300 Pizza Huts are closing after a giant franchisee goes bankrupt

300 Pizza Huts are closing after a giant franchisee goes bankrupt

300 Pizza Huts are closing after a giant franchisee goes bankrupt

Up to 300 Pizza Hut restaurants are slated to permanently close following the bankruptcy of one the chain’s largest franchisees.

NPC International, which filed for Chapter 11 in July, announced an agreement Monday with Pizza Hut’s owner Yum! Brands (YUM) to close roughly a quarter of its restaurants and sell the remaining locations. Specific restaurants and timing have not yet been determined, but NPC said a “substantial majority” of affected locations have dining rooms.

The agreement provides NPC with “flexibility to explore options for achieving a value maximizing outcome as it seeks to finalize the terms of a comprehensive financial restructuring and emerge from Chapter 11,” it said in a release. A perfect storm of coronavirus-related shutdowns, a massive debt burden of nearly $1 billion and rising labor and food costs tipped NPC into bankruptcy.

Pizza Hut said Monday that the 300 US locations “significantly underperform” compared with the rest of NPC’s Pizza Hut locations, and it will help employees find jobs at nearby Pizza Hut restaurants. The chain has been shifting away from opening and operating restaurants with dining rooms. Instead, it is encouraging customers to order pick-up through its website or third-party apps.

“In the event NPC executes a sale of its Pizza Hut business, Pizza Hut’s focus would be to ensure that new ownership brings to NPC’s Pizza Hut restaurants a strong capital structure, healthy balance sheet, commitment to operational excellence, and a growth mindset,” a Pizza Hut spokesperson said in a statement.

Read| Trump Signs New Order On H-1B Visa Hiring

NPC’s 1,227 Pizza Hut locations account for a fifth of the chain’s total U.S. footprint.

The closing Pizza Huts underperform the rest of the chain’s locations, and the majority are expected to be dine-in locations. In recent years, the pizza chain has shied away from its reputation as a dine-in restaurant and sought to draw more attention to its delivery and takeout, a change that has been accelerated by the coronavirus pandemic. Pizza Hut reported its highest average sales week for delivery and carryout in the past eight years during the month of May.

Employees at shuttered Pizza Hut restaurants operated by NPC will be moved to better-performing locations, if possible, according to Pizza Hut’s statement. NPC has not made final determinations as to which locations will close or the timing of the closures.

Paid Content