Sometimes a little friendly competition is a good thing. That’s what sparked it all for the now widely acclaimed and rapidly growing Patxi’s Pizza (Patxi’s; pronounced Pah-Cheese) restaurants.
In 2004, Bill Freeman, CEO of the Palo Alto, California, upscale chain challenged his longtime friend and now business partner, Francisco “Patxi” Azpiroz, to a pizza throw down.
At the time, Azpiroz was managing Zachary’s Chicago Pizza, a popular pizzeria in Berkeley and Oakland. “I said, ‘let’s see what you can do in your kitchen’ and challenged him to make a pizza as good as, or better than, Zachary’s,” recounts Freeman. “He came up with his own dough recipe and his own sauce and baked pizzas for me in his apartment in Rockridge until we perfected them.”
Before long the pair was drawing up a business plan with Azpiroz’s deep-dish style pizza recipe as the secret to some serious dough. Freeman invested in the company’s first location in Palo Alto and Azpiroz ran the day-to-day activities of the restaurant.
“It really started as a hobby for me – one that I was passionate about, but first, I wasn’t actively involved,” says Freeman. “I started a telecommunications company in the 1990s, built it up and sold it in 2000 and I knew one of the things I wanted to do was to open a restaurant.”
After quick success in Palo Alto, there was talk of opening a second location. “We had a friend with a nice building in Hayes Valley, a gentrifying neighborhood in the Bay Area,” tells Freeman. “We opened a year-and-a-half later and Patxi’s had two units until late 2009, when we opened the third. At that point, I rewrote the business plan and thought: we can really make something of this.”
Upping the ante in premium pizza
Now, 10 years and 14 locations later, that’s exactly what Freeman and Azpiroz have done. “With 14 locations and $30 million in sales in 2014, next year we’ll be at 17 or 18 locations with plans to reach more than 60 over the next five years,” reveals Freeman.
The largest cluster of nine Patxi’s is centered in the Bay Area, but the company also has three Denver-based restaurants, one in Seattle and one in Santa Barbara; all of which are company-owned.
“This is a decision we’ve made for now not to franchise,” explains Freeman. “We felt in order to execute the concept; we needed to be the ones doing it.”
Patxi’s employs more than 750 people across all locations and Freeman says the company is quickly adding more to the lineup to make room for growth. “We have recently added a director of human resources, a chief technology officer and a chief concept officer,” he details.
People are key when each 3,000- to 4,0000-square-foot Patxi’s includes: dine-in seating, takeout and delivery for lunch and dinner, a full bar and a plethora of menu choices. In fact, there are so many choices that Stanford mathematicians recently calculated the number of Patxi’s pizza combinations – a whopping 9 million accounting for the two Chicago-style crusts (stuffed and pan), thin crust, whole wheat, gluten-free, vegan and not to mention 36 ingredients.
“From all-natural meats to fresh vegetables, various crusts, sizes, extra this and extra that – the choices are boundless,” measures Freeman.
Making way for unprecedented growth
While Patxi’s plans to host 60 locations by 2019 sounds ambitious, the company is making serious changes to advance business all while focusing on two principles Freeman says are critical to success.
“The two business practices that are vital to Patxi’s continued success are always focusing on better before cheaper and emphasizing revenue before costs,” he measures. “We’re also constantly trying to improve our guest experience and our product offering.”
From rolling out a new menu in Seattle to moving to electric Italian-made ovens that can bake at 900 degrees, Patxi’s is positioning itself for growth. “With these ovens we can control the temperature on the bottom and top and they hold the heat, so we’ve effectively reduced cooking time and increased quality,” explains Freeman.
But even before the oven, high-quality ingredients come first, according to Freeman. “We started with a great recipe, but we’ve been evaluating ingredients and sources from day one,” he assures. “We’re never satisfied.”
While Patxi’s take on gourmet pizza is unique, the market shift from cheap eats to artisanal influence has certainly helped propel the company’s fast-growing model. In fact, Forbes named taking pizza from fast food to artisanal as one of the hottest food trends for 2014.
Food trends aside, Freeman notes success also comes back to Patxi’s community-centered model. Honored as one of the Most-Admired CEO’s in the Bay Area by the San Francisco Business Times, Freeman explains the company’s 52 Weeks of Giving Program.
“Patxi’s hosts an event every week at every location focusing on children’s education and well-being,” he shares. “We donate 10 percent of the day’s revenue to local non-profits. To-date we have contributed over $600,000 to our communities and I know this program will continue to grow as we do.”
Patxi’s Pizza is more than a gourmet deep-dish pie; it’s a place to enjoy hospitality and the warmth of a community-based business that’s growing on a national scale.