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Ones to Watch | By Lynne Miller

Paciugo

Consumers don’t have to go far to scoop up a sweet, cold treat. Ice cream, frozen yogurt, Italian ice, and gelato establishments are plentiful.

In fact, their abundance could chill a foodservice operator with an itch to grow his frozen dessert concept. Ugo and Cristiana Ginatta, the founders of Paciugo, acknowledge there’s a lot of competition out there. Yet the Italian-born entrepreneurs believe their signature gelato can stand up to rivals. Since it was founded in 2000, the company has grown from one store to a chain of 24, with dozens more on the way. Franchisees have signed agreements to open 60 new stores, with 45 scheduled to open by 2009.

“We don’t see any dangerous competition,” Ugo Ginatta says. “We perceive our niche to be protected by high entry barriers. You really need to know what you’re doing and where to source the ingredients to be successful and offer a good product.”

The Ginattas learned all about making gelato in Italy, where ice cream parlors known as gelaterias are common. Cristiana, whose grandfather made gelato, worked as an apprentice at a gelateria in Torino, in northwestern Italy. The couple wanted to start their own business, but they were put off by Italy’s unfriendly business climate. The U.S. by comparison looked like a “paradise” for entrepreneurs, Ugo says. For a home base, they chose Dallas. They had heard it was a good city for testing new food concepts and liked its location and proximity to the Port of Houston.

“We still import specialty ingredients,” Ugo says. “For us to be near a top port is absolutely indispensable.”

Ugo and Cristiana, and Ugo’s son, Vincent, opened their first store in 2000. To gain exposure and introduce the locals to Italian ice cream, the Ginattas donated gelato to community functions. It didn’t take long for people to warm up to the frozen concoction. By the end of 2001, the couple had opened two more stores in the city. The Ginattas expanded the concept to four other states as well as Mexico, and, along the way, discovered they preferred franchising to running their own stores.

“It’s easier to motivate a franchisee than a store manager,” Cristiana says, adding some of their franchisees are former employees and customers. “Our franchisees love our product. You don’t have that kind of commitment from a store manager.”

Decorated in soothing shades of blue and brown, each gelato parlor seats about 20 people. One wall is decorated with photographs of Italian scenery. Comfortable dark brown leather couches encourage customers to relax and stay a while. People can choose from up to 40 flavors of gelato, including whole milk-based gelato, water-based, fat-free sorbetto, a soy-based gelato and a no-sugar-added version.

Chocolate gelato and a sorbet called Frutti di Bosco, featuring a mix of berries, are top sellers. Most stores also offer tartufi—gelato cakes—along with coffee, specialty drinks, and bottled beverages.

As the company’s gelato mastro, Cristiana has developed more than 200 recipes. She tries to keep the menu interesting by coming up with offbeat combinations that change with the seasons. Last year, she introduced banana beet, banana carrot, mango cucumber, and strawberry celery sorbets.

“We’re looking to make recipes that are unique with ingredients that are good for you,” she says.

Last year, the Ginattas invested $1.5 million to make the Dallas headquarters state-of-the-art. Inside the 17,000-square-foot facility, ingredients are prepared and shipped to the stores, where employees make small batches of gelato fresh each day. A training center for franchisees includes a production area that’s equipped with a gelato machine, display case to serve the gelato, espresso machines, and blenders for making frozen drinks.

Paciugo’s one remaining company-owned store is also in Dallas, in an upscale shopping center next to a movie theater.

Paciugo
President: Ugo Ginatta
HQ: Dallas
Year Started: 2000
Annual Sales: $5.5 million
Total Units: 24
Franchise Units: 23

“We use this store for testing of new products because the clientele is well traveled and has high expectations of quality, freshness, and authenticity,” Cristiana says. “We know that if something is successful at Highland Park Village, all our customers will like it.”

People are paying more attention to what they eat, Cristiana says. “This is a good time [to expand] because people are discovering food and getting more passionate about it. People are interested in what they’re eating, where it comes from, and where it’s made.”

Made with whole milk, instead of cream, gelato has fewer calories per serving than ice cream, making it a healthier dessert choice, she says.

The cost to open a franchise ranges from $180,000 to $360,000, depending on the location, type, and size of the store. Expected annual sales at an individual store can exceed $500,000 depending on the location, Ugo says.