Investing in Straw Hat Pizza
Routes to Ownership
There are two ways to become a Straw Hat Pizza Franchisee. The first is to sign on as a new franchisee, find a site and open a new store. The other is to purchase an existing store. Both have their advantages so it will depend on your goals as to which is a better fit for you.
Buy an Existing Store
Steps to Buy an Existing Location
- Contact the current franchise owner and learn about the location.
- Negotiate the sales price with the franchise owner.
- Get approved by Straw Hat Restaurants Inc. as a franchisee.
- Enter Escrow.
- During Escrow you will attend training.
- Close Escrow and take over your new Straw Hat Pizza.
To become a Straw Hat Pizza Franchisee, we are looking for an entrepreneur who is not afraid to take a risk in the hopes of making profits. We are looking for motivated individuals or partnerships who will strengthen the Straw Hat Pizza brand. You do not need to have restaurant experience to be successful. It will depend more on the following skills:
- Ability to design and implement a business plan
- Belief in the Straw Hat Pizza products and systems
- Outgoing and good with customers and employees
- Not afraid to get out in the community to market your location(s) in person
- Time to be involved in your business. The restaurant business is not for absentee owners.
|Expense||Estimated Amount or Estimated Low-High Range||Method of Payment||When Due||To Whom Paid|
|Initial Franchise Fee||$30,000||Lump Sum||When applicable contract signed||Straw Hat Restaurants, Inc.|
|Initial Leased Real Estate Costs||$6,000-10,000||As incurred||At lease signing, monthly thereafter||Landlord|
|Leasehold Improvements and Construction||$250,000-$511,000||As arranged||Before opening||Contractors, Architect|
|Utility Deposits||$2,000-$4,000||As incurred||Before opening||Utility Company|
|Equipment and Fixtures||$100,000-$175,000||As incurred||Before opening||Vendors|
|Signs, Menu Boards, and Décor||$2,000-8,000||As arranged||Before opening||Vendors|
|Computer System||$10,000-$25,000||As arranged||Before opening||Vendors|
|Initial Inventory||$7,000-$10,000||As incurred||Before opening||Vendors|
|Licenses and Permits||$3,000-$5,000||As incurred||Before opening||Public Agencies|
|Insurance||$6,000-$8,000||Installment||As arranged||Insurance Company|
|Travel and Room during training||$1,500-$3,000||As incurred||Before opening||Hotel and third parties|
|Opening Marketing||$0-5,000||As incurred||Before opening||Vendors|
|Additional Funds (Working Capital)||$40,000-$60,000||As incurred||Employees||Vendors|
Your Business Plan
As part of any business venture, you should write a business plan and decide if this would be the right investment for you. We do not make any representations about a franchisee's future financial performance or the past financial performance of company-owned or franchised outlets. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet with permission of the owner of the location.
Ways to Finance Your Restaurant
- Cash – A potential option if you have the financial resources available.
- 401k Rollover – If you have significant amount in your 401k, there are ways to set up a business and rollover the 401k to fund it. This type of investment can’t be passive so you would need to be an active participant in the business.
- Partners – Writing a great business plan and looking for a partner is another way to finance your Straw Hat Pizza restaurant. This would be the responsibility of the buyer to find a partner.
- Seller Financing – If you are buying an existing Straw Hat Pizza location from the current owner, they may be able to offer some financing. This also might work if you find an existing location selling by an independent pizzeria or other chain, then convert it over to a Straw Hat Pizza.
- Vendor Financing – This is not for the entire business, but some items purchased during the building of your store may have financing available from the vendor. It can help manage your startup costs.
- SBA Loans – You will need an excellent credit score as well as good personal credit to qualify for an SBA loan or traditional loan from a bank. This will depend on the individual lender and business factors as provided by your business plan. We do not partner with any specific company or bank. Start with your current bank and find out what their criteria and collateral requirements are to fund a new business.
- Ideal: 2800-3200 Sq. Ft.
- Strip shopping centers with solid anchor
- Easy accessibility
- Ample parking
- Excellent visibility of signage
- Should be on a main street - NOT at the edge of town
- Space should not be too narrow or difficult to lay out
- Adequate Utilities (Gas, Electric) to support operations
- Zoned for Restaurant Use
- Ability to install oven hood
Key Area Demographics
- Large household size in area
- High percentage of children and young adults
Frequently Asked Questions (FAQs)
Does this franchisor just pick any potential franchisee if they have the money or are they concerned about picking a quality franchisee and saying no when they need to for the sake of the other franchisees?
What Type of location is best for a Straw Hat Pizza? I have one in mind, will it be ok?
How does the franchisor support the franchisee?
Multiple ways, from the time a franchisee signs the franchise agreement, we take a turnkey approach:
- Having our real estate team work with the franchisee to find the location
- Operations team works to design the layout of the restaurant
- Construction team will do the entire build out if required
- Assist with locating either new or used equipment
- Intensive 3 week/8 hours a day/6 days a week training program
- Prior to opening we send an operations person to your location to help open, train your staff and be a support person for the opening week.
- After opening you will see a field marketing or operations person frequently, plus you can make an appointment for someone to come in and assist you with any issues.
ALL OF THIS IS DONE AT NO COST TO THE FRANCHISEE
Does a new franchisee get any mentoring from a current franchisee?
What are the percentages for payroll, maintenance, food costs, taxes, utilities, etc. and at what percentage do you need to be at to make a decent profit?
An average as reported by the franchisee:
- Labor 20-30%
- Food Cost 25%
- Paper Goods 3-4%
- Beverage 3-4%
- Royalty Fee 4%
- Marketing Fee 1%
- Insurance 3%
- Utilities 3-4%
- Rent 10-15%
- Credit Card 2-2.4%
- Internet/POS/TV 2-3%
What is the average gross flow of the restaurant?
Does the franchisor realize that the franchisee deals with customers on the front lines and that they have more of a sense of how to improve overall restaurant operations?
What is the average check amount?
What are the average daily revenues for lunch and dinner?
- Lunch: $200 - $1000
- Dinner: $500 - $3,000 with spikes for the weekend and parties to $3-5k per night.