The Biz Beat: Worker-owned eatery serves San Jose State students

Owner Richard Hobbs said that when he purchased Peanuts Deluxe Cafe in early 2025, he had more in mind than simply renovating the popular but “fully dilapidated” restaurant across from San Jose State University by slapping on a coat of paint and installing new booths and tables.

“I thought this would be a golden opportunity to really do two things,” he told San José Spotlight. “Number one, to convert it to a worker-owned cooperative. And number two, to engage the students across the street who are looking for alternatives to the inequality that’s destroying their opportunities.”

An immigration attorney, Hobbs’ activism includes co-founding SIREN (Services, Immigrant Rights and Education Network) and the nonprofit Human Agenda, which has launched three other worker-owned businesses.

“I believe in the concept of a worker-owned cooperative,” Hobbes said. “It’s the only form that allows the workers to own the business, make all of the decisions, including their working hours and their wages, and allows them to also receive from the profits.”

The building that houses Peanuts dates to 1928 and became Mary’s Sandwich Shop in 1963, a place where students could buy seven sandwiches for a dollar. Rebranded as Peanuts Deluxe Cafe in 1964, it has served as a central hangout for generations of SJSU students.

That tradition continues today, with a menu packed with dishes that offer great flavors and large portions at prices the average starving collegiate can afford.

The menu has all the breakfast classics one would expect, from omelets to pancakes, including the Spartan Griddle, an egg layered between two pancakes. The menu also includes full lunch offerings, with sandwiches such as the B.L.A.T. (Bacon, Lettuce, Avocado and Tomato) and the Spartan Burger, a cheeseburger on a brioche bun.

Hobbs said the place was “on its last legs” when he bought it. A walk-in refrigerator, now used for supply storage, had been broken for 10 years. The new four-part sinks the health department had been demanding since 2018 were finally installed, he said.

“Having never owned a restaurant in my life, it was a tremendous challenge to refurbish and repurpose it,” Hobbs said. “We brought in booths. We got new chairs, new tables, new lighting. We repainted the place in San Jose State colors. We did everything.”

Joining Hobbs in the renovation, four employees put in what he describes as the “blood equity” necessary to establish their interest in his ultimate plan of employee ownership, becoming founding members in the process.

Christian Contreras, hired last October, said he wasn’t sure at first about having a stake in the store, given concerns about the eatery’s future.

“It was very overwhelming, because we didn’t know what to expect,” he told San José Spotlight. “I was always a shift leader or manager. But now, since I’m becoming an owner, it’s like a brand new door opens. Overall, it’s been very interesting.”

His favorite lunch item on the menu is the popular hand-carved Turkey Avocado Sandwich, which includes mayonnaise and a pesto he said gives it an “enormous kick.” On the breakfast side, he’s a fan of the enormous Pike’s Peak.

“It’s a big portion on a big plate,” Contreras said. “You get your two eggs, with hash browns or crunchy potatoes on the side with bacon or sausage. On the side, you get two pancakes, and you can add strawberries or bananas. Personally, that’s my favorite out of the whole menu.”

The menu includes a “south of the border” selection that favors Mexican standards, like Huevos Rancheros and Chilaquiles, as a nod to the background of the restaurant’s primarily Latino workers. There are also Mexican-influenced offerings such as the Mexi-Cali Burger, with chorizo and avocado, and the just-introduced Street Tacos and Super Quesadilla, with a choice of meat mixed with avocado, sour cream and pico de gallo.

The star might be the three-egg Mexican Omelet, which is made with chorizo, Monterey Jack cheese and jalapeño slices, topped with pico de gallo, sour cream and avocado slices. The presentation is eye-catching, and the flavors are indulgent.

One of the biggest sellers, Contreras said, is the Breakfast Burrito, made with three scrambled eggs, a choice of meat, cheese and potatoes. A vegetarian version swaps the meat for mushrooms, bell peppers and spinach, with optional avocado.

That burrito is the favorite of regular customer Vickie Mueller Olvera, who describes Peanuts as a “no-frills kind of place.” She said she is drawn to the cafe’s look and style.

“It’s just really good food at a reasonable price and a very good value,” she told San José Spotlight. “They’ve fixed it up nicely. It’s more wide open, and there’s more space to sit at the big tables.”

Having that kind of social atmosphere — one of engagement that leads to community action — is part of Hobbs’ vision, which is evident in the new t-shirts he has ordered for the business, which read “Peanuts Deluxe Cafe for fun and transformation.”

As part of the effort, for example, Taco Tuesdays includes discounted tacos to munch on while listening to talks by local leaders on issues related to the upcoming election.

“So we want Peanuts to be a location where people feel that they can come and relax, enjoy themselves, but also to be transformed by the engagement that we hope to continue to offer to the community,” Hobbs told San José Spotlight.

Contact Robert Eliason at [email protected].

Editor’s Note: The Biz Beat is a series highlighting local small businesses and restaurants in Silicon Valley. Know a business you’d like to see featured? Let us know at [email protected].