Juan José Gutiérrez, a global businessman

Estrategia y Negocios, 2006


Juan José Gutiérrez, a global businessman

Business and Strategy, 2006

Cover page

Juan José Gutiérrez

Conquest of global markets

In 25 years, Juan José Gutiérrez turned Pollo Campero, a fledgling fast-food company with operations in Guatemala and El Salvador, into the strongest restaurant chain in Central America. After three years of successful presence in the United States, Pollo Campero is ready to start operations in Indonesia, China and Spain. Gutiérrez understood the new times and joined globalization, so much so that these days his concern is to translate his brand for Chinese consumers.

Special guest

This year we have started with a guest of honor on our pages, such as our editorial line, by presenting on the cover the most prominent regional businessmen, who tell us their history, that of their companies and their keys to reach the cusp.

He is the developer of one of the “luxury” firms in Central America: Juan José Gutiérrez, president of Pollo Campero, took on a new-born family business while very young and today it can be said with certainty that he has conquered the world.

Perhaps the great secret of the famous chicken of Guatemalan origin has been, at least initially, to reach the palate of millions of Central Americans and later Latin Americans who have emigrated to the United States and long for the taste of their food. As a result, the chain managed to enter the US market and grow surprisingly, positioning itself as an important competitor of the well-known recipe of “KFC Colonel Sanders”. Now, Campero is preparing to take flight to other continents, such as Asia and Europe, where he hopes to have the same success that he has achieved in America.

From Juan José Gutiérrez we can learn important lessons, such as his marked search for growth and improvement, as well as his constant and tenacious work, but perhaps the best lesson comes from his demonstration that a Central American company can go very far and place itself at the same level as large multinational corporations.

The recognition that Campero enjoys among businessmen and executives is reaffirmed by the special mention that we include in this edition with the ten most admired business groups in the isthmus, part of the result of the annual Estrategia y Negocios forecasting school, in which Grupo Multi-Inversiones occupied a very favorable position.

The subject of human resources will occupy a permanent place on our agenda, since from now on we will present the new section Colócate por E&N, for whose production we have the support of specialists from Tecoloco.com and in which we will address various aspects related to employment and the human capital of companies, not only from the perspective of the employer, but also of young talents who seek to successfully participate in the changing world of work.

2006 is also a bearer of challenges. The Free Trade Agreement among the United States, Central America and the Dominican Republic is already a reality, and to keep you up to date with what is happening in this field, we will have a permanent section throughout the year, in which we will fundamentally address the new opportunities that Central American and Dominican companies are presented with to access the US market as well as the necessary adjustments for those who sell domestically and will face greater competition.

Patricia White

Executive editor

Unlimited flight

JUAN JOSÉ GUTIÉRREZ WAS JUST 23 YEARS OLD WHEN HE BECAME PRESIDENT OF CAMPERO – THE RESTAURANT COMPANY FOUNDED BY HIS GRANDFATHER, JUAN BAUTISTA GUTIÉRREZ, AND HIS FATHER, DIONISIO GUTIÉRREZ.

TODAY, ABOUT TO CELEBRATE  25 YEARS AT THE HEAD OF THE CHAIN’S PRESIDENCY, JUAN JOSÉ LEADS ONE OF THE MOST SUCCESSFUL CENTRAL AMERICAN FIRMS, RECOGNIZED FOR ITS MASSIVE INCURSION IN THE UNITED STATES, WHICH HE HOPES TO COMPLETE AND PUT IN OPERATION THIS YEAR, IN ADDITION TO THE INTRODUCTION OF THE FAMOUS GUATEMALAN CHICKEN IN INDONESIA, SPAIN AND CHINA.

Velia Jaramillo

Just a few years earlier, in his teens, Juan José had suffered the death of his father in a plane accident, which led him to become involved very early in the family business.

Seeker of challenges, the newly appointed president of Campero went straight “to the streets”, to share the experience with employees and customers. He ducked into the kitchen and behind the cash register and began laying the foundation for the growth of the family business. First, he consolidated it as the leading restaurant chain in Central America, then he worked his way through the world of international business.

