When the chips are down

Pedro’s owner goes retail in a continuing effort to boost the bottom line.

Around 10 a.m. on a weekday at Pedro’s Mexican Restaurante in east Madison, long-time cooks Roberto (12 years) and Christian (10 years) prepare food for the anticipated lunch and dinner crowds. As freshly cut vegetables steam on an industrial stove, corn tortillas are being cut and fried to perfection around the corner.

“These two men are very proud of the food they make,” notes James Martine, COO, a possible successor to the family business.

His dad, Pedro’s owner Jim Martine, bought the business from his father and a handful of investors years ago, and over the past four decades Pedro’s, like so many businesses, has had more than its share of good and bad years, COVID notwithstanding.

The business opened in 1981 when there were few Mexican restaurants around, Martine explains. The ownership group was looking for a family-oriented, affordable restaurant with a casual theme, and Mexican fare with margaritas was the perfect fit.

But challenges have dogged the business — and the industry — for years, mostly due to events beyond their control.

Outside, the Pedro’s sign on East Washington Avenue lets people know that the restaurant is hiring, but the trail of hospitality workers, among the most devastated by the relentless pandemic, has slowed to a trickle at best.

The shortage has left Martine with no alternative but to close the restaurant on Mondays and shorten hours elsewhere to provide employees some relief.

“That’s one of the toughest decisions I’ve had to make lately,” he says. “We started that back in February before we could go full capacity, which didn’t come back until May. It’s frustrating.”

Happy hour blues

Years ago, Pedro’s was a popular restaurant and place to meet after work for a cocktail and perhaps a bite to eat.

Before the internet, social media, and cellphones, the restaurant’s fans tuned in to local radio stations hoping their first name would be drawn in a promotion that could make them eligible for a free lunch or dinner. It was a huge success, Martine recalls. “We can’t do that anymore.”

Through the years the business thrived and expanded. Martine added a location in Brookfield and franchises in the Wisconsin Dells and Michigan.

“With all that going on, between 2005 and 2007 the first big real estate hits came,” he says. Then a countywide — and later statewide — smoking ban passed in 2010.

“That’s when we lost our bar business,” he recounts. “Everything was changing and evolving, and I couldn’t continue to maintain all the places. It became very, very difficult.”

Over time the franchises closed, and Martine sold the west side location in 2012.

“We always had a very vibrant happy hour,” Martine says, “but as time went along, happy hours ran their course too. People became much more responsible with their drinking and driving, and that was a good thing.”

It forced Pedro’s to change as well.

“I had to make up the bar revenue somewhere,” he says, “and that’s when we got into catering.”

Up until March 2020, Pedro’s catering business represented 30% and sometimes 50% of the company’s revenue, with nearly all accounts being corporate. EVCO Plastics was Martine’s largest catering customer. “We were there all the time,” he laughs, “sometimes doing nine caters a day between its three manufacturing facilities.”

Then COVID-19 brought catering to a screeching halt, at least temporarily.

Pedro’s east, once a bustling, 12,000-square-foot restaurant with multiple rooms, has been scaled down dramatically for business survival. Booths have been moved into a quaint, 4,000-square-foot cocktail bar area where capacity is currently limited to 135 people.

With over 16,200 check-ins on Facebook, Pedro’s continues to promote food and drink specials, sports nights, and late-night happy hours on weekends, but in its heyday, the two Madison locations employed about 220 people.

Now there are roughly 25.

Retail optimism

In 2020, Pedro’s started selling its signature tortilla chips at retail outlets. The 15-ounce bags — those made daily by Roberto and Christian — are sold at various locations around town including Metcalfe’s Market, Jenifer Street Market, and several Woodman’s locations around the state. A second flavor hits store shelves soon.

Why 15-ounce bags? “Actually, we started with a one-pound bag,” Martine smiles, “but our chips are bigger than most, and we couldn’t get 16 ounces of chips to fit without some breakage.”

Each week, staff fills and packages dozens of cases of chips (12 bags per case) for retail distribution. Another boost came in late March when the Wisconsin state legislature approved a cocktails-to-go law.

“That was a game-changer for us,” Martine says. The very day it was approved, Pedro’s began selling 1.75-liter sealed bottles of the company’s original, ready-to-drink margaritas out of its restaurant lobby.

The alcoholic beverage is on track to hit store shelves soon as well, with the support of Doundrins Distilling in Cottage Grove, Arty’s Legendary Cocktails in Clintonville, and Middleton-based Frank Beverage Group, all of which help produce and distribute the product.

Confident in his smaller dining establishment, Martine now needs the retail products and catering business to succeed as part of his new business plan, and he’s fully aware that profitability will take time.

The raging Delta variant continues raising havoc, causing businesses, schools, and the public to rethink group events, and staffing shortages makes things even worse. “Even if we got back to pre-pandemic levels, we’d struggle to accommodate groups right now because we just don’t have the people. Nobody does,” Martine says, “but I’m an optimist!”

He and his wife co-own the building, and he doesn’t entirely rule out the idea of renting unused space to another retail-type business in the future.

“We’ve had to make huge changes,” he says. “I mean, huge changes.”

But will they be enough to survive? The proof will be in the pico de gallo.

In many respects, Martine says he sometimes feels like he’s starting all over again, but this time he’s got James. “I couldn’t have done this without my son. He’s the nuts and bolts of the business.”

James, 27, has worked at Pedro’s as a bartender since age 18 and oversees product development — from being an ideas guy to chip production and distribution to loading a van and driving chips to customers as far away as Green Bay or Appleton. James also will oversee the restaurant’s margarita business while his dad tends to the restaurant and catering.

After decades of incredible highs and crushing lows, what keeps Martine from giving up? “My children!” he exclaims. “Giving up is and never was an option. I can’t just throw in the towel after all these years.”

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