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.

New Store

To open a new Straw Hat Pizza location, the steps are elaborated here. The advantages are you have control over the location, lease, store layout, your employees and if you purchase new equipment your maintenance costs should be lower.

Buy an Existing Store

We maintain a list of stores currently for sale by our existing franchise owners. The advantages of buying an existing locations are you will know your sales and costs up front so your business plan should be very accurate. Having the sales can make it easier to get financing as well. The cost of the transfer fee is currently $10,000 which is lower than signing on as a franchisee to open a new location. Buying an existing location also takes less times since it is currently operating with all the equipment and employees in place. The downside is there might not be one available in your area and you will need to negotiate with the existing owner over the price for the business. In addition to the cost for the business and the transfer fee, you will also need to budget for deposits and licenses, marketing, any upgrades to the store and funds to operate. See the section on startup costs for estimates on these costs.

Steps to Buy an Existing Location

  1. Contact the current franchise owner and learn about the location.
  2. Negotiate the sales price with the franchise owner.
  3. Get approved by Straw Hat Restaurants Inc. as a franchisee.
  4. Enter Escrow.
  5. During Escrow you will attend training.
  6. Close Escrow and take over your new Straw Hat Pizza.

Qualifications

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.
Net Worth Required: $300,000
Liquid Capital: $100,000

Startup Costs

ExpenseEstimated Amount or Estimated Low-High RangeMethod of PaymentWhen DueTo Whom Paid
TOTAL$447,000-$844,000 
Initial Franchise Fee$30,000Lump SumWhen applicable contract signedStraw Hat Restaurants, Inc.
Initial Leased Real Estate Costs$6,000-10,000As incurredAt lease signing, monthly thereafterLandlord
Leasehold Improvements and Construction$250,000-$511,000As arrangedBefore openingContractors, Architect
Utility Deposits$2,000-$4,000As incurredBefore openingUtility Company
Equipment and Fixtures$100,000-$175,000As incurredBefore openingVendors
Signs, Menu Boards, and Décor$2,000-8,000As arrangedBefore openingVendors
Computer System$10,000-$25,000As arrangedBefore openingVendors
Initial Inventory$7,000-$10,000As incurredBefore openingVendors
Licenses and Permits$3,000-$5,000As incurredBefore openingPublic Agencies
Insurance$6,000-$8,000InstallmentAs arrangedInsurance Company
Travel and Room during training$1,500-$3,000As incurredBefore openingHotel and third parties
Opening Marketing$0-5,000As incurredBefore openingVendors
Additional Funds (Working Capital)$40,000-$60,000As incurredEmployeesVendors

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

  1. Self-Funding
    • 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

Location Requirements

  • 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?

The family pizza business is very different, unlike a McDonald’s or most restaurants where people only go in for a quick meal. Straw Hat Pizza is a community centric restaurant with strong support from local schools, families, churches, and sports teams. We will not approve a franchisee unless they are good operators, not only from the point can they make money, but more important, are they connected in the community?

What Type of location is best for a Straw Hat Pizza? I have one in mind, will it be ok?

Our restaurants range in size from 1000-6000 square feet. We have found that 3000-3200 is the best size to maximize sales while keeping your rent at a reasonable level. The location should be in a center with a good anchor store (supermarket or other business with heavy traffic) and plenty of easy parking for guests.

How does the franchisor support the franchisee?

Multiple ways, from the time a franchisee signs the franchise agreement, we take a turnkey approach:

  1. Having our real estate team work with the franchisee to find the location
  2. Operations team works to design the layout of the restaurant
  3. Construction team will do the entire build out if required
  4. Assist with locating either new or used equipment
  5. Intensive 3 week/8 hours a day/6 days a week training program
  6. 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.
  7. 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?

Yes: We provide a franchisee with a link to an existing franchisee so they can share ideas and just ask questions. Plus, at the annual convention, the franchisees get together and share ideas.

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?

$550,000 per restaurant with a range from $250K - $2 million.

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?

Success in any franchise is following the proven system of operations. If you want to do your own thing, then a franchise might not be the best business model for you. However, we do always listen, and when it makes sense, use your feedback to the benefit of the system.

What is the average check amount?

The average check is $25.

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.

Does the franchisee seem happy overall? Do they enjoy going to work every day?

Yes: In 2010 we scored an 82.28% FSI (Franchise Satisfaction Index) vs. the industry average of 64.63%. This placed us at the top 5% of all national franchises. Working at a Straw Hat Pizza is fun. You are not slinging burgers but running a restaurant where families, sports teams, and business people all come to eat great food and relax while socializing or watching the big game on large HDTVs.

What products/menu items are unique/different than the competition?

Straw Hats make our dough from scratch each day. We use six different cheeses on every pizza and our guests rave about our famous Hot Hats, salad bar, sandwiches and appetizers. All of our produce is cut fresh in the store.

How is communication between the franchisor and franchisees? Is the franchisor team available for consultation and help on a regular basis?

Every quarter there is a newsletter that goes out to all franchisees. Our field reps are in your store every 3-4 months and available more frequently when requested. This is after you are open for awhile and operating well.

Is the franchisor support team trained in every station of the restaurant? If not, how do they understand issues that come up with the franchisees?

Yes: The field support team has years of knowledge in the restaurant and the pizza business.

Are the POS systems high quality and easy to use? Does the company who supplies POS system offer support for the franchisees?

Yes: The company provides training and installation support, plus ongoing 24/7 support.

Is the franchisor on the preferred list of franchises for SBA loans? If not, why not?

Since Straw Hat has been in business for since 1959, a number of the locations have been approved and opened with SBA loans.

Does the franchisor require the franchisee to purchase equipment from their hand-picked supplier or can the franchisee buy used or lease equipment for tax purposes so it is counted as assets?

The franchisee can buy/lease the equipment from whoever they want.

How does the franchisor support the stores efforts on social media?

Each location has their own Facebook and Instagram page. These are posted to weekly with the eclub offer and when new promotions come out. It is up to the owner to add to it their own personality and content to drive business. With each promotion we provide Facebook banners the stores can use.