Franchise News

The Story of Straw Hat Pizza: Franchise Review and Fees

Straw Hat Pizza

Hi! I’m Scott Mason, the Head of Operations for the Straw Hat Pizza chain.  I didn’t begin the enterprise but I grew up going to Straw Hat Pizza and I have all the time beloved our pizza.  My grandfather used to take me there as a kid again in the 1970s. I’ve been with Straw Hat Pizza for almost 11 years and in my current position for just a little over two years.  For those not acquainted with Straw Hat Pizza, it’s a regional chain with our headquarters in San Ramon, CA. We have now places in California and Nevada. We offer our “Real California Pizza” and are what most people think of once they picture a standard pizzeria.  Most of our places are round 3000 sq ft or somewhat bigger and supply numerous forms of leisure along with the good meals. 

The Straw Hat Pizza Brand has all the time offered the communities we serve an amazing place to take the family to get nice food in a cushty setting.  The primary differentiator between us and our competition is the entertainment issue. Because the chain was based, most of the places have offered stay entertainment.  In the 1960’s it was banjo bands. At the moment it’s UFC fights, sporting occasions, and karaoke. These appear very totally different, however on the core it offers families the entertainment they’re in search of.  

One other distinctive function concerning the chain is we’ve all franchised places.  Personally this makes my position quite simple as I’m targeted on franchise success.  When you franchise places and need to have a wholesome model this is imperative. We make selections that may positively influence the underside line of our franchises.  If their enterprise is healthy, so is the brand. We additionally do all we will to maintain up with or forward of the developments within the market. Smaller chains or independents have one benefit over the larger chains in they will react shortly to modifications out there.  It’s much easier for us to usher in a brand new item and promote it. 

Table of Contents:

  • Based: 1959
  • Franchising Since: 1961
  • Variety of Present Places: 23
  • Complete Initial Funding: $346,500 to $825,000
  • Initial Franchise Charge: $30,000
  • Ongoing Royalty Payment: 4%
  • Advert Royalty Payment: 1% to Advertising Fund and a couple of% spent regionally
  • Internet Value Minimum: $500,000 with $250,000 liquid
  • Agreement Length: 10 years

Straw Hat Pizza was based in 1959 by Charlie Olsen and Invoice Henderlong.  That they had been working at a competitor studying the business. They decided they might do it higher by offering a better pizza and extra concentrate on households. 

They opened the first Straw Hat Pizza in San Leandro, CA, a metropolis close to San Francisco about 10 miles south of Oakland.. The identify was picked as a result of the competing brand had their staff wear straw hats so it was a strategy to convey to the purchasers what fashion of pizza they might anticipate.  The brand was originally named “Straw Hat Pizza Supreme”.

The unique Straw Hat Pizza Location.

To attract clients and develop the business, they introduced in stay music.  Additionally they brought in a coin operated horse journey which they let the youngsters journey totally free.  They named it Charlie Horse, after the founder that got here up with the thought. For those within the restaurant business, many occasions youngsters have numerous say about where the household eats.  The Charlie Horse gave the true choice makers a purpose to return again.

Straw Hat Pizza did incredibly nicely and was capable of broaden.  By 1968 it had grown to 20 places. Nevertheless, in 1969, the founders decided to sell the chain to the Saga Corporation.  Fueled by the Saga Company, Straw Hat Pizza grew to 230 shops by 1980. This made Straw Hat Pizza the most important chain on the West Coast at the time.  

In 1986 Marriott purchased the Saga Company, however it was primarily for the Faculty Food Service enterprise.  They selected to promote all of the Company Straw Hat Pizza places to Pizza Hut to convert to their brand. In fact they assumed all the franchise house owners would change over as properly, however they all liked the model and merchandise in order that they fought in courtroom to maintain the logos and recipes. 

The remaining 81 places shaped the “Straw Hat Cooperative Corporation”. Straw Hat Pizza operated beneath the cooperative model until 2011. This gave particular person retailer house owners a large say in the operating and path of the company. Unfortunately, this possession mannequin didn’t show the success they hoped for and the number of places dwindled. 

