NPC International, the largest U.S. franchisee of Yum Brands’ Pizza Hut, filed for Chapter 11 bankruptcy on Wednesday.
The company operates more than 1,200 Pizza Huts and nearly 400 Wendy’s restaurants.
In contrast to most of the restaurant industry, Pizza Hut is one of the rare companies to report same-store sales growth in April and May, thanks to higher digital and delivery sales. But the coronavirus pandemic follows years of slumping U.S. sales for Pizza Hut, and NPC has struggled with a debt burden of roughly $1 billion.
Seeking Chapter 11 protection means that NPC can continue to operate while it tries to turn business around. Pizza Hut 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.”
Source: CNBC News, July 01, 2020