Thursday, March 28

Pizza Hut Franchise File for Bankruptcy

World’s largest Pizza Hut franchisee in the US filed for Chapter 11 bankruptcy due to business loss in the Covid19 period.

In its court filing, the franchise distributor of Pizza hut and Wendy restaurant’s, NPC International Inc. listed estimated assets ranging from $1 billion to $10 billion and estimated liabilities in the same range. 

NPC operates 1,227 Pizza Hut and 393 Wendy’s franchise in the United States, representing about 20% of the domestic Pizza Hut system.

One of NPC’s hurdles has been Pizza Hut’s performance in recent years, which created a “significant drag on profitability due to a lack of sales growth and a significant inflationary cost environment,” the filing said.

But the Covid19 pandemic causes a big loss for Pizza Hut sales, and NPC has struggled with a debt burden of roughly $1 billion.

“Although Pizza Hut has recently communicated its commitment to orchestrate a brand turnaround and to reinvigorate interest in the brand, over the past several years these factors have worked together to strain the financial performance of (NPC) and have restricted and limited its ability to operate profitably under its current balance sheet,” NPC’s court filing said.

Chapter 11 protection means that NPC can continue to operate while it can offer local lenders to take over the business.

Pizza Hut also said in a statement that NPC’s locations of the pizza chain continue to serve food. The franchisee pre-negotiated a restructuring agreement with most of its lenders.

“While NPC’s Chapter 11 filing was expected, we view it as an opportunity to create a better future for NPC’s Pizza Hut restaurants,” a Pizza Hut spokesperson said in a statement. “As NPC works through this process, we support an outcome resulting in an organization with a lower, more sustainable level of debt, ownership focus on operational excellence and a greater level of restaurant investment.”