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FDD Talk 2017: What You Need to Know About the Pizza Hut Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

by Franchise Chatter on April 23, 2017

in FDD Talk 2017: Food Franchises, Franchise Earnings, Pizza Franchises



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In this FDD Talk 2017 post, you’ll learn the following:

  • Section I – Background information on the Pizza Hut franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Pizza Hut franchise, based on Item 7 of the company’s 2017 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Pizza Hut franchise, based on Items 5 and 6 of the company’s 2017 FDD
  • Section IV – Presentation and analysis of Pizza Hut’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
  • 2016 average gross sales, cost of sales, cost of labor, cost of advertising, semi-variable costs, other semi-variable costs, other fixed costs, rent, and EBITDA for the 39 company-owned “Red Roof” Dine-In Pizza Hut Restaurants with leased real property that had been open a minimum of one year as of December 31, 2016
  • 2016 average gross sales, cost of sales, cost of labor, cost of advertising, semi-variable costs, other semi-variable costs, other fixed costs, rent, and EBITDA for the 198 company-owned Delivery/Carryout Pizza Hut Restaurants with leased real property that had been open a minimum of one year as of December 31, 2016

Section I – Background Information

13 Things You Need to Know About the Pizza Hut Franchise

Providing 11,000 Jobs and Growing the Number of Stores



1.  Early this year, Pizza Hut announced that it expected its U.S. locations to fill up to 11,000 job openings before Super Bowl Sunday. Pizza Hut said that Super Bowl Sunday is one of the busiest days of the year for the chain, and having a large number of employees is the key to quick and reliable service. Positions available ranged from pizza makers, delivery drivers, store managers, and more.

2.  The company said that the uptick in hiring “reflects Pizza Hut’s commitment to improving the customer experience, fueling restaurant growth, and unlocking the best potential in all restaurant employees.”

3.  Last year, Pizza Hut announced that it would grow the number of U.S. stores to 8,500 – and 20,000 worldwide – over the next few years. Through the expansion, Pizza Hut hoped to provide more jobs, better customer service, and more opportunities for franchisees to offer career-building training and education programs.

Giving Fans a Chance to Win Custom Shoes That Can Order Pizza

4.  As the Official Pizza of the NCAA, March Madness and the Final Four, Pizza Hut announced in early March that it had created a custom basketball shoe that can order pizza for delivery at the press of a button located on the shoe’s tongue. The shoes, dubbed “Pie Tops,” use Bluetooth communication to connect to the Pie Top app on the user’s phone.

5.  According to David Daniels, Vice President, Media & Advertising, Pizza Hut, “Pie Tops are a culturally-timed creative expression of our commitment to providing the easiest pizza ordering and delivery experience possible.” To showcase how easy it is to order a pizza with the Pie Tops, Pizza Hut ran a TV campaign starring March Madness legend Grant Hill.



6.  Last year, Pizza Hut announced that it had signed a multi-year contract with the NCAA and launched the Pizza Hut All-American program, providing one fan the opportunity to attend every Division I national championship. This year’s Pizza Hut All American is Jason Zone Fisher.

7.  Starting on March 30, to celebrate the Final Four match-ups, Fisher gave away Pie Tops to a select number of fans in Phoenix. For those that could not attend the event in person, Fisher launched an online contest called “Pie Tops Hunt” on April 3. The contest was a virtual 360 panoramic hunt to spot a pair of the Pie Tops hidden in Phoenix Stadium.

Making Pizza Ordering Easier with Amazon

8.  Late last year, Pizza Hut announced that it had added new ordering capabilities through the Alexa Voice Service on Amazon Echo, Amazon Tap, Echo Dot, Amazon Fire TV, and Fire tablets. Through Alexa, users have the option to order from a menu of the most popular Pizza Hut items. Customers can also order their favorites and access past orders.

9.  To order through Alexa, customers have two different voice command options: “Alexa, open Pizza Hut” and “Alexa, ask Pizza Hut for a pizza.” Menu items that are available through this method of ordering include: Pepperoni Pizza, Meat Lover’s Pizza, Cinnamon Sticks, Breadsticks, Pepsi, Moutain Dew, and more of Pizza Hut’s best selling items.

10.  On February 9, National Pizza Day, Pizza Hut offered customers that used Alexa to place their orders 30 percent off their total bill. The promotion ran until February 16 and was available for delivery and carry-out orders.



Company History

11.  Pizza Hut was founded in 1958 by brothers Dan and Frank Carney in Wichita, Kansas. The brothers borrowed $600 from their mother to open a pizza place and named it Pizza Hut because the sign could only fit eight letters. A few years later, in 1960, the first franchised location opened in Topeka, Kansas.

12.  Pizza Hut was acquired by PepsiCo in 1977 and is currently owned by Yum! Brands, which was created as PepsiCo’s fast food division. Today, there are over 7,000 Pizza Hut restaurants in the U.S. and over 8,000 international locations.

Entrepreneur’s Franchise 500

13.  Pizza Hut has appeared on Entrepreneur’s annual Franchise 500 list every year in the last decade. With the exception of this year’s rank of No. 497, the company tends to rank in the Top 20 franchises. Pizza Hut’s highest position on the list was No. 4 in 2008.

Section II – Estimated Costs

  • Please click here for detailed estimates of Pizza Hut franchise costs, based on Item 7 of the company’s 2017 FDD (updated).

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on Pizza Hut’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis



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