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Pizza Hut Franchise Costs Costs $412K – $2.1M (+ 2024 Profits)

Pizza Hut, a major player in the global pizza market, was founded by brothers Dan and Frank Carney in 1958 in Wichita, Kansas. The business quickly took off, leading to the start of franchising just a year later in 1959. Today, Pizza Hut operates as a subsidiary of Yum! Brands, Inc., with its corporate offices located in Dallas, Texas.

This franchise is celebrated for delivering a wide variety of pizza products, pasta, and wings, making it one of the largest pizza chains in the world. The growth of Pizza Hut is notable not only for its size but also for its innovative approaches within the pizza industry.

Over the decades, Pizza Hut has introduced a range of products that have become favorites among consumers, including their signature Pan Pizza. The franchise operates over 16,000 restaurants in more than 100 countries, demonstrating its extensive reach and popularity.

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Initial investment

Type of ExpenditureAmount (Dine-In/Delivery/Carryout)Amount (Freestanding “Delco” Delivery/Carryout)Amount (Inline/Endcap “Delco” Delivery/Carryout)
Initial Franchise Fee$25,000$25,000$25,000
Equipment$150,000 – $300,000$100,000 – $175,000$100,000 – $175,000
Opening Inventory$4,000 – $8,000$4,000 – $8,000$4,000 – $8,000
Smallwares$15,000 – $50,000$10,000 – $18,000$10,000 – $18,000
Building and Site Improvements$550,000 – $1,575,000$425,000 – $700,000$240,000 – $425,000
LandVariesVariesVaries
Computer System$15,000 – $30,000$15,000 – $30,000$15,000 – $30,000
Computer System Training$0 – $1,500$0 – $1,500$0 – $1,500
Additional Funds (3 months)$5,000 – $21,500$5,000 – $21,500$5,000 – $21,500
Miscellaneous$10,000 – $22,000$10,000 – $22,000$10,000 – $22,000
Advertising$0 – $16,500$0 – $10,300$0 – $10,300
Start-up “Other”$3,000 – $4,000$3,000 – $5,000$3,000 – $5,000
TOTAL$782,000 – $2,053,500$597,000 – $1,011,300$412,000 – $736,300

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Franchise fees & Royalties

Initial Franchise Fee

The Initial Franchise Fee is $25,000, payable in full upon signing the franchise agreement.

Royalty Fee

Monthly Service Fees amount to 6% of the prior month’s Gross Sales for each franchised Restaurant.

Marketing/Advertising Fee

The Advertising Fund Contribution is set at 4.75% of Gross Sales.

Management Fees

Management fees include a charge that can be the greater of: (i) two times the salary paid to the individual(s) assigned by the franchisor to operate the Business, or (ii) 10% of the Business’s monthly Gross Sales.

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✅ Compare turnover, investment, profits and more

Franchise pros and cons

The Pros:

  • Exclusive territory protection: Franchisees receive the right to operate their pizza stores in a protected area. The franchisor does not authorize other franchisees or competing units to operate in the designated area.
  • Diversified income streams: The franchisor provides its franchisees with multiple restaurant formats, such as restaurant-based delivery (RBD), delivery/carryout (Delco), and Delivery Based Restaurant (DBR)/Fast Casual Delco (FCD) system restaurants providing franchisees flexibility and different earning streams.
  • Pre-opening training: The franchisor has an extensive training program for its franchisees to learn about the basics of a pizza franchise, customer service, hiring staff, and much more. Franchisees don’t need to be experts in the pizza industry, and the franchisor offers them onboarding assistance and operational strategies.
  • Marketing and branding: The franchisor utilizes stellar marketing and advertising tools and programs to help franchisees spread the word about their restaurants and build strong public relations. These included social media, email marketing, loyalty program apps, and more.
  • Third-party financing: The franchisor has contracts with third-party lenders to help franchisees fund their startup costs, equipment, inventory, and payroll.
  • Growth opportunities: Pizza Hut is one of the leading pizza brands in the world and is owned by a reputable franchise chain, giving franchisees the opportunity to attract customers and expand into multiple locations.

The Cons:

  • Not a passive investment: The franchise cannot be run on a “manage-the-manager” basis. The franchisor requires franchisees to take full operational roles in their franchises.
  • Not a home-based business: The franchise must be operated from a fixed office space, retail facility, or warehouse, which may push up the startup and ongoing costs.
  • Not a part-time business: Pizza Hut franchisees are supposed to operate full-time as per the parent company’s official working hours.

How to open a pizza hut franchise

1: Meet the Basic Requirements

  • Financial Requirement: Ensure you meet the financial requirements which typically include a significant net worth and liquid assets.
  • Experience: Preferably, have experience in food service management or retail operations, though this may not be strictly necessary.

2: Submit an Inquiry

  • Initial Contact: Reach out to Pizza Hut through their franchise inquiry form to express your interest.
  • Receive Information: Obtain detailed franchising information, including costs, requirements, and the application process.

3: Application Process

  • Complete Application: Fill out the Pizza Hut franchise application, providing all necessary personal and financial information.
  • Background Checks: Undergo background checks and a review of your business experience and financial stability.

4: Review Franchise Disclosure Document (FDD)

  • Obtain and Review FDD: Carefully review the Franchise Disclosure Document provided by Pizza Hut that details all aspects of the franchise operation.
  • Legal and Financial Advice: Consult with legal and financial advisors to understand the obligations and implications of the franchise agreement.

5: Training and Approval

  • Training Program: Attend the Pizza Hut training program which covers product preparation, operational procedures, and business management.
  • Site Approval: Work with Pizza Hut to find and approve a suitable location based on market research and company criteria.

Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.

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