Tuesday, April 9, 2002

Despite Predictions To The Contrary, 15 Years Later, CO-OP

This year, the Straw Hat Pizza Cooperative celebrates fifteen (15) successful years in operation. In 1987, when Straw Hat franchisees rebuffed a parent organization buy-out and conversion by Pizza Hut, Inc., the cooperative concept was new and unproven in the restaurant industry. Today, fifteen years later, Straw Hat Pizza restaurants are thriving while enjoying the advantages of a unique cooperative business system.

The Straw Hat chain, founded in 1959, was a West Coast pioneer and frontrunner in the pizza segment during the 1970's and 80's, growing to nearly 230 restaurants. Reportedly, Pizza Hut was attracted to purchase the chain in 1987 because of Straw Hat's numerous high volume locations and dominance of the California market. However, most of the then franchisees believed that converting their stores to Pizza Huts would irreparably harm their businesses. After initiating a precedent setting legal action, and in a true "David and Goliath" outcome, Straw Hat's franchisees were granted the right to keep the name "Straw Hat Pizza" and form a not-for-profit cooperative.

"We didnít have a roadmap to follow back in 1987." said Randy Wise, Chairman of the Board for Straw Hat Cooperative Corporation, (SHCC), and a Straw Hat restaurant owner. "In the beginning, many industry followers didnít give us much chance for survival; we definitely felt like underdogs facing our larger franchise rivals. But, over the years, weíve learned that being a cooperative offers huge advantages over franchise systems – and we've proved that a cooperative system can vigorously compete and flourish. However, a cooperative needs to be managed much differently than other systems. Our organization runs in reverse of a typical franchise chain and we're proud of this fact. The Co-op exists to support the decisions of our Members, not vice-versa."

"Straw Hat has refined an effective model for doing business as a cooperative" said Joshua Richman, SHCC President. "It's a model developed with the benefit of experience and it provides all of the expected support of a franchise system, but relies on the wealth of talent and knowledge of our Members to maintain very low business costs. Our Members pay a fraction of the cost of traditional franchise fees, yet enjoy purchasing, marketing, training, and field support programs which rival those of chains many times our size. We cut through the "red tape" of a franchise system, and implement new ideas and innovations quickly. Today, our system-wide sales growth out-paces that of our "franchise" competitors and we keep on adding new Members and locations. Our future outlook is all positive and we're looking forward to developing new trading areas."

Straw Hat Pizza has recently undergone a complete image and marketing update, is in the process of remodeling its older locations, and has developed two new prototype concepts. Unit sales are up across all geographic regions, with many locations enjoying double-digit sales increases. Although embracing positive changes, the company remains committed to its tried and true core themes of serving genuine California crust pizza and other signature menu items in a friendly and fun environment.

[SHCC licenses members to operate nearly 50 Straw Hat Pizza locations in California & Nevada. The "Cooperative" is solely directed by its membership owners and has been called "the un-franchise, franchise." It provides the benefits of a franchise system, however, the Cooperativeís individual owners enjoy greater control, and corporate overhead is kept to a minimum, (about 1/3rd of the average franchise fee.)]

For more information please visit: strawhatpizza.com/contactus and please follow us on Facebook & Twitter @StrawHatPizza.