Shakey’s in Southland Stands Out by Taking Slice of Latino Market

It might well be called El Shakey’s.

The venerable pizza chain has fallen on hard times in recent years, shrinking from 450 stores in the 1970s to a mere 60 or so today. But Shakey’s ovens are still cooking in Southern California, where 52 stores survive -- and even thrive -- thanks largely to its ability to attract Latino customers.

“The stores that are doing better are in the more heavily Latino areas,” said John McNulty, president of the Shakey’s Franchised Dealers Assn. “We’re a relatively Hispanic brand now.”

Size is one big reason. A throwback to another dining era, Shakey’s pizza parlors can measure 8,000 square feet plus -- more than twice the size of a typical Round Table Pizza restaurant. That helps the chain’s appeal to Latino families, who often dine out in large groups, according to experts who track ethnic consumer trends.

“Our size does allow us to accommodate larger groups, parties, teams, and that blends well with the Hispanic clientele,” said McNulty, who estimates that more than 70% of the diners at his El Monte Shakey’s are Latino. “On the weekends, we frequently see groups of 10 to 15. Not party groups, just extended family groups.”

At the Burbank Shakey’s, nearly all the customers one recent evening were Latino. Among them was Fernando Perez, who was trying valiantly to keep track of his scrambling troops: sons, nephews and friends. There were eight children in all, ages 5 to 9.

“We come here once or twice a month,” said Perez, who coaches the Toluca Rockies youth baseball team. “I’ve been coming here since I was a kid. It was always Shakey’s after baseball. It’s still the same now, and that’s a very good thing.”

Founded in Sacramento in 1954, Shakey’s was one of the first franchised pizza parlors. But the chain’s store ranks have been decimated by increased competition, changing American tastes and, most recently, a bitter battle between its Singapore-based owner, Inno-Pacific Holdings Ltd., and U.S. franchisees.

The chain posted sales of about $55 million last year, according to Chin-Yong Wong, chief executive of Shakey’s and Inno-Pacific, for a per-store average of more than $850,000. But consultants see problems for Shakey’s as big as its oversized dining halls.

The menu hasn’t seen a substantive change in years, and the decor is not so much retro-chic as aging-starlet. Its Tiffany-themed lamps and ice cream parlor-styled seats contrast with the brass and faux granite of upscale competitors such as California Pizza Kitchen.

Southland franchisees say they recognized years ago that the chain needed a face-lift, but complain that they have received almost no help from Inno-Pacific, which bought the company in 1989 and runs it from Singapore and from corporate offices in Garden Grove.

So dealers say they took measures into their own hands -- adding game rooms and sponsoring youth sports teams. The latter strikes a chord with many Latino consumers, who loyally support companies that show community involvement, said Ricardo Lopez, president of New Jersey-based Hispanic Research Inc.

“What Shakey’s has done, and this goes back to the ‘80s, is become very family-oriented,” added Santiago Ogradon, executive vice president of Los Angeles-based Castells & Asociados, which helps fast-food leader McDonald’s Corp. reach the Latino market. “It’s very welcoming to kids and that’s what’s going to draw the family in.”

Southland Shakey’s owners spend more than half of their $1.2-million advertising budget targeting Latinos -- primarily with Spanish-language television and radio ads, said Colette Brooks of Culver City-based Big Imagination Group, the ad agency for Los Angeles-area owners. That, in turn, helps the chain’s profile in heavily Latino areas such as El Monte, Huntington Park and La Puente.

“When the restaurants ... started out 50 years ago, those neighborhoods may have been Anglo,” Brooks said. “Over the years, some of them have become Hispanic-dominant. So our core audience has shifted as a result.”

Despite its appeal to Latino diners, Shakey’s faces an uncertain future. The franchisee that operates a third of the stores -- Alhambra-based Jacmar Restaurant Group -- has threatened to bolt when its contract expires in 2005 if Inno-Pacific remains as corporate parent.

In addition, franchisees have filed at least four lawsuits against Shakey’s in the last three years, including one by 20 store operators in December. Alleging fraud and other wrongdoings, the Los Angeles Superior Court suit claims that Shakey’s has essentially abandoned its children, offering little in the way of new product development or makeover suggestions.

Wong denies the accusations, and says franchisees have spurned the company’s ideas, such as a promotional campaign to promote the chain’s upcoming 50th anniversary.

“A lot of things we did try were blatantly rejected,” said Wong, adding that the company has run a deficit for two years.

With so many stores now closed, he added, there isn’t enough to cover basic overhead, let alone spend millions of dollars on new concepts.

Shakey’s isn’t alone in suffering shrinkage. Market leader Pizza Hut, a unit of Louisville, Ky.-based Yum Brands Inc., has seen a 12% erosion in its stores over the last dozen years. Pizza sales nationwide grew by only 3% from 2000 through 2001, while sales at restaurants that appeal to health-conscious diners, such as sandwich and salad eateries, leaped by 12%, according to Chicago-based restaurant consulting firm Technomic Inc.

Against this trend, local Shakey’s restaurateurs see Latino customers as a bright spot. Chuck Wilburn credits seven straight years of increased sales at his Redlands store partly to his growing Latino clientele.

“Redlands is about 30% Hispanic. My business is about 50% Hispanic,” said Wilburn, 47. “They’re such a loyal customer base.”

Reflecting the trend, taco bars have been installed at several of the Jacmar-owned Shakey’s, including restaurants in Pasadena, San Gabriel and Huntington Park. And McNulty said he’s been mulling over creating a Spanish-language version of the menu at his store.

“It’s something that would be appropriate,” McNulty said. “It’s an accommodation that needs to be made.”