Vicente Gregorio knew what customers wanted in a restaurant, as he dealt with them closely while working as a crew member that washed dishes and waited on Shakey’s Pizza patrons in the mid-1980s.
The experience became a solid foundation for Gregorio in rebuilding the Shakey’s Pizza chain in the Philippines over the past decade into what is now a reputable casual dining restaurant that has surpassed its US counterpart.
International Family Food Services Inc., the Philippine company led by Gregorio as executive vice president and chief executive, is the largest operator of Shakey’s Pizza brand in the world, with 153 stores in the country, topping the 60 stores in the US, where the brand originated. It was not like this a decade ago.
Gregorio, who graduated from Don Bosco Mandaluyong High School in 1981, worked at Shakey’s Pizza to support his college education, starting from a dishwasher.
“I grew up from the ranks. I started as a crew,” Gregorio says in a news briefing, as Shakey’s Pizza marks its 40th year in the Philippines in February.
Gregorio remembers working at Shakey’s first Philippine branch in Makati City near Landmark in 1983. “I worked in that store way back,” he says, while pointing to a digital image of a concrete store that was very different from what a Shakey’s store looks today—classy but modern in style, with glass wall allowing daylight in and ample interior space for customers’ convenience.
Gregorio says he has worked his way through the ranks, becoming a store manager at Shakey’s Katipunan branch in Quezon City in 1985. The Katipunan branch is now considered a legacy store for its high volume of customers.
“That store was very special to me because that store was the one assigned to me when I became a manager,” he says.
As a branch manager, Gregorio earned the attention and trust of IFFI’s shareholders led by former Philippine Basketball Association commissioner Leopoldo Prieto Sr. and was appointed operations manager. He left the company in 1993 to work in other establishments in the food and restaurant business, only to return a decade later.
When he became chief executive of IFFI in 2003, Gregorio started reengineering the company. “I left and came back in 2003. I helped them run Shakey’s and orchestrate and design a strategy. The general direction is wholesome, family and fun,” he says.
Shakey’s is an American brand that became big in the Philippines. It was named after its founder, Sherwood “Shakey” Johnson who opened the first Shakey’s outlet in Sacramento, California in April 1954. It served pizza and beer.
San Miguel Corp. acquired Shakey’s Philippine franchise in 1975 as a marketing strategy for its draft beer. The first Shakey’s restaurant in the Philippines opened at Makati Avenue in Makati City and featured live bands.
“San Miguel owned this in the beginning. The brand was bought by San Miguel to promote their draft beer,” says Gregorio.
San Miguel decided to divest from the restaurant business to focus on its core competency and sold the Shakey’s brand in the Philippines to the Prieto family in 1987, but the next decade saw the rise of other fastfood giants in the Philippines.
Shakey’s had to reinvent itself to find its own niche as a casual dining restaurant that serves pizza, chicken, pasta, mojos, salad, fruit shakes and draft beer. It retained its strategy of having customers waited on by crew and rebuilt its stores to become bigger with ample parking space to lure its desired market—the middle-class who are willing to pay a little higher than in fastfood joints. Gregorio describes this as “best value for money.”
Shakey’s general manager Jorge Concepcion, in the same news briefing, says this strategy has helped the Philippines eclipse the US as the biggest operator of Shakey’s. “We are the biggest with 153 stores. The US is the second biggest with 60, mostly in the West Coast and Southern California. The entire Philippines has 153, the entire US has less than half,” says Concepcion.
“The secret of Shakey’s is not just to meet the expectations of the guest, but to exceed them. We have been consistent in the past 40 years, especially in the last 10 or 11 years. We continue to evolve with the change in the market. One of the keys to the success of Shakeys in the past 10 or 11 years is we recognize the original Shakey’s model, which started in 1975, that’s why we are 40 years this year. Last year was the 60th year of Shakey’s in existence. It started in the US in 1954. This year, it is 40 years in the Philippines. One thing we recognize is we continue to evolve with the market,” says Concepcion.
Concepcion says the food and the store are what keep customers coming back to Shakey’s.
Gregorio explains why Shakey’s does not tap celebrity endorsers. “Here, the food is the star,” he says. “We want to be known for great food. At the moment, we want to focus on the Shakey’s brand as the main star. We have been doing that for the last 40 years,” he says.
