When Pizza Hut bought out Straw Hat Pizza nearly 10 years ago, Straw Hat franchisees faced a dilemma: Either convert or go independent. For a number of franchisees, neither option was appealing, so they came up with another alternative. They opted out of the Pizza Hut franchise and established a cooperative to retain ownership of the Straw Hat name, operating systems, recipes and logo.
Today, Dublin, California-based Straw Hat Cooperative Corp. is going strong, with 50 members and 65 locations throughout California, Nevada and Washington. An average of six new stores are added each year. All decisions guiding the company are made by an elected board of directors.
"It's a shared strength," says Joshua Richman, president and CEO of the cooperative. "The idea is that these pizza restaurants will be stronger as part of a group than on their own."
The benefits are numerous. The backing of 60-plus stores helps when negotiating deals with suppliers. Co-op members also save money because Straw Hat manufactures its own cheese, dough, meat toppings, sauce, boxes and cups. The royalties are low, and all marketing materials are provided.
Says Richman, "We've found it is a real formula for success in our industry, which is extremely saturated and competitive."