it shows sustained appeal through next month.

Kelly McDonald, president of Dallas-based McDonald Marketing, a specialist in marketing to Hispanics, called the chain’s promotion “fantastic and brilliant.”

“It’s revolutionary and 100-percent customer-focused,” McDonald said. “I applaud their efforts in this area. It’s groundbreaking in serving their customer. It’s visionary and fearless.”

She added: “From a marketing perspective, it’s really, really putting your pesos where your mouth is. It lets those customers know the program is for them, and they are a primary consumer target, not a secondary one. Secondly, there is a convenience factor for those who have visited Mexico and come back with their pockets full of pesos.”

However, the chain’s website, , has received thousands of e-mails from people on both sides of the debate, though Swad said about 20 percent of those respondents oppose the program.

One e-mail stated: “You are part of the problem why Mexicans do not assimalate [sic] into American culture.”

Others were supportive, such as: “I want to say, bravo. People can hate on others for no reason, and a lot of the time that’s all people remember at the end of the day, is the negative. I want to say I am proud of your company’s choice.… As a man who has more than half his family as Mexican ancestry—right down to the grandma who stayed in Mexico—I can honestly say that you guys are doing good.”

Swad, who is of Italian and Lebanese ancestry, said his biggest surprise was “how passionate people feel on this issue on both sides.”

“I’ve gotten passionate, hate-filled phone calls and e-mails full of anger,” he said. “On the other side of the coin, I’ve gotten the most beautiful, eloquently written messages of encouragement that I’ve ever seen. This thing has exposed the broad spectrum of human emotion to me.”

He said the five outlets of the chain owned by his Pizza Patrón Inc. have done about 10 percent to 15 percent of their business with customers spending pesos, but he did not estimate the peso volume at the chain’s 54 franchised outlets since the promotion began. Same-store sales for January were already running positive before Jan. 8, so he was unable to say if the Pizza por Pesos program was bringing in new customers.

The controversy has provided an opportunity to boost Pizza Patrón’s brand profile, Swad admitted. “We huddled early and made some key decisions that worked well for us; the first was to take as many opportunities to do interviews and explain the Pizza por Pesos program as much as possible,” he said.

Swad said operations director Hernandez was handling all Spanish-language media while the chain’s director of brand development, Andy Gamm, was doing radio interviews with stations throughout the United States and Canada.

The controversy “is making us a better company, and it’s making us better executives,” Swad said.

Also, National Public Radio, network television, the British Broadcasting Co., and major Mexican broadcast and print media have interviewed Swad and other Pizza Patrón officials.

“I’m a businessman who is trying to out-position the company with competitors who have more resources,” Swad said. “We’ve reached out to our core customer and reinforced our brand promise that it’s a Latino brand.”

The threats against the company have led Swad to examine security at branches of the chain, though he said neither the FBI nor any other police agency had been asked or had offered to get involved. “We’ve taken appropriate steps, and I’m satisfied,” Swad said.

Franchisee Margaret LeVecke, whose family operates eight Pizza Patrón units in Arizona, said concerns about the dual-currency initiative there have been mostly limited to operational issues. “The questions have mostly been in regards to deposits, and the banks are working on that,” LeVecke said.

Swad said the company had decided to accept only paper pesos and not coins, making bank deposits easier.

“When you get into a secondary currency, it’s complicated enough,” he said. “We have looked at the peso-versus-dollar [exchange] ratio, and it’s remarkably stable. So we’ve come up with a cheat-sheet card so each of our point-of-sale people can reference what each of our items costs in pesos. A $4.95 pizza is 60 pesos.”

Jud Phillips, who owns six Pizza Patrón stores in El Paso, Texas, said his managers unanimously thought the promotion was a good idea. “They see a lot of people in our stores with pesos in their pockets,” Phillips said. “Anything we can do to be a service to our customers and community, we’re willing to try it.”

Wendi Saari of the Texas Restaurant Association said some small, independent operators on the border might accept pesos, but she knew of no other large foodservice organizations doing that.