Reference no: EM131378211
Assignment
In 1962 a couple opened up a small one room restaurant in Albuquerque, New Mexico. They called their restaurant El Pinto. Using family recipes, the entrepreneurs Jack and Connie Thomas were one of the first restaurants to market their food as New Mexican. The restaurant became a popular dining spot for locals, and it soon gained a reputation for its flavorful salsa. Jack and Connie built their home next to the restaurant so they could be close to both their family and business. Over the years, the two expanded the restaurant to include a patio and an additional dining room.
Fast forward 50 years, and El Pinto looks very different from its humble origins. Today El Pinto is owned by Jack and Connie's twin sons, Jim and John Thomas, who bought out their parents more than 20 years ago. The two men share the entrepreneurial spirit of their parents. After taking control of the restaurant, they began further expansion. The business now consists of twelve acres of land, a restaurant that can seat more than 1,200 guests, and a 5,000-square-foot manufacturing facility used to develop salsas for commercialization. The restaurant itself consistsof a cantina, five patios, and three dining rooms. Despite this expansion, the traditions of El Pinto remain the same. For instance, the owners continue to use their grandmother's recipes for their menu items.
El Pinto's popularity as a restaurant is not limited to New Mexico. The restaurant has a wall with photos of famous people who have patronized the business, including President Obama, President Bush, Hillary Clinton, Mel Gibson, Bill Cosby, Toby Keith, and Snoop Dog. El Pinto has been voted the Best New Mexican Restaurant in Albuquerque. Under the leadership of Jim and John Thomas, the business has gone from under $1 million from when the twins bought out their parents to $12 million.
Outside the Southwest, consumers are more likely to recognize El Pinto not from the restaurant but from its salsa. During the 1990s El Pinto's loyal customers began requesting products of the company's famous salsa and sauces. Jim and John Thomas saw an opportunity to expand their business even further. At night the two experimented with salsa recipes to find the best ones for bottling. In 2000 the salsa
product line was launched. The chile for the salsa is grown organically on land the brothers' lease in Mexico. Using organically grown chile, the company manufactures the products on the premises in its own facility. The El Pinto product line includes enchilada sauce, green chile sauce, hot salsa, chipotle salsa, and special-edition products such as super-hot Scorpion salsa. Its products can be found nationwide at Walmart, HEB, Albertson's, Kroger, and Costco.
Traditionally, El Pinto salsa products have come in 16-ounce jars. Yet in the past few years, El Pinto has begun to experiment with other sizes. The company conducted market research on whether there would be demand for a 3-ounce cup of salsa. One major issue with salsa is that many salsa companies recommend eating the salsa within a week after opening. Otherwise, the salsa will start to deteriorate. However, 16-ounce jars can be hard to consume in a week. Small sizes, on the other hand, could allow consumers to consume and transport the product more easily. El Pinto feels that consumers could use the smaller sizes for snacks or lunches without feeling pressured to finish off a large container within a week.
El Pinto introduced its 3-ounce salsa in package sizes of four and 48 with limited distribution to test the market. Future plans may be to introduce 2- and 3-ounce packages of salsa to grocery stores across the nation in addition to their 16-ounce jars. Although other companies offer similar package sizes of salsa, including Chi-Chi's, the smaller sized package is a relatively new concept that may be appealing to those who desire smaller portions.
By operating both in the service (restaurant) and manufacturing (salsa production) industries, the entrepreneurs running El Pinto have taken advantage of multiple opportunities for expansion and growth. Their ability to innovate with new product ideas, restaurant improvements, and different package sizes has made their small business into one of the highest grossing restaurants within New Mexico.39
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What are the management challenges El Pinto faces in the future?