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

Section I – Estimated initial investment (franchise costs) for a Pizza Hut franchise, based on Item 7 of the company’s 2022 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Pizza Hut franchise, based on Items 5 and 6 of the company’s 2022 FDD

Section III – Number of franchised and company-owned Pizza Hut outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD

Section IV – News updates on the Pizza Hut franchise opportunity

Section V – Presentation and analysis of Pizza Hut’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:

• 2021 average, median, highest, and lowest gross sales; average cost of sales; and average cost of labor for the 22 company-owned Pizza Hut restaurants that were open and operating for at least one year as of December 27, 2021 and that were situated on leased real property

• 2021 average, median, highest, and lowest gross sales for the 2,057 franchised Pizza Hut restaurants of the Dine-In/Red Roof and RBD restaurant concept type that were open and operating for at least one year as of December 27, 2021

• 2021 average, median, highest, and lowest gross sales for the 2,563 franchised Pizza Hut restaurants of the Delco Delivery/Carry-Out restaurant concept type that were open and operating for at least one year as of December 27, 2021

• 2021 average, median, highest, and lowest gross sales for the 4,620 franchised Pizza Hut restaurants that were open and operating for at least one year as of December 27, 2021

• 2020 average, median, highest, and lowest gross sales; average cost of sales; and average cost of labor for the 20 company-owned Pizza Hut restaurants that were open and operating for at least one year as of December 28, 2020 and that were situated on leased real property

• 2020 average, median, highest, and lowest gross sales for the 2,095 franchised Pizza Hut restaurants of the Dine-In/Red Roof and RBD restaurant concept type that were open and operating for at least one year as of December 28, 2020

• 2020 average, median, highest, and lowest gross sales for the 2,537 franchised Pizza Hut restaurants of the Delco Delivery/Carry-Out restaurant concept type that were open and operating for at least one year as of December 28, 2020

• 2020 average, median, highest, and lowest gross sales for the 4,632 franchised Pizza Hut restaurants that were open and operating for at least one year as of December 28, 2020

Section VI – Key ratios, comparables, computations, and analyses for the Pizza Hut franchise opportunity (exclusive content for Platinum subscribers)

Section I – Pizza Hut Franchise Costs

• Pizza Hut franchise costs (for RBD and DBR Dine-In/Delivery/Carryout System Restaurants), based on Item 7 of the company’s 2022 FDD:

• Initial Franchise Fee:  $25,000
• Equipment:  $150,000 to $300,000
• Opening Inventory:  $4,000 to $8,000
• Smallwares:  $15,000 to $50,000
• Building and Site Improvements:  $550,000 to $1,575,000
• Land:  Varies
• Delivery Vehicles:  Varies
• Computer System:  $20,000 to $40,000
• Computer System Training:  $0 to $1,500
• Additional Funds (3 months):  $5,000 to $21,500
• Miscellaneous:  $10,000 to $22,000
• Advertising:  $0 to $16,500
• Start-up/Other:  $3,000 to $4,000
• Total Estimated Pizza Hut Franchise Costs:  $787,000 to $2,063,500

Section II – Pizza Hut’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Pizza Hut’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:

• Initial Franchise Fee:  $25,000
• Monthly Service Fee:  6.0% of Gross Sales (6.5% of Gross Sales under certain circumstances)
• System Advertising Fund Contribution:  4.75% of Gross Sales

Section III – Number of Franchised and Company-Owned Pizza Hut Outlets

Franchised

2019

• Outlets at the Start of the Year:  6,124
• Outlets at the End of the Year:  5,953
• Net Change:  -171

2020

• Outlets at the Start of the Year:  5,953
• Outlets at the End of the Year:  5,323
• Net Change:  -630

2021

• Outlets at the Start of the Year:  5,323
• Outlets at the End of the Year:  5,295
• Net Change:  -28

Company-Owned

2019

• Outlets at the Start of the Year:  24
• Outlets at the End of the Year:  23
• Net Change:  -1

2020

• Outlets at the Start of the Year:  23
• Outlets at the End of the Year:  22
• Net Change:  -1

2021

• Outlets at the Start of the Year:  22
• Outlets at the End of the Year:  22
• Net Change:  0