In 2009, the Coop created a franchise firm Straw Hat Restaurants, Inc. to move to a franchise model. In 2011 the cooperative was dissolved and the remaining members turned franchise house owners.  

All restaurant brands have their own tradition and Straw Hat Pizza at this time continues to be heavily influenced by the point as a cooperative.  We’ve decrease royalties and advertising charges than our rivals and are run by a Board of Administrators which are all present or former Straw Hat Pizza house owners. 

They make selections in one of the best curiosity of the franchise house owners. In 2017 and 2018 we had 4.7% and 8.5% similar retailer sales progress (respectively.) The brand is stronger than ever and we’re excited for what the longer term holds.

Straw Hat Pizza Location.

In fact, operating a pizza chain is all about providing a terrific pizza!  For probably the most half, our product is unchanged even after 60 years. Our “Genuine California Pizza” is what most think of as California Type or West Coast Fashion Pizza. 

The dough is made recent within the store every day. It is rolled quite than tossed which leads to a thinner crust, but one with layers and texture. The sauce isn’t as candy as different types of pizza, however as an alternative has an excellent tangy flavor.  We use recent tomatoes in making our sauce – they never comes out of a can.

The cheese we use is a mix, not just mozzarella. This enhances the flavor of the pizza. We have now various combination pizzas which we seek advice from as “Master Pizzas”  (Masterpieces) the preferred is our “The Works” pizza.

In addition to our traditional pizza, we’ve been providing Gluten Free pizza for over 10 years. Final yr we launched a Vegan menu and this yr we added Cauliflower crust which is selling incredibly nicely. 

The Works Pizza.

Surprisingly our second largest category is appetizers.  We promote quite a lot of great appetizers including our Groovy Twists, Wings, Potato Wedges, and Inexperienced Bean Crispers to call just some.  Our stores all showcase a recent self serve Salad Bar and we also have our proprietary Scorching Hat™ sandwiches.

We do our best to supply as regionally as potential.  All franchise house owners are encouraged to work with local produce corporations.  We choose solely high quality elements for our merchandise.

One example is our pizza sauce is recent packed and made with vine ripened tomatoes from a producing plant based mostly within the central valley of California. 

We use our purchasing power to work with producers to get nice pricing for our franchise house owners. Straw Hat Pizza is certainly a family restaurant and we would like our clients to be ok with the food they obtain from us.

You possibly can taste the difference with regionally sourced components.

The really unique factor about Straw Hat Pizza is our franchise targeted tradition.  I take a look at different chains and what they charge in fees – royalty, advertising, and so on. – and marvel what’s left over for the operator on the finish of the day. 

As a franchisor, we need to grow our income by more stores and improved gross sales, not by accumulating more than absolutely wanted from our franchise house owners.  This is all part of our tradition and having a Board of Directors that also own places. Present me some other chain where you only pay 4% in royalties!

One other difference from different chains is our philosophy round advertising.  We gather a very small quantity for the central advertising fund. The primary purpose being that every retailer owner will get to determine the place it is best to spend their advertising dollars in their commerce area. 

The downside, if any, is we don’t presently promote on TV or Radio. However, we feel if the operators put that extra cash into advertising their store in the long term they’ll do better. 

Inside a Straw Hat Pizza Restaurant.

In fact being round 60 years we now have wonderful techniques, training and help.  However, really, whenever you take a look at the pizza area as an entire, the place we stand out is by offering an ideal expertise in the stores with a concentrate on leisure in addition to the good product.

We’re excited to say we have now simply come off two years of strong similar retailer sales progress.  We had 4.7% progress in 2017 adopted by a good higher 2018 with 8.5% progress.

Some of this has been driven by profiting from the third celebration ordering and supply development.  Within the final 5 years supply has doubled as a proportion of our general gross sales.

We feel all our house owners should sign up for every service that has their very own portal they promote.  In the event that they get even small amounts of incremental gross sales every month from them it helps.

The shops which have lead the pack in gross sales progress are the ones which have added more televisions and  hold pay-per-view events just like the UFC fights. Some even have stay music.

With nearly all of our business being dine in, this has an influence.  These households that attempt us throughout an event come back at different occasions. If we now have completed our job nicely additionally they tell their pals.

