Pizza and Pesos — What's the Big Deal?

My officemate Tony Poshek recently pointed me in the direction of this story about Pizza Patron, the now (in)famous fast food chain which has made quite a stir by accepting Mexican Pesos in addition to US Dollars. According to ABC News, Pizza Patron "does have one rather unique quality. Discreetly placed on the counter is a small sign that states Pizza Patron now accepts pesos, the Mexican currency, along with U.S. dollars. Nearly all of the restaurant's customers -- no matter their heritage -- still pay in good old U.S. dollars, but the fast food chain says that at least 5 percent of their patrons exchange pesos for their pizzas."

Given the recent decline in the dollar of late relative to the Euro, there are multiple reasons why it makes sense to take the Pesos over the US Dollar. In addition to serving the needs of a specific demographic that might have loose Mexican change in their pocket, accepting -- and holding -- the Pesos is also a natural hedge against a continued decline in the US dollar. Many multinationals do not specifically hedge regional currency exposure, in fact. Rather, they simply buy and sell in local currencies, which serves a similar goal (albeit without paying trading and banking fees). On a micro-scale, Pizza Patron is doing the same thing, especially if they're buying some of their ingredients South of the border. Make mine a La Mexicana and toss on the Jalepenos!

Jason Busch

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