Section IV – News Updates on the Pizza Hut Franchise

• Detroit-Style Returns to Pizza Hut Nationwide

• Pizza Hut Introduces New Oven-Baked Pastas to Menus Nationwide

• Pizza Hut Partners With Dairy Farmers of America on Innovative Farm-Level Sustainability Project Through 2024

• David Graves Promoted to Pizza Hut U.S. President, Effective January 1, 2022

• Pizza Hut Ranks No. 60 on Entrepreneur’s 2022 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Pizza Hut Franchise (Item 19, 2022 FDD)

• Set forth below are historical data for certain domestic traditional Pizza Hut outlets owned and operated by Pizza Hut or its affiliates (“Company-Owned System Restaurants”) and certain domestic traditional Pizza Hut outlets owned and operated by franchisees (“Franchised System Restaurants”).

Part 1 – Mature Company-Owned Restaurants

• The financial performance representations below provide certain information regarding Company-Owned RBD and Delco System Restaurants that were open and operating for at least one year as of the end date of December 28, 2020 and December 27, 2021, respectively (each, a “Reporting Period”) that were situated on leased real property (“Mature Company-Owned System Restaurants”).

• RBD stands for Restaurant-Based Delivery System Restaurants from which Pizza Hut pizza and other products approved by PHLLC (“Approved Products”) are sold for dine-in and carry-out consumption, and may be delivered for off-premises consumption.

• Delco stands for Delivery/Carry-out System Restaurants from which Approved Products are sold for carry-out and are delivered, all for off-premises consumption.

• Specifically excluded from Mature Company-Owned System Restaurants are System Restaurants for which PHLLC or its affiliates owned the real property; carry-out only System Restaurants; seasonal System Restaurants; Express Restaurants (for which licenses are offered under a separate disclosure document); or any type of System Restaurant other than traditional RBD and Delco System Restaurants.

• As of December 28, 2020, there were 20 Mature Company-Owned System Restaurants, and as of December 27, 2021 there were 22 Mature-Company-Owned System restaurants, which are reflected in the subset information provided below.

A1. 2020 Average Performance (ended December 28, 2020) – Mature Company-Owned System Restaurants

• Number of Mature Company-Owned System Restaurants:  20
• Average Gross Sales:  $900,704
• Median Gross Sales:  $895,600
• Lowest Gross Sales:  $490,757
• Highest Gross Sales:  $1,374,461
• Average Cost of Sales:  $237,569 (26.3%)
• Average Cost of Labor:  $292,005 (32.6%)

A2. 2021 Average Performance (ended December 27, 2021) – Mature Company-Owned System Restaurants

• Number of Mature Company-Owned System Restaurants:  22
• Average Gross Sales:  $981,650
• Median Gross Sales:  $958,000
• Lowest Gross Sales:  $554,791
• Highest Gross Sales:  $1,586,726
• Average Cost of Sales:  $261,946 (26.3%)
• Average Cost of Labor:  $343,812 (34.9%)

• “Average Gross Sales” is the mathematical average of the total annual cash or other payments received for the sale or use of any products, goods, or services that were sold from the System Restaurants included within the group, less applicable discounts, allowances, and sales taxes.

• “Average Cost of Sales” is the mathematical average of the total annual delivered cost of food, beverages, paper, and promotional items to the System Restaurants included within the group, expressed as a percentage of Average Gross Sales.

• “Average Cost of Labor” is the mathematical average of the total annual hourly labor costs, the salaries and related costs of management, payroll taxes, health insurance, vacation pay, sick pay, bonuses, and workers’ compensation insurance for all employees at the System Restaurants included within the group, expressed as a percentage of Average Gross Sales.

Part 2 – Mature Franchised System Restaurants

• The financial performance representations below provide certain information regarding the Franchised System Restaurants – of the Dine-In/Red Roof, RBD, and Delco Delivery/Carry-out Restaurant Concept type – that were open and operating for at least one year as of the end date of the Reporting Periods dates listed in the chart below (“Mature Franchised System Restaurants”).

• “Red Roof” System Restaurants are restaurants from which Approved Products are sold for dine in and carry-out consumption. PHLLC generally no longer offers franchises for Red Roof System Restaurants (though it does permit existing Red Roof System Restaurant franchisees to renew and transfer their franchises to the extent such renewal and/or transfers are permitted by the subject Pizza Hut Franchise Agreement governing such Restaurants).

