One of the reasons some opt for a franchise is because of the brand recognition. After all, it’s easier to market a product that is already known by many.
Take, for instance, Pizza Hut. The franchise has been around since 1959. Now, the company has expanded to more than 7,000 units in the US alone. No doubt it’s rare to find someone who does not know the brand.
If you want to leverage the company’s popularity, here’s a guide on how much does the Pizza Hut Franchise cost.
Average Pizza Hut Franchise Cost
According to the company’s Franchise Disclosure Document (FDD), the initial investment cost runs from $279,000 to more than $2.1 million. The exact price will depend on the type of unit you plan to establish. Following are the average costs:
- Red Roof Dine-in Restaurant: $852,000 to $2,144,000
- Freestanding “Delco” Delivery/Carryout Restaurant: $545,000 to $917,000
- In-line/Endcap “Delco” Delivery/Carryout Restaurant: $279,000 to $563,000
The Pizza Hut franchise cost includes the following expenses:
- Franchise fee
- Real estate and location improvements
- Equipment and Supplies
- Other opening costs
Pizza Hut Franchise Startup Fee
You have an obligation to pay a franchise fee of $25,000 before you open a Pizza Hut restaurant. You should settle this one-time payment during the signing of the Development Agreement.
The term for a Pizza Hut franchise lasts 20 years. As of now, the company offers no option to renew.
Real Estate and Location Improvements
The company’s website and the reference site Franchise Direct did not specify the real estate costs. However, the latter has listed average costs for building and site improvements for each unit type. The specifics are as follows:
- Red Roof Dine-in Restaurant: $540,000 to $1.5 million
- Freestanding “Delco” Delivery/Carryout Restaurant: $325,000 to $525,000
- In-line/Endcap “Delco” Delivery/Carryout Restaurants: $125,000 to $200,000
The costs of land and development fees, on the other hand, varies depending on your location.
According to the company, you as the franchise owner will be the one responsible for the construction of the restaurant. That said, you will still receive support from Pizza Hut.
For instance, the company will provide you with names of general contractors with experience building Pizza Hut restaurants. Furthermore, the franchisor’s Architecture and Engineering team will assist with construction plans.
Note that you can set up a Pizza Hut chain in non-traditional locations such as:
- Airports
- Shopping malls
- Campuses
- Entertainment sites
- Travel centers
- Stadiums
- Business sites
- Casinos
- Healthcare facilities
- Resorts
Equipment and Supplies
The costs of equipment and supplies vary depending on the type of restaurant you wish to establish. The list of averages include:
- Red Roof Dine-in Restaurant
- Equipment: $225,000 to $450,000
- Opening inventory: $4,000 to $8,000
- Smallwares: $25,000 to $50,000
- Freestanding “Delco” Delivery/Carryout Restaurant
- Equipment: $125,000 to $200,000
- Opening inventory: $4,000 to $8,000
- Smallwares: $15,000 to $22,000
- In-line/Endcap “Delco” Delivery/Carryout Restaurant
- Equipment: $100,000 to $175,000
- Opening inventory: $4,000 to $8,000
- Smallwares: $10,000 to $18,000
Note that Pizza Hut does not allow you to use any equipment or furnishing you already own. That said, you should follow standards and specifications regarding the above expenses. Work closely with the Restaurant Supply Chain Solutions (RSCS) to know what you should purchase for your store.
Other Opening Costs
Aside from the Pizza Hut franchise startup fee, location, and equipment, expect to spend for the following opening costs:
- Development services fee: $35,000
- Computers: $15,000 to $30,000
- Advertising: $25,000
- Miscellaneous expenses: $10,000 to $22,000
- Other startup expenses: $3,000 to $5,000
The above costs apply to all Pizza Hut restaurants. The company didn’t include averages for delivery vehicles.
You should also secure an additional fund of $5,000 to $20,000 as a working capital. The cost will cover the first 3 months of your business.
Training
Pizza Hut will only allow you to operate the business after you complete their training program. The said program will last from 8 to 12 weeks. You and your key operator will train in a restaurant in Dallas, Texas.
The company will be the one to shoulder the training costs. Note, however, that you are responsible for all other expenses such as travel and lodging.
Additional Fees
You have other obligations aside from the Pizza Hut franchise startup fee. Opening and ongoing fees include:
- Monthly service fee (royalties): 6% of gross sales
- National advertising fee: 2.5% to 3% of gross sales
- IPHFHA dues: 2% to 3% of gross sales
- Digital innovation fund: $0.27 per online order
- Software training fee: $1,500 plus travel and living expenses
- Software maintenance/support fee: $1,792 per year per unit for all services
- Inspecting and testing costs: Up to $50,000
- Late charges: 1.5% per month (as set by PHLLC)
- Unauthorized closure: Double the past year’s monthly service fee
- Relocation: Maximum of $25,000
- Transfer fee: $2,500 plus additional $250 per unit
Requirements to Become a Pizza Hut Franchise Owner
So, what are the qualifications of a franchise owner set by Pizza Hut? Financially, the requirements include:
- Net worth of $700,000
- Liquid assets worth $350,000
- Strong credit report and history
- Financial plan for future development
Additionally, you as a franchise applicant should have a successful retail or restaurant business ownership experience. Lastly, you must be passionate with handling the operations. That is, you should be “hands-on” with the store, focused with strict attention to detail, and able to build a capable team.
Approval Process
It will take some time before you can open your Pizza Hut franchise. The approval process includes the initial qualification which involves background checks and interviews. This phase generally lasts 10 to 12 weeks.
After the initial qualification, it will take another 3 to 9 months to identify and secure an opportunity. The exact time will depend on the size and scope of your franchise.
You would sign the Development Agreement once the company approves your trade area. After the signing, you will have a year’s time to prepare everything for the grand opening.
The process proves to be a stringent one. It’s only fitting, though, as Pizza Hut is the largest pizza company in the world. With its popularity and your passion, your business will surely grow. Good luck!
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