Campero today has 7,000 employees and more than 217 restaurants in Central America, Mexico and the United States. By 2008, Gutiérrez estimates that the company’s operations outside Central America will be as important as those in the region and will take it to destinations as remote as the Middle East.

With annual sales of US $ 300 million, of which US $55 million are generated in the United States, this year the chain will develop an ambitious investment plan of more than US $ 65 million in all the countries in which it operates.

How did a company from a small Central American country become a successful global franchise? Its leader tells the story.

The lessons of internationalization

What is the balance three years after launching Campero in the US market and having decided to go international?

Campero went international in 1972, when we only had seven restaurants in Guatemala and we arrived in El Salvador. At the end of the 90s we were already a totally regional company, with operations in Honduras, Nicaragua, Costa Rica and Panama. But it was in 2002 when the first restaurant in the United States opened and Campero became known internationally. Three years later we had 25 restaurants in that country, in large, important cities, such as Los Angeles, Chicago, Houston, Dallas, New York and Washington.

2006 will be a year of consolidation. We are going to open 25 restaurants in the United States, basically in the cities where we are already operating, where the immigrant ingredient stands out.

In the United States, you reported sales of US $30 million in 2004. How did it go in 2005? Are your American restaurants more profitable than Central American restaurants?

In 2005 we sold about US $ 55 million in the United States. We decided to grow in the US market through the franchise program, and there are 25 restaurants that have very good sales volumes, above industry levels.

What percentage of your sales does the United States represent and how do you expect that market to evolve?

The United States represents about 18% of the sales of the entire Campero system. We believe that by 2006 this market will represent no less than 25% to 30% of our sales. In the next three to four years, we estimate that the United States could become, in terms of sales volume, a market as or more important than the Central American region.

What did the corporation gain by deciding to grow through franchises?

Rapid growth in the United States, which requires rapid coverage. If we had entered with our own investment, we would advance at a third of the speed, and we would not be thinking about other continents.

However, the door is always open to go operate our own restaurants in the United States when we believe the time is right.

Are you already moving from the Central American market to consumers in the United States and from other countries?

When we started, 100% of the customers were Guatemalan and Salvadoran, mainly because of the long lines. But when the queues began to drop and word of mouth advertising began to run, we began seeing consumers of other nationalities: Dominicans, Puerto Ricans, Mexicans. In Chicago we have many Mexican and Asian consumers. Today, in 25 restaurants, 40% of consumers are no longer Central American, they are Latino in general, and between 3% to 5% are American, including many African Americans.

After restaurant 150, we think that the share of American consumers will be more significant. The Hispanic market is very large; within it, Mexicans occupy the first place. That is the reason why, in 2006, we are proposing an important development in the southeast of Mexico before the end of this year. We plan to open restaurants in Mexico City, Guadalajara or Monterrey, not through a franchise program, but through a strategic partnership with an operator in Mexico.

Since the end of the 90s, we have invested our own equity in the Mexican southeast. We started going to cities like Tapachula and Tuxtla Gutiérrez, in the state of Chiapas. This year, we will go to Mérida, Villahermosa and Cancun, which is a very international market, very important for brand exposure purposes.

In their first weeks of operations, these restaurants broke sales record. Does this phenomenon hold? How are the big food chains competing now?

Our store in Los Angeles was designed to sell about $850,000 the first year and sold $1 million in the first 47 days; it was a total phenomenon. In all the cities where we have opened restaurants, the common denominator is that we have managed to sell US $1 million in about a month. After that the sales volumes have dropped by 40% to reach a plateau. Each restaurant in the United States processes about 1,200 transactions a day.

What is your cumulative US investment?

We are talking about an investment of US$ 25 million, with 25 restaurants in operation. Together with marketing and advertisement, Campero will have represented an investment of US $35 million. This year comes with an investment of 25 restaurants, with an additional ingredient: until now we had been operating and supervising the United States chain from Guatemala, but we have decided to move our U.S. headquarters and our base of operations to the United States.

