The Pizza Hut Bailout

~ Laura

Amusing article in the Wall Street Journal and reaction from Helaine Olen at Strollerby about parents buying  fast food franchises to keep their adult children employed. According to the WSJ article, you need about $1 million to open a Pizza Hut down the block, so this trend is only for the wealthiest families.

Published by Laura

13 thoughts on “The Pizza Hut Bailout”

  3. We’ve seen this happen at a local corner store. Twice. Two doctors, in succession, bought the store for ne’er do well sons. Neither time ended well.
    Running a corner convenience store is a hard business. 24/7/365, and the profit margins are thin. If either of the sons had had a good work ethic, and a talent for marketing, they might have made a go of it. Ah well, love is blind.

    Like

  4. I think the comment that a franchise might be a more valuable investment for the child’s future than a graduate degree a fascinating (and potentially true) one. How much does a high network individual pay these days to put a kid, say, through medical school (a pretty good investment in the kid’s future) or law school (potentially good), or grad school (bad investment)? A million seems like a lot, but if the restaurant breaks even, or even looses 50K a year in the beginning, it doesn’t cost more school.

    Like

  5. But in the Olen profile, the idea isn’t that it’s being done for “ne’er” do well kids; it’s being done for kids who aren’t finding the kind of job they hoped to find on graduation (say, an entry level position with the potential to eventually move into management). So, the parents are buying a small business for their kids.
    Running a small business is really, really hard, but given the lack of secure career tracks (especially now), giving the right kind of child this kind of opportunity might work (as opposed, say, to sending them to law school).

    Like

  6. I wouldn’t think a restaurant (at least without a franchise) is a very good business to start someone in. So many of them go under and so few people seem to know how to run one.
    (Related: I just had lunch in a Peruvian Chicken place that was pretty good, but I have no idea how it makes rent.)

    Like

  7. I sometimes wish (in that grass-is-greener way) that my parents had done something like this and supported more entrepreneurial thinking than focusing our futures solely towards academia (my path into media being a very poor substitute in their view).
    Weirdly, my mother did end up owning her own business in the end – but it was never presented as an option to do the same.

    Like

  9. I’ve known a couple of families which have bought rental properties for the failure-to-launch son to run. There’s a signs-by-tomorrow place in our neighborhood which looks like that. When I worked at North Station in Boston there were a couple of kitchen design places which never had any visible customers, but my coworkers clued me in that they were to launder mob money.. As a known declinist, I just have no idea what the hell there will be for my kids. Buying them a Pizza Hut seems out of reach, though…

    Like

  10. Buying them a Pizza Hut seems out of reach, though.
    Maybe the price will drop. Pizza deflation is has been pretty significant around here. It used to be that you had to pay attention to get the good coupons, but now they just run specials that are better than 95% of the old coupons.

    Like

  11. If can be awake at 5:00 am without wanting to kill people, I think a breakfast could be a good way to make money without a huge capital input. You’ve got a fairly good mark-up and you don’t need to spend much on the decor. Having a clean place with fresh coffee will get you far.

    Like

  12. One of my great uncles owned a succesful small chain of appliance stores. NONE of his four kids wanted to take over the business. They became lawyers and engineers. Two have now hit mid-life and been laid off. They both wish they had stayed home and ran the store.
    The rest of us cousins always wished we would’ve had the opportunity. I would’ve done it in a heartbeat.
    We’re actually exploring opening a booth in our farmer’s mkt next spring with the idea that it would be something for our college age daughters to do every summer to earn money. Just working out the business plan now to figure out how realistic it could be.

    Like

  13. I was talking about this article with one of my many entrepeneurial relatives on the ride to SeaTac yesterday. Here are a few thoughts:
    1. The article says that franchises succeed no more often than conventional businesses, so that extra start-up cost is a waste. Dave Ramsey gets asked regularly about franchises, and he’s not very excited about them, pointing out that the up-front equipment costs of running a pizza place are quite low.
    2. I’ve never heard of Pita Pit. Maybe it is better-known elsewhere, but it’s not infrequent to hear about people who pay big bucks for franchises that nobody has ever heard of.
    3. They leave this fact for the end of the article, but the woman who is running the Pita Pit is from a restaurant family, so she’s got an immediate advantage over her peers.
    4. I wish they’d mentioned how many of the kids had worked fast food before (I’m assuming the Pita Pit woman had, but you never know). Working a year or two at one of those places would help a lot to figure out if the kids are serious and capable of working in the business long-term.

    Like

Comments are closed.