Hi! I’m Scott Mason, the Head of Operations for the Straw Hat Pizza chain. I didn’t start the business but I grew up going to Straw Hat Pizza and I have always loved our pizza. My grandfather used to take me there as a kid back in the 1970s. I’ve been with Straw Hat Pizza for nearly 11 years and in my current role for a little over two years. For those not familiar with Straw Hat Pizza, it is a regional chain with our headquarters in San Ramon, CA. We have locations in California and Nevada. We offer our “Genuine California Pizza” and are what most people think of when they picture a traditional pizzeria. Most of our locations are around 3000 sq ft or a little larger and offer various types of entertainment in addition to the great food.
The Straw Hat Pizza Brand has always provided the communities we serve a great place to take the family to get great food in a comfortable environment. The main differentiator between us and our competition is the entertainment factor. Since the chain was founded, many of the locations have provided live entertainment. In the 1960’s it was banjo bands. Today it is UFC fights, sporting events, and karaoke. These seem very different, but at the core it provides families the entertainment they are seeking.
Another unique feature about the chain is we have all franchised locations. Personally this makes my role very simple as I am focused on franchise success. If you franchise locations and want to have a healthy brand this is imperative. We make decisions that will positively impact the bottom line of our franchises. If their business is healthy, so is the brand. We also do all we can to keep up with or ahead of the trends in the marketplace. Smaller chains or independents have one advantage over the larger chains in they can react quickly to changes in the market. It is much simpler for us to bring in a new item and market it.
Table of Contents:
- Company Overview
- The Story of Straw Hat Pizza
- What Makes Straw Hat Pizza Unique?
- Future of the Business
- Day in the Life of a Franchisee
- How Much Can You Make?
- Learn More
- Founded: 1959
- Franchising Since: 1961
- Number of Existing Locations: 23
- Total Initial Investment: $346,500 to $825,000
- Initial Franchise Fee: $30,000
- Ongoing Royalty Fee: 4%
- Ad Royalty Fee: 1% to Marketing Fund and 2% spent locally
- Net Worth Minimum: $500,000 with $250,000 liquid
- Agreement Length: 10 years
What’s your backstory?
Straw Hat Pizza was founded in 1959 by Charlie Olsen and Bill Henderlong. They had been working at a competitor learning the business. They decided they could do it better by providing a better pizza and more focus on families.
They opened the first Straw Hat Pizza in San Leandro, CA, a city near San Francisco about 10 miles south of Oakland.. The name was picked because the competing brand had their employees wear straw hats so it was a way to convey to the customers what style of pizza they could expect. The brand was originally named “Straw Hat Pizza Supreme”.
To attract customers and grow the business, they brought in live music. They also brought in a coin operated horse ride which they let the kids ride for free. They named it Charlie Horse, after the founder that came up with the idea. For those in the restaurant business, many times kids have a lot of say about where the family eats. The Charlie Horse gave the true decision makers a reason to come back.
Straw Hat Pizza did incredibly well and was able to expand. By 1968 it had grown to 20 locations. However, in 1969, the founders decided to sell the chain to the Saga Corporation. Fueled by the Saga Corporation, Straw Hat Pizza grew to 230 stores by 1980. This made Straw Hat Pizza the largest chain on the West Coast at the time.
In 1986 Marriott purchased the Saga Corporation, but it was primarily for the School Food Service business. They chose to sell all the Corporate Straw Hat Pizza locations to Pizza Hut to convert to their brand. Of course they assumed all the franchise owners would switch over as well, but they all loved the brand and products so they fought in court to keep the trademarks and recipes.
The remaining 81 locations formed the “Straw Hat Cooperative Corporation”. Straw Hat Pizza operated under the cooperative model until 2011. This gave individual store owners a large say in the running and direction of the company. Unfortunately, this ownership model didn’t show the success they hoped for and the number of locations dwindled.
In 2009, the Coop created a franchise company Straw Hat Restaurants, Inc. to move to a franchise model. In 2011 the cooperative was dissolved and the remaining members became franchise owners.
All restaurant brands have their own culture and Straw Hat Pizza today is still heavily influenced by the time as a cooperative. We have lower royalties and marketing fees than our competitors and are run by a Board of Directors that are all current or former Straw Hat Pizza owners.
They make decisions in the best interest of the franchise owners. In 2017 and 2018 we had 4.7% and 8.5% same store sales growth (respectively.) The brand is stronger than ever and we are excited for what the future holds.
Tell us about your menu and customer offerings.
Of course, running a pizza chain is all about offering a great pizza! For the most part, our product is unchanged even after 60 years. Our “Genuine California Pizza” is what most think of as California Style or West Coast Style Pizza.
The dough is made fresh in the store daily. It is rolled rather than tossed which results in a thinner crust, but one with layers and texture. The sauce is not as sweet as other styles of pizza, but instead has a great tangy flavor. We use fresh tomatoes in making our sauce – they never comes out of a can.
The cheese we use is a blend, not just mozzarella. This enhances the flavor of the pizza. We have a number of combination pizzas which we refer to as “Master Pizzas” (Masterpieces) the most popular is our “The Works” pizza.
In addition to our traditional pizza, we have been offering Gluten Free pizza for over 10 years. Last year we introduced a Vegan menu and this year we added Cauliflower crust which is selling incredibly well.
Surprisingly our second biggest category is appetizers. We sell a variety of great appetizers including our Groovy Twists, Wings, Potato Wedges, and Green Bean Crispers to name just a few. Our stores all showcase a fresh self serve Salad Bar and we also have our proprietary Hot Hat™ sandwiches.
We do our best to source as locally as possible. All franchise owners are encouraged to work with local produce companies. We choose only quality ingredients for our products.
One example is our pizza sauce is fresh packed and made with vine ripened tomatoes from a manufacturing plant based in the central valley of California.
We use our buying power to work with manufacturers to get great pricing for our franchise owners. Straw Hat Pizza is definitely a family restaurant and we want our customers to feel good about the food they receive from us.
What makes this opportunity unique?
The truly unique thing about Straw Hat Pizza is our franchise focused culture. I look at other chains and what they charge in fees – royalty, marketing, etc.