Pizza Hut’s Biggest Franchisee Declares Bankruptcy

Consumer hunger for take-out and delivery food was not strong enough to save NPC International Inc., the largest franchisee of Pizza Hut restaurants in the U.S., which filed for bankruptcy protection Wednesday after coronavirus-related shutdowns added to a long-playing dip in popularity for the ubiquitous brand.

Confirming rumors that had been swirling this week, Kansas-based NPC International said in a statement it has entered into a restructuring support agreement with its lenders to “substantially reduce NPC’s long-term debt and strengthen the company’s capital structure.”

The company has $903 million in debt and has pre-negotiated a restructuring agreement with about 90% of its first-lien lenders and 17% of second lien lenders, according to Bloomberg. The plan is aimed at reducing the company’s debt, with first-lien lenders taking equity and potentially participating in a new cash injection. It also includes the sale of at least part of the company’s restaurants, Bloomberg said.

Rising commodities costs and a “higher level of financial leverage,” presented challenges to the restaurant operator, Jon Weber, chief executive and president of NPC’s Pizza Hut division, said in the statement.

NPC owns 1,225 Pizza Hut locations, 385 Wendy’s restaurants, has 7,500 full-time employees, about 28,500 part-time workers, and operates in 30 states and the District of Columbia, according to the company which said he aims to keep its locations open and keep paying workers.


In a statement, Pizza Hut said it hopes the restructuring will help “NPC’s Pizza Hut restaurants generate the same momentum we are seeing throughout the Pizza Hut U.S. business,” which in May posted its highest delivery and carry-out average sales week in the past eight years.

But Pizza Hut as a brand has faced challenges from the rise of competitors for years. When quarterly results for the brand’s parent company, Yum Brands, were released in late April, measuring sales through March 31, worldwide system sales, excluding foreign currency translation, dipped 2% at sister brand KFC and dropped 9% at Pizza Hut, with the dips partially offset by 4% sales growth at Taco Bell.

“These challenges have been magnified recently by the impact and uncertainty of Covid-19.”

Jon Weber, chief executive and president of NPC’s Pizza Hut division

NPC International is the largest franchisee of any restaurant concept in the U.S., based on location counts. Based in Leawood, Kansas, the company has long been the backbone of Pizza Hut’s franchise community.  But even before the pandemic, the company sought help from restructuring advisors, according to Bloomberg. Restaurants across the country have been hit hard by closures mandated as the nation tries to curb the spread of Covid-19.


Written by How Africa News

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