“More than bill boards, TV advertising, it is the presence of our stores that generates the best and highest awareness for us,” he says. “For us, we try to find venues where our guests will have easier and more convenient time to share the Shakey’s experience. Being accessible to our guests is primary. When we look for sites, the first thing we do is to make sure we have enough parking. Everybody goes to the mall. We have mall stores, and mall stores have a value for us, but moving forward, there are things that separate us.”
Concepcion says since 2014, Shakey’s has built mostly free-standing stores. “We build from the ground up. It is consistent with the identity of Shakey’s. The idea now is we want to convey the experience of new Shakey’s.”
He says the new stores are being built according to the latest design while old stores are being renovated to conform with the new style. “We recognize that it will take us a few years, to renovate 20 to 30 stores a year, so that in five years time, all the stores will have a similar feel and look like this,” Concepcion says, referring to the new Shakey’s store along Diosdado Macapagal Ave. near City of Dreams Manila in Paranaque City.
The Shakey’s Macapagal branch has a standard floor size of 300 square meters, with a function room and a bar. “We have different models. Some stores have one function room. Some stores have two or three. Some do not have function rooms. We have stores with a fun zone,” says Concepcion.
Gregorio says one common element among the stores is the fun element. “We also try to provide space between tables. All of these contribute to the brand image of wholesome, homey, very casual experience. That’s what we want to achieve,” he says.
Concepcion says while Shakey’s retained the bar that serves beer and wine, “we move away from the beer garden layout.” “It is probably the only pizza place that has a bar,” he says.
Gregorio says the company’s shareholders have agreed to invest for the future of Shakey’s. “We have never gone shy in investing in our stores. The store’s look and feel have a vital role in having perception. Even if the food is good, but the venue or the place is not so good, it kind of diminishes the experience,” he says.
“We are the kind of group that invests heavily in the brand. We invest heavily in our stores. We invest heavily in our people. We try to find new ways to make the store more alluring, a place you want to celebrate with relatives and friends,” he says.
Concepcion says the company invests about P15 million to P30 million to build a new store and about P3 million to P10 million, or an average of P5 million to renovate the existing ones.
IFFI owns most of the 153 Shakey’s stores. “Right now, I think we have 90 company-owned stores and 63 franchise stores. So the ratio is about two to 1. We work with our franchisees,” says Concepcion.
Gregorio says IFFI spends P500 million a year to build better stores and equipment. “We look at the long term, rather than the short term. It [capex] has a big impact on the bottomline because the owners agree on reinvesting their share to continue the success of the brand, with longevity as long-term goal. As part of the management team, that’s make our life easier because the owners are more forward looking.”
Top pizza chain
Gregorio says this is what separates Shakey’s from the fastfood joints. “Our price points are not fastfood prices. So we give our customers an environment similar to the American casual dining chain, but at Shakey’s prices, and that’s where our value proposition really goes up. It has worked very well for us,” says Gregorio.
Gregorio says Shakey’s Pizza has solidified its position at the top of the pizza sector. “In the pizza segement, we would like to believe we are number one now in terms of system revenues, but this has to be validated. We just continue with what we do best. We do not focus much on what others are doing. We focus on how we can become better,” he says.
Concepcion says Shakey’s had a compounded annual growth of about 18 percent over the last 11 years. “This year, we are looking at close to that average,” he says.
Gregorio says in terms of return on investment, “it is safe to say we are one of the best. Probably, the return of investment, as far as franchising is concerned, can be as fast as three years, maybe four or five years,” he says.
Stronger than ever
Gregorio says IFFI is investing P500 million to build 10 new Shakey’s stores and renovate 22 existing outlets in 2015. Concepcion says the brand’s Philippine network will likely reach 200 branches in five years, as the company pursues its growth strategy.
Gregorio says that strategy has guided Shakey’s over the past 40 years. “Not many brands out there can last 40 years, and are still very strong after many years. This year, Shakey’s is stronger than ever. We are excited for the future. We feel that our brand has a lot of legs to stand on. We have been focused on providing our consumers, our target market, with family, fun experience. That was the success formula of Shakey’s,” says Gregorio.