Pizza hut franchises are one the best fast food franchise with ever-increasing popularity. Do you want to start a Pizza Hut franchise or do you wish to know the cost of opening a Pizza Hut franchise? No need to worry as we will discuss the cost of opening a Pizza Hut franchise in this article.
Pizza Hut franchises: Cost to Start
A total investment of $297,000-$2.11 million is required, besides a $25,000 licensing fee. You’ll need $360,000 in liquid capital and a net worth of about $700,000.
Total net worth is a combination of your holdings such as a home and retirement funds. Liquid capital refers to the amount you need in hand.
Fee and Financial Requirements
|Expenses / Fee|| Amount|
|Total Investment||$297,000 – $2,109,000|
Here’s a detailed breakdown of Pizza Hut’s starting charges.
|Initial Franchise Fee||$25,000||$25,000|
|Building and Site Improvements||$190,000||$1,575,000|
|Computer System Training||$0||$1,500|
|Additional Funds (3 months)||$5,000||$21,500|
Other fees that may arise monthly or annually, this includes their royalty fee.
|Tax||According to tax authorities.|
|Monthly Service||6% or 6.5% of gross sales|
|Advertising Fund Contribution||4.75% of total sales.|
|Digital Innovation||$0.38 per transaction|
|International Pizza Hut Franchise Holders Association (IPHFHA) Levy||4.75% of total sales, fixed by franchisees|
|Software Training||$1,500 plus travel and lodging expenses|
|Restaurant Technology||$2,500 Annually|
|Initial Training Cost||$500 per person, weekly.|
|Transfer Fee||$2,500 plus $250 for every system restaurant transferred.|
|Late Charge||1.5% per month.|
Pizza Hut has a large collection of fees that has a huge impact on profit margins and is the main reason franchisees don’t make a lot of money.
Average Sales / Annual Revenue of Pizza Hut Franchises
The average Pizza Huts outlet generates $714,000 in sales. The entire system generates annual revenue of $3.5 billion. After all expenses, each franchisee will make an average of $100,000.
Global sales for the franchise have been doing well and Pizza Hut is expanding its global footprint, while domestic sales have been struggling.
Of course, many stores surpassed the aforementioned averages. Here are a few reasons certain stores outperform expectations.
Pizza Hut would not be where it is today without the support of its parent company, Yum! Brands. They are also the reason that Pizza Hut’s menu is so diverse. Yum! Brands allow this to happen and direct marketing and management to handle customer outreach.
Because they specialize in branding, the company understands how to get your franchise in front of customers. If you become a part of the company, you will have access to the marketing and technical support you require via mobile apps.
Pizza Hut’s menu has evolved to reflect current trends and consumer preferences.
They’ve supported a variety of creative ideas and promotions, including meat pie, hot dogs, beef poutine, macaroni and cheese sauce, cheeseburger, and much more!
Pizza Hut also sells chicken wings, which are a highly lucrative menu item that is also simple to prepare.
Depending on where a franchise is located, it will adapt its menu to what is popular in the area, focusing on making new types of pizza flavors such as the famous Taco Pizza, which is available in almost any part of the Midwest.
This encourages repeat visits.
Pizza Hut has over 17,000 stores globally, giving them a large footprint. Pizza Hut franchises can be found almost anywhere, including school campuses, airports, shopping malls, and standalone locations.
Delivery, carryout, and pickup services have also been available for decades. This adds flexibility that not all fast-food chains can provide.
Benefits of Pizza Hut Franchise
Below are some of the key benefits of starting a Pizza Hut franchise.
1. Part of a Bigger Brand
The most important thing to remember is that you will be a part of a large network and brand company.
For example, your marketing will already have a strong presence on social media. Branding assistance is provided, as well as multi-branding. Pizza Hut, for example, has already added chicken wings to its menu.
Pizza and chicken wings complement each other well, providing more opportunities for expansion, a big customer base, and, of course, more revenue.
Customers will have more alternatives and variations on how to do business with you because Pizza Hut franchises offer delivery services.
You can also contact the corporate headquarters via toll-free phone numbers or online. They will provide any type of training, as well as keep you and your employees up to date on trends and provide organizational support.
Pizza Hut alone has over 17,000 outlets, so networking opportunities abound within this system.
4. Territorial Protection
Pizza Hut will also protect your new franchise’s territory.
This ensures that other fast-food chains and competitors are not within a certain radius of your stores, giving you a defined territory other store owners will not enter.
5. Lending Assistance
Pizza Hut has some franchise lending help programs available. However, these do not contribute to the initial investment, so you must contribute your own funds.
However, because some franchises do not provide any financial help, this is still a great option.
- Programs provide some financial help.
- Yum! Brands provide management, training, and other services.
- Menu options that are unique
Pizza Hut Franchises Difficulties
Every franchise faces unique difficulties that must be overcome. Pizza Hut is exactly the same.
There are so many pizza eateries available, some of which specialize in pizza or offer different varieties, making it difficult for Pizza Hut to contend with increased competition.
Domino’s, for example, is the market leader in American fast-food pizza, with 17,600 locations in 90 countries. Besides small ma-and-pa players, there’s also Chicago-style pizza and New York-style pizza.
2. Declining Sales
Another factor to consider is that Pizza Hut’s corporate sales have been declining in the United States.
This could be because of trends, the intensity of rivalry outdoing Pizza Hut, or other factors, some store unit sales fell 4% last year.
The company appears serious about turning around the company’s performance with new leadership and menu innovation.
3. Huge Investment Capital
The amount of money you’ll need to invest can quickly add up, especially when you consider the fees you’ll face later on. The costs could range from $300,000 to $2 million! It’s an important leap.
There are also ongoing fees that can add up to a huge amount of money and eat into your profit margins.
4. Outlet Construction
Pizza Hut does not assist with the construction of outlets during the initial stages of your franchise.
They also demand that your restaurant opens within a year, so you’ll need to ensure that all construction of a store is finished and that you have funding in place.
Pizza Hut runs credit reports and checks on new franchise owners to ensure they have excellent credit so that the start-up doesn’t face too much trouble, particularly with financing.
Is the Pizza Hut Franchises a Good Investment?
a score to open a Pizza Hut franchise, you must have a combination of liquid assets and capital ready before investing in the franchise.
Your credit must be in top form, as Pizza Hut will not allow you to proceed if it is not. A credit score of 740 or higher is considered good, and a score of 800 or higher is considered perfect.
For Pizza Hut’s basic training, you’ll need to put in more on-the-job hours than classroom hours. Prepare to get your hands a little cheesy and saucy, if not dirty.
If you’re worried about the business administration side, don’t be because they have the assets to educate you in that area.
Someone with previous experience in managing people or a business, preferably in the fast food industry, is the best person for Pizza Hut.
This will expedite their approval process and get you prepared to operate on your own.
Pizza Hut will not refuse to train you if you have never managed or worked in the food business, however it will take them less time to train and educate somebody with experience.
Despite the Yum! Brands’ support, don’t expect to have everything taken care of for you because you’ll still have to step up in order to earn a profit for yourself.
When it comes to pizza, there is a lot of competition in the US States, and you must stand out.
As a franchisee, you’re betting that Yum! Brands’ management will keep innovating in the coming years. This bet has historically been profitable, but there is no assurance for the future.
Frequently Asked Questions
Overall, no eatery franchise is simple to run. If you want something simple and easy, franchising is not the way to go.
However, if pizza is your specialty, you have excellent credit, and can follow a winning strategy, Pizza Hut will gladly welcome you with loving arms!