Pizza Hut’s Largest Franchisee Will Close Up to 300 Units

NPC International, Pizza Hut’s largest franchisee and one of the largest restaurant operators for any brand in the country, was facing dire financial straits even before the coronavirus crisis walloped the restaurant industry. The holding group, which operates more than 1,200 Pizza Hut locations and nearly 400 Wendy’s locations, was contending with nearly $1 billion in debt in February. By July, NPC had filed for bankruptcy. Now, the beleaguered restaurant group has announced that it will close up to 300 Pizza Hut stores and launch a sales process to offload the rest.

Though the move is not a good look for Pizza Hut, it actually aligns with the iconic pizza franchise’s post-COVID operational strategy. Most of the 300 restaurants to be closed are dine-in only, and Pizza Hut is explicitly shifting its strategy to promote off-premise service across the franchise network.

From QSR Magazine:

“The agreement with Pizza Hut follows an extensive analysis that the parties conducted of its entire Pizza Hut portfolio to best position NPC’s Pizza Hut business for long-term success, and has the support of the ad hoc group of NPC’s first lien lenders,” NPC said in a statement. 

 

“ … The optimization of NPC’s Pizza Hut restaurant footprint is expected to increase the potential value that could be generated from the Pizza Hut business, either through the sale path, or if value is not maximized through such effort, through a standalone plan of reorganization, and possibly through a hybrid of the two options.” 

As a franchise, Pizza Hut has actually faired reasonably well throughout the coronavirus crisis, with same-store sales growing by five percent in Q2. In May, the chain saw its highest averages sales week for takeout and delivery in eight years. 

Read more at qsrmagazine.com.