Yum Brands (NYSE: YUM) has come to an agreement with NPC International, its biggest franchisee, to close a total of its 300 Pizza Hut locations. NPC International filed for chapter 11 bankruptcy in July amid the aftermath of the global coronavirus pandemic. NPC’s remaining 927 Pizza Hut restaurants are set to go on sale.
According to a press release, the deal intends to offer NPC the “flexibility to explore options for achieving a value maximizing outcome as it seeks to finalize the terms of a comprehensive financial restructuring and emerge from Chapter 11.” The unforeseen shutdowns, previous USD1 Billion debt and growing labor and food costs, drove the franchisee into insolvency.
Pizza Hut revealed Monday that the selected 300 restaurants had “significantly underperform” in comparison to NPC’s other locations. However, the company promised to aid employees in finding jobs at other operating Pizza Hut locations.
“In the event NPC executes a sale of its Pizza Hut business, Pizza Hut’s focus would be to ensure that new ownership brings to NPC’s Pizza Hut restaurants a strong capital structure, healthy balance sheet, commitment to operational excellence, and a growth mindset,” a Pizza Hut spokesperson said in a statement.
NPC International’s total 1,227 Pizza Hut locations amount to 18% of the chain’s total restaurants.
“We have continued to work with NPC and its lenders to optimize NPC’s Pizza Hut restaurant footprint and strengthen the portfolio for the future, and today’s joint agreement to close up to 300 NPC Pizza Hut restaurants is an important step toward a healthier business,” the pizza chain said in a statement.
Written by Rebecca Urena.
View the original article at here.