About Pizza Hut’s Franchising Business
Pizza Hut is a leading American restaurant chain founded in 1958 by Dan and Frank Carney.
Pizza Hut’s parent franchise company is YUM! Brands. The restaurant began franchising in 1959 and is currently a growing franchise in the American QSR industry. According to Entrepreneur, Pizza Hut only has 53 directly-owned restaurants and 5,310 US franchises and 11,255 international franchises.
Pizza Hut is still actively seeking to open new franchises in the US and worldwide. This provides new investors with a chance to consider Pizza Hut when buying a franchise.
Key Takeaways:
- Pizza Hut serves and delivers pizzas quickly.
- Evaluating the Pizza Hut franchise requires due diligence that professionals at Fransmart can help with.
- Buying a Pizza Hut franchise ranges from $367,000 to $2,063,500.
- Franchisees must undergo franchisee training programs, including an aspect called “The First Slice.”
- Pizza Hut ensures protected territories and a great support system for its franchisees.
- Pizza Hut has strict operation rules, and its franchising cost is high.
How To Buy a Pizza Hut Franchise
Franchisees can choose any of the three types of restaurants:
- Restaurant-Based Delivery (RBD) System Restaurants: These restaurants are sold for dine-in, carryout and delivery.
- Delivery/Carryout (Delco) System Restaurants: These are restaurants with approved products sold for carryout and delivery only.
- Delivery Based Restaurant (DBR)/Fast Casual Delco (FCD) System Restaurants: These are restaurants with approved products sold for dine-in and carryout consumption and delivered for off-premises consumption.
The Cost of Buying a Pizza Hut Franchise
Buying a Pizza Hut franchise ranges from $367,000 to $2,063,500. The franchise cost includes a franchise fee of $25,000 and covers expenses such as inventory, equipment, construction, interior decor, exterior landscaping, signage, hiring, and training.
| 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 |
The length of Pizza Hut’s initial franchise term is 10 years. Franchisees can renew their franchise agreements for two terms of 5 years each if they meet the criteria from the initial franchise term.
How To Finance Your Pizza Hut Franchise
YUM! Brands, Pizza Hut’s parent franchise company, offers two sources of financial assistance to franchisees:
- YUM Minority Lending Assistance Program: This lending assistance program is targeted at minority franchisees. Participation depends on whether a minority franchisee satisfies YUM’s participation criteria and is permitted to participate. YUM guarantee 25% of the principal of the franchised business loan, up to a maximum of $3,000,000 per loan or franchisee.
- Pizza Hut Employee Lending Assistance Program: The franchisor offers affiliates an optional lending assistance program. If franchisees satisfy the requirements, the lending assistance will guarantee 25% of their loan principal under this program capped at $1,250,000 per franchisee.
Apart from the two highlighted financial support programs from Pizza Hut, the company does not offer any other arrangements to finance the investment cost. To finance their planned Pizza Hut franchise, franchisees can turn to financial service firms for loans.
Pizza Hut’s Franchise Training and Support System
New franchisees must complete the initial training program at Pizza Hut’s headquarters and its system restaurant in Plano, Texas. “The First Slice” of the Pizza Hut training takes 8 and 12 weeks. The following is required from franchisees:
- Full attendance at franchisee onboarding meetings with selected Pizza Hut’s functional leaders
- Undergo in-restaurant training and web-based training at the stipulated times
- Full attendance at pizza prep classes
- Satisfy all portions of the First Slice onboarding checklist
The length of training at the First Slice is dependent on the franchisee’s and their operator’s experience. The training is meant to finish at least a month before the restaurant’s planned opening. Further training can be requested by franchisees or mandated by the franchisor based on an assessment of planned operations.
Advantages and Disadvantages of Buying A Pizza Hut Franchise
These are some of the identified advantages of buying a Pizza Hut franchise:
Competitive Protection
Pizza Hut provides competitive protection for its franchisees from up to a 500-yard radius away from each franchise. The protected radius of a franchise is guaranteed as long as it is operated according to Pizza Hut’s established guidelines. Furthermore, Pizza Hut grants franchisees specified delivery areas for each system restaurant they operate, within which the franchisee may deliver the approved products.
Great Franchisor Support System
Pizza Hut provides a great support system for its franchisees. Ongoing business support includes a newsletter, franchisee conventions, a grand opening, online support, and a toll-free line.
Pizza Hut also offers marketing support such as loyalty programs, a meal app, co-op advertising, and ad templates.
The following are the identified disadvantages of a Pizza Hut franchise:
Strict Operation Rules
Pizza Hut expects franchisees to participate fully in the daily operations of its system restaurant, although it is not compulsory. Some of its many stipulated operations rules include:
- A system restaurant must be supervised by an on-site manager who underwent the franchisor’s mandatory training program.
- Franchisees must have one or more qualified operators for the daily operations at a franchise.
- Franchisees must sell only all approved products except otherwise agreed.
These many rules at a franchise can hamper the ability to run your Pizza Hut autonomously which can irk entrepreneurs.
High Franchise Costs
There are plenty of franchises such as Ike’s, Rise, and Brooklyn Dumpling Shop that offer lower start-up costs than Pizza Hut. Pizza Hut requires a franchisee to pay an initial franchise fee, pay for construction costs, buy equipment, and fund other startup costs. The minimum for a Pizza Hut franchise is about $367,000 and can rise to around $2,063,500.
Alternative Emerging Brands
Fransmart, is the leading franchise development firm for emerging brands. They discovered Five Guys, Qdoba and The Halal Guys and turned them into international sensations. Using Fransmart you can have help deciding if a Pizza Hut franchise is for you, or if another profitable franchise investment opportunity for sale in the USA with a low cost and the high success rate is a better investment.
You’ll be able to compare investing in a Pizza Hut franchise with some new, exciting, emerging brands like:
- RISE SOUTHERN BISCUITS & RIGHTEOUS CHICKEN
- BROOKLYN DUMPLING SHOP
- CURRY UP NOW
- IKE’S LOVE & SANDWICHES
- JARS BY FABIO VIVIANI
- SLAPFISH
- THE HALAL GUYS
- TAFFER’S TAVERN
- SAVANNAH SEAFOOD SHACK
Conclusion
Working with Fransmart you can have professional help evaluating the Pizza Hut franchise opportunity, along with other fast-casual brands. Contact Fransmart today to get started on your franchise journey.