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Pizza Hut’s most extensive franchisee NPC files for bankruptcy

Pizza Hut

Yum! Brands and NPC agreed to close their underperforming restaurants and intend to reorganize around its Pizza Hut eateries and emerge from Chapter 11 bankruptcy under new ownership.

The beloved Pizza Hut brand, once known for its retro dine-in experience where you feast on as many variety slices as you could eat, is shutting 300 underperforming locations.

Pizza Hut’s largest franchisee NPC International Inc., founded in 1962, was one of the first franchisees of Pizza Hut Restaurants. It filed for bankruptcy in July 2020, as it continues to hold discussions over its pizza outlets’ fate.

NPC operates more than 1,200 locations, which account for 20% of the chain’s 7,000 US locations. The company had been struggling before the coronavirus pandemic forced many of its eateries to close. The company filed for chapter 11 bankruptcy protection earlier this year before a lender group came in as a financial lifeline. 

NPC has filed procedural motions with the court to continue operating during the Chapter 11 case. 

The chain shifted away from opening and operating the Pizza Hut restaurants with dining rooms. Instead, it marketed and encouraged customers to order pick-up through its website or third-party apps.

“The Pizza Hut business has especially fallen to a brand image and product offering that lags behind its competitors,” said Eric Koza, NPC’s chief restructuring officer, said in court filings. If all goes well in bankruptcy, NPC intends to reorganize around its Pizza Hut eateries and emerge from Chapter 11 bankruptcy under new ownership, reported the Wall Street Journal. 

A Pizza Hut spokesman said the bankruptcy should prove an opportunity to reduce NPC’s debt and make the business stronger. “We are working with NPC and its lenders to ensure that NPC’s Pizza Hut restaurants emerge from this process with the support they need to succeed,” he said, further reported WSJ.

The 300 locations closing will be dine-in, which are not well suited for carryout and delivery, at a time when millions of people are sheltering at home during the pandemic.

Although Pizza Hut is dealing with struggles, pizza sales exploded during the pandemic with Domino’s, the nation’s largest pizza chain, reporting a 30% spike in quarterly profits, according to CBS News. Domino’s Pizza and Papa John’s have both hired more employees to manage surging orders. In general, the to-go pizza space is doing exceptionally well as more people continue to stay home and order in and delivery.

NPS has Pizza Hut locations in Florida, Georgia, North Carolina, Alabama, Mississippi, Louisiana, Arkansas, Virginia, Maryland, Delaware, New Jersey, Kentucky, Tennessee, Indiana, Missouri, Illinois, Iowa, Oklahoma, and Colorado. Are you worried about a vacancy to fill? Consider other pizza carry-out or delivery retailers to backfill your Pizza Hut space. Retailsphere can help you identify and reach out to potential tenants, decreasing your risk of vacant storefronts. Schedule a no-obligation demo today and see how easy Retailsphere can make your tenant search.

Written by Alicia Williams