How will this step translate into your operations?

It will mean moving part of our team there, spending more time in the United States, and starting the formal hiring of American executives to prepare for the second phase of growth. Over the next three or four years we believe that we will have no less than 350 restaurants open, which requires an organization that is much closer to the operation.

What lessons has the US market taught you?

Many. The labor relationship in the United States is very complex; Our consumers in the United States, whether Guatemalan, Mexican or Salvadoran, are no longer the same as our consumers in Central America. They have different expectations and come for different motivations. You have to communicate much more aggressively than we do here.

In the United States, unlike our countries, price wars are perhaps what drives more consumers from one brand to another. We have tried to stay as far away from this as possible. In this country, our strategy is to move away from chains like McDonald’s, Kentucky Fried Chicken (KFC) and all those that are identified as fast food, and make consumers see us as a fast-casual chain, one tier up, with table service.

Half of our restaurants in the United States already employ table service personnel, and the change is very well received. We did not do it at the beginning because of the cost of labor; we were afraid that this, from the outset, would take us out of the market. Today, we are taking the step, in view of the sales volumes and the profitability of the restaurants.

In the land of the Great Wall

For some competitors and analysts, his plan to go to Asia this year, starting with China, is a reckless move. Some predict that we will be fish out of the water.

Although Campero was born in Guatemala, it is no longer a Guatemalan concept: it is an international restaurant chain. With 25 establishments in the United States, we do not believe that we have conquered the world, but it is already a proven concept. This is what led to requests from Asian and European investors to bring our concept to their countries.

Having developed in the Central American region and the United States, the challenge to continue to reach regions or markets with great potential is open also for Central Americans, not only for North Americans and Europeans.

We will go to Asia to do what others are doing with great success. We have been successful in the markets where we operate today, why shouldn’t we continue to be?

We tested Pollo Campero and Campero products with Chinese consumers in Shanghai in experimental kitchens, and our product, in a blind test with 150 Chinese consumers, resulted in an eight-to-one preference over KFC.

Your territory has been the Latin consumer and now you are determined to conquer a market where the nostalgic factor will not be present. What led you to take the leap from Latin America to Asia?

The Chinese have the chicken consumption habit. There is no other country that has such levels of per capita consumption: from 18 to 20 chickens per person per year, when in our countries, which are also large consumers of poultry, annual per capita consumption does not reach 12.

Also, the Chinese have developed a taste for fried chicken. There are 1,500 KFC restaurants in China, and they are alone there. The Chinese are consuming far more than any other consumer and are adopting the habit of eating out more times than Americans.

The plan for China is a very ambitious plan, where you are talking about opening almost 500 restaurants.

It is so ambitious that market feasibility studies and product testing set us a bit behind.

At this time, before China, we are going to open Indonesia. We are very advanced, the first Pollo Campero is already being built in the most important shopping center in Jakarta, a McDonald’s neighbor that has reported the highest sales in the world. There, the first Campero is built as part of a development plan for 25 restaurants in five years. If everything continues as it is today, we will open in mid-March.

Why Indonesia?

The percentage of the Muslim population in that country is very high at 90%, and they do not consume pork or beef but do consume chicken. The incentive came when we met a group of entrepreneurs who already in the past introduced a fried chicken chain to Indonesia with great success. They became interested in Campero.

What will be your second market outside of America?

Due to all the feasibility studies that we have conducted for China, and in which we have understood a lot about how the rest of the continents operate, we will also open Spain before China, in Madrid, in mid-February. The first Campero restaurant is already being built on Fuencarral street.

Will they go hand in hand with Telepizza or with a franchise?

In this case, we did not do business with Telepizza; our partner is the largest holder of Telepizza franchises and what we are going to try to do is build Campero restaurants with Telepizza wedges, as we do in Guatemala.

When we established the partnership with Telepizza, we agreed that just as we brought that firm to Central America, they would take Campero to Spain. In a short time, we understood that this could not be done, taking Campero to Spain within the Telepizza format would be like placing it in a straightjacket. Campero needs much larger spaces, playgrounds, they are two businesses that require very different infrastructure.

