Introduction
The two franchises, which I’ve narrowed it down to, are Pizza Hut and Domino’s Pizza. They are both in the same line of industry, fast food. Mostly all Domino’s Pizza stores are usually take away and delivery stores. Domino’s Pizza sells a variety of pizzas, but do not sell or offer as many side portions. Domino’s Pizza always has offers or deals that sound, and are really good.
Pizza Hut can either be set up as a restaurant or just as a take away shop. If I set up a Pizza Hut restaurant then there wouldn’t be any delivery service being done by me. Pizza Hut sells a variety of pizzas, which is their main product. They also have a side menu which you can buy things like salad, garlic bread, ice cream etc. When I say that you can buy salad there is a salad bar where the customer can choose what they want and can take as much as they would like to eat and is only one fixed price for the salad. There are also other offers that are good for money. Inside these restaurants, there is a lot seating space. The service is very good from the waiters/waitresses. I can say that the quality of the food is good as well. Personally, I think the prices are pretty reasonable.
If I decided to open up a Pizza Hut restaurant, I think I’d open it up inside St.George’s Harrow shopping centre. I think that it would be perfect in there, because there is a cinema in there. Therefore, when kids go to the cinema they would usually go with their friends, so they would want to eat either before or after the film. Now you would probably be saying to me right now, ‘there must be other fast food outlets there at the moment?’ Well I have already thought of that, ask yourself this question, ‘would you rather go to some where like McDonalds, buy your food and then try find a seat, knowing that you may not find one or would you go some where like Pizza Hut, walk in and they give you a table and give you service like you’re the only one there?’
If I decided to open up a Domino’s Pizza franchise, I think that I would open it up right next to the video rental along Greenford Avenue. I think that this place would be perfect because if you went to get a video then most people would have a take away pizza to go with it. So, it is very convenient if they are both right next to each other. Also, because there are always offers and deals with this franchise, so we could always leave leaflets in the video shop.
Domino’s Pizza
From the research that I have done, I found out that if I decided to open up a Domino’s Pizza franchise, it would cost me £160,000 in total. When I say in total I mean that there are many things that make it to this amount.
The first thing I would have to pay for is the construction of the actual store which would usually be about 900sq ft. I would not have to plan any designs because the store is project managed by Domino’s Property Department. They do this until the store is completed from beginning to end. The construction cost alone is £68,000.
The second thing that would cost me is the equipment. The equipment can be leased but that is a whole different situation. By equipment I mean like ovens, refrigerators, stainless steel tables etc. I will also have to pay for things like computer systems, telephones systems, security systems and the air conditioning. All of these things would cost about £54,000 altogether.
The third thing that would cost me is the planning and architecture side of things. As I said before I only have to pay for all the work being done, I don’t actually design the building. This amount of money that I have to pay doesn’t include an appeal for the planning if I need it. This section would cost me £9,000.
The fourth and last thing that would cost me are other things like the franchise fee, the training fee, pre-opening advertising and other small items that might be needed. I only have to pay for the training fee for the first store, even though I am only buying one store at the moment. If I put all of these things together, this would cost me £26,000.
These prices are only a rough guide. There is still one cost, which I haven’t mentioned yet, and that is staff. I would have to employ between 15 to 20 people. Forty per cent of this should be a full time worker and the rest should be part time.
I found out that Domino’s Pizza would give me 21 days training. This training will be done with people that are in the same boat as me. I would get experience on the practical side of things at a company owned store.
Apparently, the pay back time will be around three years with Domino’s Pizza. This franchise seems like a good investment because there haven’t been any franchises that have gone into receivership in the last five years.
Pizza Hut
From the research that I have done, I’ve found out that if I decided to open up a Pizza Hut franchise, then it would cost me between £150,000 and £185,000. I would be expected to negotiate between those prices. The price that I’d get wouldn’t be including freehold or VAT.
This price is only high because there are many things that make this price up. The things that I’d get, is the right to use the Pizza Hut trademarks, its system for preparing, marketing and selling food products, its information and specifications. Those were only some of them. There is also some allowance, which is included in the total investment cost but isn’t part of the initial fee, for management and staff training. The equipment cost is also included in the total price although; it will vary depending on the site. The franchise agreement is a 10-year term with a 5-year break.
Pizza Hut gives the most comprehensive training that there is around. They say that they won’t just hand over the keys and let me get on with it; they will train me until I feel comfortable and confident. They will give me about 13 weeks of training. This training is before I open up. Within these weeks, I’d get experience in existing stores and we also get tuition in the classrooms. As this goes on, I get on going support from a dedicated Franchise Business Manager and their Restaurant Support Centre. Once I’d have started up, I wouldn’t have to worry about creativity, production or media costs. This means that I’d benefit from their national advertising and PR.
On top of all of this, Pizza Hut are always developing new products and bringing them to the market. This is a process that involves a huge amount of research; therefore this is another worry that I would have to bother with. So, all I’d have to do is take their ideas, put them into practise and then sit back and watch the money roll in. If you think about it, this training course is pretty impressive.
Once I’d have chosen the site that I decided to build on. Pizza Hut says that they will give me a list of approved designers, contractors and proprietary equipment suppliers. This is so that I can choose from them to construct the unit. Even though I’d get to choose whom I want to build the site, the specifications would have already been agreed. As I’d go along, Pizza Hut would approve all the drawings and would be attending all the site meetings, just to ensure that the store is completed to their specifications. This would then minimise the risk of any costly mistakes. If I wanted a third party contractor, to provide a complete project management service, I’d have to pay extra.
Pizza Hut says that they can’t tell me what the pay back time is.
Conclusion
From all the research that I have done, I have decided that I am going to open up a Domino’s Pizza franchise. There are many reasons for why I have chosen this franchise.
The investment costs are one of the main reasons. Domino’s Pizza has an investment cost of £160,000. Pizza Hut has an investment cost between £150,000 and £185,000. Even though, Pizza Hut says that I’d have to negotiate with them for the final amount, I still think that after the final amount is agreed, there will still be costs that I will have to pay for. Also the investment cost for Domino’s Pizza is including every thing that I’d have to pay for, Pizza Hut’s isn’t.
Another reason is that Domino’s Pizza says that the pay back time is five years. Pizza Hut says that it all depends on the way the manager runs the restaurant, but I think that they’re just avoiding the question.
One other main reason is because there are fewer hours with Domino’s Pizza. I don’t want long hours everyday. Therefore, Domino’s Pizza seems like the best option.
I already have about £10,000 in the bank; therefore if you would let me borrow £150,000 from the bank, I would be very grateful. Also you get it back with interest in less than five years because it isn’t £160,000.
