For one franchisee, business is looking grim. According to NBC, NPC International Inc., operator of more than 1,200 Pizza Huts and nearly 400 Wendy's restaurants, has filed for Chapter 11 bankruptcy. While sales did improve during the Covid-19 pandemic, the amount of debt ($903 million in fact) was too much to keep this company afloat and the company failed to reach an extended forbearance agreement with Yum Brands, the parent company of Pizza Hut and Wendy's.
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NPC International Inc., the largest franchisee of Pizza Hut restaurants in the U.S., filed for bankruptcy after coronavirus-related shutdowns added to competitive pressures in the restaurant industry. The company sought Chapter 11 protection in the Southern District of Texas court on Wednesday. NPC, founded in 1962, operates 1,227 Pizza Hut and 393 Wendy’s stores across the U.S., according to court papers. The Chapter 11 filing doesn’t mean Pizza Hut and Wendy’s are going out of business. NPC can keep operating while it works out a plan to pay its bills and turn the business around, and the bankruptcy doesn’t affect the thousands of other Pizza Hut and Wendy’s outlets owned by other franchisees. #TheBingeStop #TheBingeStopNews #PizzaHut #Wendys
NPC International isn't the only business that has filed for bankruptcy during the coronavirus pandemic. So far Chuck E. Cheese's parent company CEC Entertainment, rental car company Hertz and retailers J. Crew, Pier 1 Imports, and J.C. Penney have all filed. Business in some states are still itching to re-open, and with the number of viruses rising daily, the chance of having to shut down stores again is a possibility.
"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," Pizza Hut said in an emailed statement to Restaurant Business Online. "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.
"These changes will help NPC's Pizza Hut restaurants generate the same momentum we are seeing throughout the Pizza Hut U.S. business and strengthen the overall health and performance of the entire system for the long term."
What is Chapter 11 Bankruptcy?
Available to every business, a chapter 11 bankruptcy protection filing means that the debt is open to reorganization usually involving a corporation or partnership. The bankruptcy filing is usually partnered with a new plan to help business and repay creditors over time. Simply put, the 1,200 Pizza Hut locations and nearly 400 Wendy's restaurant locations will not be shutting down because of the filing.