Fast food chain Pizza Hut, owned by Yum! Brands, announced an agreement with its largest U.S. franchisee NPC International, Inc., which is undergoing bankruptcy process, to permanently close up to 300 restaurants. Among the planned store closures, a substantial majority will be dine-in.
NPC, which runs a portfolio of 1,227 Pizza Hut locations in the country, said in a statement that it will launch a sale process for its Pizza Hut restaurants.
NPC said, “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.”
The companies are yet to finally determine the restaurants that are to be closed, or the closure timing. NPC and Pizza Hut plans to reallocate employees at the affected restaurants to thriving locations at NPC and other Yum! brands locations, wherever possible.
NPC, which also operates Wendy’s restaurants in the US., represents 20% of the Pizza Hut system’s restaurant base in the U.S. Pizza Hut has 6,700 restaurants across the nation.
The franchisee, which filed for Chapter 11 protection on July 1, is currently seeking to finalize the terms of a comprehensive financial restructuring and emerge from bankruptcy.
The company did its filing in the Southern District of Texas court following business loss related to coronavirus-related shutdowns, as well as about $1 billion in debt.
Under Chapter 11 protection, NPC could continue to operate while it attempts to pay its bills and turn the business around. The company had missed interest payments on it’s nearly $800 million in loans on January 31.
According to the filing, the company’s largest creditors are Pizza Hut and Wendy’s.
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