Largest Pizza Hut and Wendy’s Franchisee To Bankrupt

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According to Fox News, one of the largest restaurant franchisees in the United States is to file for bankruptcy. NPC International, which has over 1,200 Yum Brands (NYSE: YUM) Pizza Hut restaurants and nearly 400 for Wendy’s (NASDAQ: WEN), can apply for Chapter 11 protection today.

The franchisee has struggled for years as Yum! Brands have discovered that turning the chain of pizzerias is a harder problem to solve than originally thought. Meanwhile, Wendy’s fought to keep up the pace of growth alongside McDonalds and Brands International Restaurantthis is (NYSE: QSR) Burger King.

Image source: Getty Images.

Bankruptcy already on the menu

NPC International defaulted on loan commitments last year and missed interest payments on nearly $ 800 million in loans in January. The franchisee, who has $ 1 billion in debt, has begun considering bankruptcy as declining sales and rising labor costs have put pressure on restaurants across the country.

Although the coronavirus pandemic has led to the bankruptcy of several restaurant chains, including the restaurant and entertainment chain for children Chuck E. Cheese, the restrictions placed on restaurants to offer only take-out and deliveries should have helped boost NPC’s chances of survival.

Where yum! The brands have recognized that the franchisee’s problems would lead to a “turmoil” in the performance of the Pizza Hut segment this year, the chain has transformed in the last three years in order to attract consumers, improve its menu and its effectiveness. More recently, it has transitioned from its fixed service restaurants to smaller delivery and delivery locations. Wendy’s has also invested in its drive-thru technology.

This was apparently not enough to overcome the severe impact of the COVID-19 pandemic, and although NPC private equity owner Eldridge Industries promised much-needed support throughout its recovery, it could now be finished.



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