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The Real Cost Of Owning A Pizza Hut Franchise
Quick-service restaurants (QSR) have been the popular option for franchising for its established sales and revenue model and its steady customer base. For instance, Pizza Hut is one of the many franchises that has grown consistently. Although it has grown significantly, many franchisees still continue to show interest in the pizza chain. But how much does a Pizza Hut franchise cost?
In the meantime, learn more about the Pizza Hut franchise. Plus, check out what your initial investment would be when franchising a Pizza Hut.
The Pizza Hut Franchise and Market
The Carney brothers, the founders of the global pizza chain, started their venture in 1958. Having borrowed $600 from their mother, they eventually opened their first-ever store in Wichita, Kansas. It was then they came up with Pizza Hut because the sign can fit only eight letters. Since then, they’ve brought joy to customers and grew their venture to become a worldwide food industry leader.
In the US, they have 6,300+ stores, and more than 120+ are franchises. Additionally, the beloved pizza chain has 15,600 stores in 90 countries. Not to mention, as part of the Yum!Brands company, they’re also joined by KFC, Taco Bell, and The Habit Burger Grill.
Pizza Hut competes against other pizza chains like Domino’s Pizza and Papa John’s. Plus, they also have to compete with other QSRs like McDonald’s, Chipotle, and Taco Bell. Even so, they increased 8% sales worldwide in 2019.
Aside from their signature pizzas, franchisees will also serve pasta and WingStop chicken as required by the franchisor.
Training Overview
Pizza Hut, LLC, facilitates the training in Plano, Texas. Presently, that’s where their headquarters is located. In addition, trainees will also have hands-on training in a system restaurant. The training is a must for all operators.
They have another mandatory training program called the “First Slice” for the operators. It even lasts for 8 to 12 weeks. This consists of the following:
- One-on-one meetings with the Pizza Hut leaders (onboarding)
- In-restaurant training (plus the web-based training franchisees can access in the Learning Zone)
- Pizza Prep classes
- Successful completion of all First Slice training requirements
Territory Granted
A franchise will have a 500-yard protected radius for their system restaurant. No other franchise may establish another Pizza Hut in the granted radius. In line with that, the franchisor also specifies the delivery area, so that the franchisee can deliver approved products.
Obligations
Operators and principal owners are not required to oversee daily operations. However, the on-site manager must be in the location at all times. Plus, franchisees should also assign another qualified operator to execute tasks necessary in the daily operations.
The Pizza Hut Franchise Cost
A Pizza Hut franchise cost is around $297,000 to $563,000. However, that’s only an initial estimate by Pizza Hut, LLC. However, this depends on what type of Pizza Hut you could set-up.
- Restaurant-Based Delivery Restaurant or Delivery-Based Restaurant: $787,000 to $2,063,500
- Fast-Casual DelCo (Delivery/Carryout) Restaurant: $534,000 to $184,500
- Freestanding DelCo Restaurant: $552,000 to $971,300
- Inline/Endcap DelCo Restaurant: $367,000 to $721,300
Furthermore, the franchisee should pay a fee ranging from $47,500 to $69,000 to the franchisor or its affiliates.
Check out the tables below for the initial investment and other expected costs.
Your Investment
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $25,000 | $25,000 |
| Equipment | $100,000 | $300,000 |
| Opening Inventory | $4,000 | $8,000 |
| Smallwares | $10,000 | $50,000 |
| Building and Site Improvements | $190,000 | $1,575,000 |
| Leasehold Interest/Land | Varies | |
| Computer System | $20,000 | $40,000 |
| Computer System Training | $0 | $1,500 |
| Additional Funds (3 months) | $5,000 | $21,500 |
| Miscellaneous | $10,000 | $22,000 |
| Advertising | $0 | $16,500 |
| Start-Up “Other” | $3,000 | $4,000 |
| ESTIMATED TOTAL* | $367,000 | $2,063,500 |
Other Costs
| Type of Fee | Amount |
|---|---|
| Monthly Service Fee | 6% of gross sales (6.5% under certain circumstances). |
| Taxes | As levied by tax authorities. |
| System Advertising Fund Contribution | 4.75% of gross sales. |
| International Pizza Hut Franchise Holders Association (IPHFHA) Dues | 4.75% of gross sales (set by franchisees). |
| Digital Innovation Fees | Currently, $0.38 per transaction conducted through a digital or other automated channel established by the franchisor. |
| Restaurant Technology Fee (currently, a “SUS Fee”) | $2,500 per year. |
| Software Training Fee | $1,500 plus travel and living expenses. |
| Initial Training Costs | All living and transportation expenses of all trainees. However, the amounts are unknown and may vary depending upon factors such as the third-party supplier selected and the franchisee’s distance from training. Additional and subsequent trainee charge: $500 per person per week. |
| On-Site Training and Assistance | The then-current training fees plus expenses. |
| On-Going Training | The then-current training fees plus expenses. |
| Proprietary Products | Franchisees must buy proprietary products from the franchisor (RSCS, if it offers and sells same), its affiliate or designee. |
| Inspection and Testing Costs | Franchisees must reimburse the franchisor for all costs and expenses incurred in connection with the review, inspection and/or approval of a proposed product or supplier, including any salary, travel and lodging expenses. |
| Audit | The amount of the audit expenses is unknown and may vary depending upon factors such as the auditor selected. |
| Late Charges | Currently 1.5% per month. |
| Unauthorized Closure | An amount equal to 24 times the average Monthly Service Fees paid or due with respect to the closed system restaurant during the prior calendar year. |
| Relocation | Varies, depending on the franchisor’s costs in connection with reviewing and/or approving the request. |
| Transfer Fee | $2,500 plus an additional $250 per system restaurant transferred. |
| Advances | Varies. |
| Indemnification of PHLLC | Varies. |
| Attorneys’ and Experts’ Fees, Court Costs | The amount of these fees and costs are unknown and may vary depending upon factors such as the attorneys and experts selected and the court costs. |
Did You Know?
- An initial franchise term lasts for ten years. Only then after can a franchisee may renew for two consecutive terms, both having a five-year duration.
- Franchisees may purchase an existing Pizza Hut restaurant, then Pizza Hut will evaluate if they can grant the franchise’s request.
- Pizza Hut supports two causes, BookIt and the Harvest Program. Firstly, the BookIt cause aims to help students reach their reading goals. Meanwhile, for the Harvest Program, the pizza chain donates excess food to local food banks for the hungry.
- Financing options are available in rare cases:
- There’s the YUM Minority Lending Assistance Program. To explain, YUM guarantees that the franchisee will receive 25% of the principal of the franchised business loan. As a matter of fact, the amount may go up to $3,000,000 per loan or franchisee.
- The other is the Pizza Hut Employee Lending Assistance Program, for qualified former employees. It follows the same stipulation (25% of the principal of the franchise business loan), but with only up to $1,250,000 per loan or franchisee.
Starting a Pizza Hut Franchise
Now you know what the Pizza Hut Franchise cost is, you can start applying for a franchise. Before that, Pizza Hut also requires a franchisee to have had experience in retail and service management or ownership. Furthermore, a franchisee should always have a growth mindset and a passion for operations.
Firstly, you can fill out a form on the Pizza Hut franchise website. Once you complete all details, submit the form. You can also sign the form here. Pizza Hut will then contact you to assess if you’re a good fit for a franchise.
If you are, then you’ll sign the Franchise Disclosure Document. They’ll also verify your financial assets and location. Moreover, they’ll conduct a background check and review your application, plus goals and plans for the franchise. In short, learn more about the three-step process of becoming a franchisee with them here.