Pizza Hut’s largest franchisee in the U.S., NPC International, has recently filed for bankruptcy after suffering huge losses due to coronavirus-related shutdowns. These lockdowns have added massive competitive pressures in the restaurant sector.
According to reliable sources, the company filed for Chapter 11 protection in the Southern District of Texas court. For the record, NPC, which was backed by private investment firm Eldridge Industries, had launched its first Pizza Hut outlet in 1962 and currently operates over 1,225 Pizza Hut outlets and more than 385 Wendy’s stores across the United States.
Over the past few years, both Pizza Hut and NPC have faced a hard time with rising food and labor costs as they shift from traditional dine-in restaurants to a home delivery approach. Apart from NPC, the Kansas-based company, Overland Park, has been facing cut-throat competition from competitors like Papa John’s International and Domino’s Pizza.
However, NPC’s filing for bankruptcy doesn’t mean that Wendy’s and Pizza Hut are going out of business. NPC would continue its operations while simultaneously working on a plan to repay its debts and turn its business around. Additionally, this bankruptcy wouldn’t affect thousands of other Wendy’s and Pizza Hut outlets that are owned by different franchisees.
Before the pandemic, NPC was seeking help from restructuring advisers at investment bank Greenhill & Co. and law firm Weil Gotshal & Manges as well as operational adviser AlixPartners. Earlier in 2019, Eldridge had written-off its equity investment in NPC.
It is certain to say that restaurant industry is one of the worst-hit sectors in this pandemic and are constantly facing new pressures with the imposition of nationwide lockdown and temporary shutdowns of multiple locations across nations to curb the spread of COVID-19. This has affected several restaurants financially, forcing them to declare bankruptcy.
Reports claim that the recent Chapter 11 filings includes the US arm of Le Pain Quotidien and CEC Entertainment, the parent of Peter Piper Pizza, and Chuck E Cheese.