Pizza Hut Case Study
Autor: goude2017 • February 1, 2018 • 5,582 Words (23 Pages) • 783 Views
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Type of buying decisions made for Pizza Hut is the limited problem solving since the process involves a moderate amount of effort and time. The consumers engaged in the process usually have had previous experience with other fast foods or quick service restaurants. Since, their choice decisions are based on the knowledge of the product in various other such stores they are engaged in limited problem solving.
Franchising format of Pizza Hut – Business format franchise
[pic 4]
Franchise Fee (approx.) – Rs 15,00,000
Royalties – 6.5% of gross sales
Initial Investment – Rs 2.5 – 4 crores
Net worth requirement – approx. Rs 5 crores
Liquidity requirement – approx. Rs 3 crores
Financial assistance – YUM! Capital LLC
Term of franchise – 20 years
Item
Traditional (Red Roof Restaurant)
Delco/Delco-lite
Delivery restaurants
Initial franchise fee
15,00,000
15,00,000
15,00,000
Development Service fee
Variable
Variable
Variable
Development fees
variable
Variable
Variable
Equipment
1,50,00,000
75,00,000-90,00,000
50,00,000-70,00,000
Opening inventory
3,00,000-8,00,000
3,00,000-8,00,000
3,00,000-8,00,000
Small-wares
18,00,000
9,00,000-13,00,000
6,00,000-8,50,000
Land
Variable
Variable
Variable
Delivery vehicles
Variable
Variable
Variable
Computers
5,00,000-10,00,000
5,00,000-10,00,000
5,00,000-10,00,00
Additional Funds
5,00,000-12,00,000
5,00,000-12,00,000
5,00,000-12,00,000
Miscellaneous
6,00,000-10,00,000
6,00,000-10,00,000
6,00,000-10,00,000
Recommended Advertising
10,00,000-15,00,000
0-10,00,000
TOTAL
2.5 - 4 crore
1.25-2.5 crore
1-1.5 crore
Other fees:
Type of fee
Amount
Monthly service fee
6.5% of gross sales
Taxes
As levied by tax authorities
National Advertising
2-3% of gross sales
Local advertising
Difference between 4.25% of the monthly gross sales and the required national advertising contribution rate.
Corporate advertising
Difference between 4.25% of the monthly gross sales and the required national advertising contribution rate.
Digital marketing fund
Rs 6 – 8 per online order
Software training fee
Rs 60,000 plus travel and living expenses
Software maintenance/Support fee
Approx. Rs 1,00,000 per year
Training
Reasonable publication, preparation and administrative fee ( set by PHI)
Additional materials
Reasonable publication, preparation and administrative fee ( set by PHI)
Inspection and testing costs
Rs 0-30,00,000 depending on the product
Audit
Cost of audit. Interest on under payment, not greater than the legal maximum rate.
Employee Piracy
Double the annual compensation of employees involved, plus costs and attorneys’ fees.
Late charges
As set by PHI (currently 1.5 % per month), but not greater than maximum legal rate
Unauthorized closure
Double
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