Packed home for a sporting occasion.

Since we have now stores primarily in California, the most important problem we’ve in growing stores is Real Estate.  With all of the Blazes, Pieologies and Mod Pizzas out there, they have taken up plenty of potential websites.

We’re comfortable for his or her success as they operate in a special phase, nevertheless it undoubtedly makes finding a shopping center and not using a pizzeria tougher.  Additionally, the run up in real estate prices doesn’t all the time make it viable for restaurants.

With minimum wage going up in California we anticipate there to be some alternatives to seek out websites where rivals have closed. Second era restaurant websites save $100,000s of dollars in the price to construct out a restaurant. For the second we’re waiting for this so we will discover good offers for enlargement out there. 

We presently have numerous our present house owners which might be excited about including further places as quickly as they will find an applicable website.  

Virtually all of our house owners are arms on operators in their enterprise.  During lunch or dinner they’re in their enterprise serving to their staff maintain friends and ensure the whole lot is operating easily. 

In the down occasions they work to advertise their enterprise by way of social media and different means. As all good restaurant operators know, being worthwhile is all about controlling labor.  This has been the shift within the restaurant business in the previous few years since labor is now as excessive or larger than food value.  

One thing nice concerning the pizza phase is it tends to be simpler to seek out staff and turnover is lower than other varieties of eating places.  Even with historically low unemployment, the vast majority of our house owners haven’t had challenges finding good staff.  

Completely satisfied employees = Glad clients.

However, actually, the good half about pizza is it’s a lot enjoyable!  Our shops host numerous events and offering a spot where families can take pleasure in themselves could be very rewarding.  

Three cheers for quality pizza!

Earlier than I get into numbers, I want to remind your readers they need to by no means move forward on a enterprise opportunity without placing together their own business plan.  That is the most important mistake I see new operators make. Your due diligence ought to present the small print to see if it’s a great opportunity for you. Profit ought to be a plan not a surprise. 

When it comes to prime line gross sales, in 2018 the typical retailer in our system did $543,539 in gross sales.  The very best was $1,113,837 and the lowest was $285,579. This is for a standard Straw Hat Pizza which is almost all of our places.  We also have a grill idea in a single location that did over $2,500,000 however it’s unique since it is situated in a casino.  

We don’t gather enough knowledge from our franchise house owners to legally disclose meals value and labor, but ought to someone be thinking about studying extra about them I can set them as much as speak with an owner near them that can share their particular numbers and results. 

What training packages are in place to help franchisees succeed?

Training for a new franchisee falls into three elements.

First, we provide ongoing help and help as quickly as they sign with us.  This consists of working with them on finding a website, serving to them with website plans, and doing all the other issues to assist get them via development and able to open.  Once they get via with development we work with them to hire and practice their workforce, then keep on website with them during their first week of operation.  

In the lead as much as opening, they attend our arms on coaching at certainly one of our two coaching shops (N. CA or S. CA).  The coaching lasts for 3 weeks and is taught by an skilled proprietor and our area workforce. It covers all the small print they need to study the enterprise and be able to open their retailer.  This consists of all the small print about making our products, pc techniques, and management processes.  

Lastly, after they’re open and working, we offer ongoing operations and advertising help.  They will anticipate to see their franchise rep often at first and petering out as they grow to be experienced.  Assistance is all the time just a telephone name away, 24/7.  

What are the traits of profitable franchisees?

Actually, the 2 largest keys to success for franchisees are a concentrate on great customer support and balancing that with the financials.  Day by day you’ll work together with clients and it’s a must to care about making sure they get a terrific product and experience.

Our franchise house owners that stand out are the ones that know their clients by identify and make them feel welcome in their Straw Hat Pizza.  

Since Straw Hat Pizza does moreover present leisure and events at our places, having something an owner feels excited to do helps.  Displaying UFC fights isn’t for everybody. But there are tons of different nice event ideas to usher in clients and develop your corporation.  

Our inner statistics show it doesn’t make a distinction whether or not a possible franchise proprietor has restaurant expertise or not.  More essential are issues like location, area demographics, and specific features of the situation comparable to having a party room.

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