We sold the franchise in Spain to Javier Merino, a prominent, very successful businessman, who has been operating for years in the hospitality industry and also in real estate businesses. We believe that, in three years, no less than 25 restaurants will open throughout Spain.

Will China be the third country you reach outside of America?

China remains our priority. We now have more stakeholders and open negotiations than we had in the United States at the time. We are conducting joint efforts and studies with several of them, but we do not have, by our decision, a closed commitment. By the beginning of February, we will have decided what size of the territory we are going to concede. We are finalizing the strategy, because when we decided to go to China, we thought that we could develop the entire country with a few entrepreneurs. Today we think that a city – Beijing, Guangzhou, Shanghai – should have two to three franchise owners. We have enough interested investors and investment funds. We will open Shanghai in late May or early June.

After that, and before any other region, we will go to the Middle East. We have very advanced negotiations with entrepreneurs based in Kuwait, who are also partners in the New York franchise. They operate a large region of the Middle East with a significant number of restaurants of various brands. The way things are going, I don’t think 2006 will end without us already having a presence in one of those countries, Kuwait or Jordan.

What are your investment projections outside of America for 2006?

Taking into account that two restaurants will open in Jakarta this year, from two to three in Madrid, and no less than two in China, we would close 2006 with an investment in those regions of US $10 million.

Global strategy

How many restaurants operate in the Campero system?

The Campero system has 217 restaurants. If in the United States we have opened 25 in three years, opening that number in the region is no longer so easy, because we are saturated. Every restaurant that we open requires in-depth studies.

What would you highlight of your new 2006 projects?

Globally, the Campero system will invest, between its own restaurants and franchises, US $65 million this year. In the United States we will open 25 restaurants. Outside of America we will open between six and seven. In Central America we will open 25 among Guatemala, El Salvador and the rest of the Central American countries.

In addition, we decided that we will make important investments in existing restaurants to bring direct and immediate benefits to our consumers. We are remodeling the entire chain in Guatemala and El Salvador – which is where we have more stores – with a new image. This year we will remodel 30 restaurants.

In El Salvador, where we have the strongest competitor with KFC that entered the market two years ago, it is where we have opened and remodeled restaurants the fastest. We have the most modern Campero chain and the results are visible: we have had, in restaurants that opened 20 years ago, sales increases of 15% to 25% due to the fact that we provided more comfort for consumers, more services such as wireless Internet, a more modern environment and bigger parks.

What progress do you have in projects to build a plant?

We do ourselves only what no one can do for us. We buy the chicken and we perform final process, like the flavor mix, ourselves, prior to arrival at the restaurants. Everything else we entrust to third parties: the manufacture of bread, desserts, doughnuts, cakes, cabbage salads, the potato that we import frozen and ready. Although we were used to doing everything, now we are giving opportunities to other suppliers to also benefit from the Campero circle.

Will the Campero map change a lot in the short term?

In the next two years, at least, Central America will continue to be the most important region in terms of sales volumes. By 2008 I am sure that Spain will have picked up speed; Indonesia, if the concept is validated and accepted, will have get started too. By that year, development in the United States should have exploded. If everything goes as planned, by 2008 our operations outside of Central America will be more important than what we have done in Central America.

What percentage of your operations are regional?

70% is Central America, the rest, 30%, mainly the United States. This year, in Guatemala we will have 23 million consumers and in El Salvador, 12 million. We closed 2005 in the United States with US $52 million in sales.

Does the chain remain in the range of annual sales of US $300 million or have these grown?

That figure is an estimate of industry insiders based on number of consumers. We have not denied it; the answer is that we are in that range.

Where does your leadership come from?

There is no chain, local nor international, that has the number of stores that Campero has installed in Central America. We perform studies every year to know our share: out of the entire universe of consumers, Campero serves 30% or 35%. One of the great assets of our company is that our customer profile is very generic. We serve consumers A to B. Campero’s consumer base is almost untouchable, nobody serves it.

Has your market share gone up?

