Texas Pair Plunge Spoon Into Paciugo's Franchise

Partners excited to be part of gelato revolution

(Monday, December 01, 2008) - Many Indian Americans in the food business are bringing foreign flavors to the United States. Vinay Parikh and Gautum Moorjani are no different – except they are bringing a taste of Italy, not their native India.

Parikh and Moorjani are franchisees of Paciugo, a Dallas-based chain that sells gelato. Gelato is authentic Italian ice cream that is richer in taste and has a smoother texture than conventional ice cream.

Parikh and Moorjani partnered in opening a Paciugo franchise location in Allen, Texas in August. Both are first time franchisees and technology veterans who migrated to Paciugo saying they were excited by a concept that caters to excited customers who are satisfied with their purchase. They also profess to being excited about bringing a food such as gelato to the United States, where it is a relatively new concept.

"The product pretty much sells itself – especially the flavor of the product and how fresh the ingredients are," said Parikh. "As soon as the customer tries the gelato out they become very loyal customers."

"Here is something unique that stands for itself – that speaks for itself," added Moorjani. "It builds loyal customers. There is nothing comparable."



FAST FACTS

Paciugo was started in Dallas in 2000 by Cristiana Ginatta, her husband Ugo, and her son Vincenzo. The company started franchising in 2004.

Gelato is authentic Italian ice cream that has a smoother texture than conventional ice cream. Paciugo's has created 200 flavors of gelato in four base formats: milk-based, water-based, soy-based and no sugar added.

Franchises typically serve 30 to 38 flavors of gelato daily. Other food products include frappes and smoothies, sundaes and coffee.
Paciugo was started in Dallas in 2000 by Cristiana Ginatta, her husband Ugo, and her son Vincenzo. The family left Torino, Italy, and brought with them four-generations of experience at an Italian gelateria. The family has created more than 200 gelato recipes and increased the chain from that first Dallas store to approximately 40 stores, with about half of those in Texas and others in Arizona, California, Colorado, Florida, Illinois, Kansas, Missouri, Montana and Wisconsin. Paciugo also has several stores in Mexico. More locations are on tap to expand the chain to Georgia, Michigan and North Carolina.

Paciugo's first began franchising in 2004. According to the company, the chain will add about 25 stores next year and the same number in 2010.

Paciugo freshly prepares its gelato each morning before opening at each location, serving 30 to 38 flavors daily. Based upon fourth-generation Italian recipes, Paciugo has faithfully and authentically created over 200 flavors of gelato. Paciugo makes gelato in four base formats including: milk-based (only milk, no cream, no butter, nor margarine); water-based (fat free and dairy free); soy-based; and no sugar added, made with Splenda.

The gelato is made with ingredients such as nuts, nougat and candied fruit, which are imported from Italy. There are no preservatives in Paciugo gelato. Since Paciugo recipes call for no cream or butter, the fat content is 3.5 percent (a little higher for flavors that contain cocoa and nuts), considerably less than ice cream. The milk-based gelato is 50-70 percent lower in fat than premium ice creams, while the fruit-based product is fat free.

Paciugo uses three sizes of custom take-home containers called Festa Packs that allows the gelato to be transported intact for up to 45 minutes after leaving the retail location, according to the company.

In addition to gelato, other Paciugo food products include frappes and smoothies, Affogato al caffè (espresso poured over gelato) or al cioccolato (hot chocolate poured over gelato), Frizzante (gelato blended with sparkling San Pellegrino sodas and water), Coppa sundaes and coffee drinks, including Cappuccino con gelato (cappuccino flavored with gelato).

Parikh and Moorjani were fans of Paciugo gelato before they opened a franchise and say a love of the product was a key factor in choosing to sign on with the franchise. However, a visit to Paciugo's corporate headquarters also sold the pair.

"They were different in good ways from other franchises," Moorjani said. "They really focus on presentation, on the product – to make sure the customers like the product."



Paciugo gelato is made with a variety of imported ingredients such as nuts, nougat and candied fruit. The fat content is typically less than ice cream. Photo courtesy of Paciugo

The pair was also very excited to be able to get in on the ground floor at new and growing chain. They also say they were very impressed with Paciugo's overall attitude about helping franchisees succeed. "They still run every location as a company store," said Moorjani. "They want to make sure every store is successful."

Parikh and Moorjani both attended the University of Texas at Austin and met through connections at the school.

Parikh came to the United States in 1981 as a child. His father ran a convenience store and Parikh said he learned the retail business through him. In 1996, he graduated from the University of Texas with a bachelor's degree in computer science and moved to Dallas. He took a job working for Capital One developing software.

Moorjani also came to the United States at a young age in 1982. His father opened a retail store in Laredo, Texas. He said that his entire family pitched in to help run the store. He graduated from the University of Texas in 1992 with a bachelor's degree in engineering and business.

Two years later he graduated from St. Edwards University in Austin with a master's degree in business administration. He worked for number of companies developing software such as Argo Data Resource Corp. and Markit Group Ltd. developing software.

According to Parikh, they both decided to consider additional business options and began looking into franchising. "Over the past couple of years, we have been looking into doing something different," he said.

"Whatever it was, it was going to be more of a long-term strategy," said Moorjani. "Things weren't going to happen very fast. We were going to build something that was going to be long term."

Neither Parikh nor Moorjani wanted to just up and leave their professional careers, their plan was to try franchising and see how it went.

About four months into their franchise career, they are still going strong and positive about the move, though they admit that running a franchise takes a lot of time. However, they both feel it is crucial to have their hands-on operations. "It is absolutely a necessity that you get involved and stay involved in what is necessary," said Moorjani.

To handle the day-to-day business of running a Paciugo's store, Parikh and Moorjani hired a manager with experience in the restaurant business, a crucial move they say because it brought in someone who understood the food business and understood how to run a restaurant and franchise location.

Though their early reaction to the gelato business is very positive, Parikh and Moorjani say the plan is to focus on the one Paciugo location for now and see how business is going next year to consider other locations.

Vincent Ginatta, Paciugo's founding partner and vice president of franchise development, said that Parikh and Moorjani have measured up as just the kind of franchisees the chain is looking for, particularly their hands-on approach to running their franchise.

"They have their fingers on the pulse, so to speak, and that is what is important," said Ginatta. "An absentee owner seldom works."

From the corporate perspective, Ginatta said what Paciugo tries to focus on is doing the work behind the scenes and removing as many critical processes from the franchisees hands. "What we ask the franchisees to focus on is the front of the house," he added.

He believes this approach has attracted franchisees to the chain, but the product makes the sell easy, more than anything else.

"Gelato is new and not many people are familiar with it, but the category of frozen desserts is very well established," he said. "They compare us to what is out there now and we compare very favorably."

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