Daily Management Review

Pizza Hut and Wendy's franchisee asks for bankruptcy protection in USA


NPC International, one of the largest franchisee restaurant chains in the United States, has filed a lawsuit to protect against creditors under Chapter 11 of the American Bankruptcy Code.

The company manages over 1200 Pizza Hut and 385 Wendy's restaurants. In 27 states, the company employs about 40,000 people.

NPC said the chain's restaurants will continue to operate despite the bankruptcy process, CNN reports.

The pandemic led to the closure of restaurants, an increase in personnel and food costs. NPC’s debt reaches $ 1 billion

At the end of January, the franchisee delayed payment of interest on loans in the amount of about $ 800 million. As a result, in February, the international rating agencies S&P Global Ratings and Moody's Investors Service downgraded the company's ratings. The NPC had already entered into negotiations with creditors about the possible filing of bankruptcy, told The Wall Street Journal.

A number of franchised restaurant operators have filed for bankruptcy since the start of the worldwide spread of COVID-19 coronavirus infection, including the parent company of Chuck E. Cheese, an American chain of family restaurant and entertainment centers, and Le Pain Quotidien, an American bakery and restaurant chain.

The Pizza Hut chain experienced difficulties in the United States before the pandemic, but changes in consumer behavior in the context of the spread of infection had a positive effect on its performance. In early May, Pizza Hut recorded the maximum average volume of sales over the past eight years, according to the owner of the network Yum Brands Inc. Comparable sales in the chain’s restaurants have grown by more than 10% from late April to late May.

source: wsj.com