It grows from two to three points each year in the region.

What results has your partnership with Telepizza had?

Telepizza in Guatemala and El Salvador runs in Campero’s bloodstream. We sell 80% Telepizza at home, and 20% in restaurants. Four years after the partnership, we are the second player in that market and we are growing. Today, each Campero store we open includes Telepizza.

Pizza represents 20% of our sales in restaurants, and 15% of that sale is made at night.

In Guatemala, we have 95 restaurants with Telepizza. In El Salvador there are 20 stores with Telepizza.

The Campero Team

Is there permanence in the Campero team? What is your turnaround level?

Our team is made up of 7,000 people, with 800 in the United States. In Central American operations there is little turnover. The salaries, benefits and collateral benefits that we offer our people are unparalleled.

In this sector, the average entry-level salary is US $ 259 per month. Campero’s salaries range between US $454 and US $500.

We pay 16 salaries a year, we offer double Christmas bonuses, insurance, we have a loan savings account that serves employees, free-of-charge medical clinic and a dental clinic where we charge 25% of the cost.

In Guatemala, for example, we have 3,500 employees. 50% of them have worked for the company over 5 years, and 200 have been with us more than 25 years. Campero will turn 35 and about 35 employees will complete the same number of years with the company; now they are restaurant managers, instructors …

How do you develop your training programs?

Many of our employees have seen their opportunities limited to a lifetime of waitressing or of work as guards, because their schooling had been, at most, sixth grade of primary school. Since they did not go to school, they did not feel the need to send their children to school. Ten years ago, we ran a survey at Campero. We found that 95% of the employees’ children did not go to school.

Since Campero is open 365 days a year, sending our people to school was not an option. So, we created the Campero Institute that takes the classroom to our restaurants. For six years, 1,200 of our workers have graduated from high school annually. A significant number of these high school graduates chose to continue studying at university; we cover half of the scholarship. There are some who have already graduated from university, who started in Campero as security guards or cooks. Today one is in our team of lawyers, and another is in the team of auditors. This has resulted in great loyalty and a sense of belonging on the part of the Campero people, as well as in recognition from the rest of Guatemala’s working population. We receive an average of 1,500 job applications per month. The people who stop working for Campero leave because they were unable to live by our work standards.

Other employees have obtained a bachelor’s degree. But, more importantly even, they learned the importance of their children studying: today, 95% of the Campero employee children go to school.

In addition, we have a restaurant management diploma course that is taught to restaurant managers. It is not mandatory, while the permanent training program on handling and interpretation of manuals and procedures, of equipment use techniques and product processes is compulsory. Employees who train and achieve high levels of performance are rewarded with promotions.

Personally, how is your relationship with your employees?

Very direct, very trustworthy. I just had an anniversary as the leader of the company and back I started my office was closed for six months while I was on field. Many of the employees who trained me back when I started are still around; visiting the restaurants in inner cities often; I have a very close relationship with most of them.

The corporation

How is a company like Campero managed?

At Campero everything happens very quickly. Here I learned to execute. It is a very operational company, which is run on the street, in restaurants, very close to employees and consumers.

In recent years, 30% of my time is spent outside the country.

The cost of that change has been high for the family, but business-wise, it has been the best lesson of my life.

How has the Campero Corporation grown to accompany such strong growth?

At Campero, 15 years ago, the Corporation was made up of an operations manager and myself. The rest were middle and technical managers.

Now, I am the president of the company, I have four vice presidents, one executive vice president manages Latin America, another manages the United States, the third is dedicated to Europe and Asia. We have an office in Madrid and one in Shanghai with teams of trained professionals that work for us in the region. The fourth vice president is in charge of finance and legal matters.

Reporting to each executive vice presidency are directors and managers for each region, from 15 to 18 high-level executives, marketing, training, and systematization managers. Campero’s executive team is made up of more than 400 people.

How much does Campero represent in Multi-Inversiones operations?
25%. When I assumed the presidency, Campero’s participation was much less important, 6%. At that time, Campero had 180 employees.


Estratégia y Negocios