Earn More MoneyNovember 15, 2021December 6, 2021

How Profitable Is A Pizza Hut Franchise?

A common topic on our website is our franchise series. In these articles, we analyze a few key factors pertaining to how franchises work. The reason why we do this with so many franchises is that there are many options. Therefore, an individual may find it hard to choose which one they want to invest their time and money into. While there are a lot of options, many of them have rather large differences that can either make or break a decision. These differences can come in many forms. Some franchises have relatively high royalties. However, there are other franchises that have a high initial fee.

There are many people who would rather opt-in to pay the higher royalties if it means a lower initial fee. However, there are companies like Chick-Fil-A which don’t necessarily franchise their restaurants in the traditional sense. Therefore, you need to find what your budget is and which company best suits your plan. The great thing about any franchise is that they are always looking for growth opportunities. Therefore, there will always be a chance for you to acquire a franchise.

How To Obtain A Pizza Hut Franchise?

Much like any franchise, there is one main way of obtaining a franchise. That way is applying through the company website. Similar to other companies, you are able to find out a ton of information through their main website. Essentially, if you’re looking to apply to become a franchisee, you would need to go online, visit Pizza Hut’s and click on their link that says “join our family”. Once you’ve done this, you will need to complete a few things. The first is completing basic information about yourself.

This means your name, address, email, and phone number. However, there are a lot more in-depth questions per se. For example, Pizza Hut would like to know your net worth. Furthermore, they require information on how much liquid assets you’re willing to invest into a franchise. There are a few criteria that you have to meet.

If we’re looking at financial requirements, a few criteria need to be met. The first is that you need a net worth of approximately $700,000. However, the more net worth you have, the better. Having a higher net worth exemplifies a few things. The first is that you’re in a better financial situation. This is extremely advantageous due to the fact that many franchises require a large amount of capital. The second reason is that it shows that you are financially literate.

The second financial condition is having approximately $350,000 in liquid assets. This is due to the fact that a lot of your initial investment needs to be paid upfront. This can be the amount you spend on equipment, franchise fee, and other associated costs.

The last financial condition is that you need to have a strong credit report and history. Having this is good in many aspects of life. It’ll help you get loans and other useful resources. Having a strong credit report shows the company that you are reliable. Therefore, if you have a high credit score, you’re more likely to get cheaper interest rates as well.

Aside from the financial conditions, Pizza Hut requires its potential candidates to have successful and adequate experience within the restaurant industry. While it does not outline how many years you need, it is fair to assume that you will need over 5 years of experience. This is due to the fact that running and managing a restaurant takes a lot of experience/knowledge.

The Costs

Some of the costs were already outlined. For example, the $350,000 in liquid assets. However, Pizza Hut provides a more exact range on how much money you’ll need to spend in order to own a franchise.

According to Pizza Hut, the lowest cost opportunities are the inline or carry-out restaurants. However, the initial investment can vary greatly. The initial investment can be from $367,000 to just over $2,000,000. However, these amounts are in USD. Therefore, if you’re in Canada, the amount will be considerably higher. The amount increases based on a few factors. The first is whether or not you’re getting a standalone unit or not. Standalone units tend to cost more money as they are bigger and require more equipment. Furthermore, the amount you pay can be based on the area you’re in. If you find an area that can be considered prime real estate with a lot of traffic, that’ll increase the cost of the initial investment.

How Much Money Can You Bring In?

In terms of how much money a Pizza Hut franchise can bring in, the amount varies. The amount depends on how many sales you bring in. Similar to other franchises, as the franchise owner, your salary will depend on the profit your establishment brings in. Therefore, let’s say your Pizza Hut brings in approximately $700,000 per year. However, after all the costs are settled, it accumulates to $600,000. This means that your gross profit will be $100,000 per year, making this your salary. While this may seem like a lot, there are a few things to remember. The first is that depending on your state, province, etc, a lot of this amount will be reduced due to taxes.

The next thing to remember is that a lot of the money you earn will most likely be put into the debt you incur from the initial investment. Furthermore, a common practice for franchisees is to use a lot of the profit the company gets as incentives. These incentives are used to boost employee morale. Employee morale is absolutely vital within an organization. The frontline workers are the face of the company. Therefore, having high employee morale can help improve customer interaction. This will in turn result in repeat customers. Repeat customers mean more consistent sales which leads to higher profit margins.

Another way that a franchise owner can increase the amount of money they take home at the end of the day is by mitigating their expenses and keeping them low. The lower the costs and higher the sales mean more money will be leftover at the end of the day.

Lastly, there are many opportunities for growth. Therefore, if you have one franchise, it’ll be easier for you to acquire multiple. This is due to the fact that you’ve accumulated a certain amount of trust with the company. With that trust, they are more inclined to give you another establishment. With these extra establishments, you will see your salary skyrocket.

Let’s say you have your first establishment and pay it off within 5 years, you are now cashflow positive. After that, you decide you want another franchise. You acquire it and pay it off in a shorter amount of time than the first due to your experience and funding from the first establishment. Now you are ready to receive your third establishment and it’s a success. At this point, your salary would’ve gone from $100,000 per year to $300,000 per year assuming that all of the franchises are performing the same.

Shameed Chris Khan

Shameed is just a man on a mission to help those around him gain financial success. Obsessed with writing about all things finance, this GTA native is constantly learning and sharing his experiences with others.