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Largest Pizza Hut Franchisee Files Chapter 11

NPC Worldwide, the premier franchisee of Pizza Hut dining establishments, filed for Chapter 11 individual bankruptcy on Wednesday as the drop of the Pizza Hut brand name proceeds to try to eat into its earnings.

The enterprise has $903 million in debt and has pre-negotiated a restructuring settlement with about ninety% of its 1st lien creditors and seventeen% of next lien creditors.

As CNN stories, privately-held NPC, which also franchises Wendy’s dining establishments, has been dealing with “a great storm of problems” that led to the Chapter 11 submitting, which include coronavirus-related shutdowns, its substantial debt stress and rising labor and food costs.

Amid declining product sales at Pizza Hut, it experienced earlier received $35 million in unexpected emergency funding from creditors following warning it would exhaust its operating capital by mid- to late January 2020. NPC explained Wednesday it intends to use the individual bankruptcy course of action to “engage in even more discussions with its brand name partners, landlords and other creditors to accomplish a consensual Chapter 11 prepare of reorganization.”

The challenges experiencing the enterprise “have been magnified recently by the influence and uncertainty of COVID-19, and we think it is needed to acquire proactive ways to bolster our capital structure,” Jon Weber, CEO of NPC’s Pizza Hut division, explained in a information launch.

NPC operates far more 1,600 franchised dining establishments, 1,200 of them in the Pizza Hut technique. In a court docket declaration, Chief Restructuring Officer Eric Koza explained the Pizza Hut dining establishments have been “a important drag on [its] profitability because of to a absence of product sales expansion and a important inflationary expense surroundings.”

“The Pizza Hut enterprise has in particular been impacted by a brand name image and product or service presenting that has lagged driving its opponents,” he added, noting that “the important change and escalating prevalence and use of third-bash shipping and delivery providers, these as DoorDash and GrubHub, has also increased the competition for shipping and delivery website traffic and off-premises orders.”

In accordance to NPC, its Pizza Hut dining establishments noticed “a significant spike” in product sales as the COVID-19 pandemic lessened solutions for food shipping and delivery and acquire-out but Wendy’s has been hit by decreases in product sales as a consequence of a “dramatic drop in foot and travel-via website traffic.”

Presley Ann/Getty Photographs for Pizza Hut/em>

chapter 11, COVID-19, speedy food, franchisee, NPC Worldwide, Pizza Hut, restructuring, Wendy’s