• RBD stands for Restaurant-Based Delivery System Restaurants from which Pizza Hut pizza and other products approved by PHLLC (“Approved Products”) are sold for dine-in and carry-out consumption, and may be delivered for off-premises consumption.

• Delco stands for Delivery/Carry-out System Restaurants from which Approved Products are sold for carry-out and are delivered, all for off-premises consumption.

• Specifically excluded from the definition of Mature Franchised System Restaurants are those DBR/FCD System Restaurants; carry-out only System Restaurants; seasonal System Restaurants; Express Restaurants (for which franchises are offered under a separate disclosure document); or any type of System Restaurant other than traditional Dine-In/Red Roof, RBD, and Delco Delivery/Carry-out System Restaurants.

• As of December 28, 2020, although there was a total of 5,321 Franchised System Restaurants, there were 4,632 Mature Franchised System Restaurants, and as of December 27, 2021, although there was a total of 5,309 Franchised System Restaurants, there were 4,620 Mature Franchised System Restaurants.

• Any Mature Franchised System Restaurant that closed during the Reporting Period in the table below is excluded from Restaurants included in such period.

A1.  2020 Average Performance (ended December 28, 2020) – Mature Franchised System Restaurants of the Dine-In/Red Roof and RBD Restaurant Concept Type

• Number of Mature Franchised System Restaurants of the Dine-In/Red Roof and RBD Restaurant Concept Type:  2,095
• Average Gross Sales:  $973,080
• Median Gross Sales:  $918,570
• Lowest Gross Sales:  $221,848
• Highest Gross Sales:  $2,922,768

A2.  2021 Average Performance (ended December 27, 2021) – Mature Franchised System Restaurants of the Dine-In/Red Roof and RBD Restaurant Concept Type

• Number of Mature Franchised System Restaurants of the Dine-In/Red Roof and RBD Restaurant Concept Type:  2,057
• Average Gross Sales:  $1,075,836
• Median Gross Sales:  $1,019,310
• Lowest Gross Sales:  $219,847
• Highest Gross Sales:  $2,996,833

B1.  2020 Average Performance (ended December 28, 2020) – Mature Franchised System Restaurants of the Delco Delivery/Carry-out Restaurant Concept Type

• Number of Mature Franchised System Restaurants of the Delco Delivery/Carry-out Restaurant Concept Type:  2,537
• Average Gross Sales:  $950,058
• Median Gross Sales:  $899,546
• Lowest Gross Sales:  $262,711
• Highest Gross Sales:  $3,058,878

B2.  2021 Average Performance (ended December 27, 2021) – Mature Franchised System Restaurants of the Delco Delivery/Carry-out Restaurant Concept Type

• Number of Mature Franchised System Restaurants of the Delco Delivery/Carry-out Restaurant Concept Type:  2,563
• Average Gross Sales:  $1,022,827
• Median Gross Sales:  $971,229
• Lowest Gross Sales:  $218,514
• Highest Gross Sales:  $2,993,149

C1.  2020 Average Performance (ended December 28, 2020) – All Mature Franchised System Restaurants

• Number of Mature Franchised System Restaurants:  4,632
• Average Gross Sales:  $960,470
• Median Gross Sales:  $906,911
• Lowest Gross Sales:  $221,848
• Highest Gross Sales:  $3,058,878

C2.  2021 Average Performance (ended December 27, 2021) – All Mature Franchised System Restaurants

• Number of Mature Franchised System Restaurants:  4,620
• Average Gross Sales:  $1,046,429
• Median Gross Sales:  $988,910
• Lowest Gross Sales:  $218,514
• Highest Gross Sales:  $2,996,833

• The Mature Franchised System Restaurants set forth in Part 2 above includes one System Restaurant that was originally a company-owned System Restaurant, but that was transferred to franchisee ownership during the fiscal year 2019 Reporting Period. This System Restaurant was included in the definition of Mature Franchised System Restaurants since it paid royalties to PHLLC for at least one month during that Reporting Period.

Section VI – Pizza Hut Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️