The Irving-based Pizza Hut franchise operator of more than 130 restaurants filed for bankruptcy this week.
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The Irving-based franchise operator of more than 130 Pizza Hut locations filed for bankruptcy this week, presenting a new challenge for the Plano-based restaurant chain.
Franchisee EYM Pizza LP filed for Chapter 11 bankruptcy protection in the Eastern District of Texas on July 22.
The filing lists creditors including Manufacturers Bank, a state-chartered commercial bank based in Los Angeles, and Pizza Hut LLC. EYM Pizza owes the bank more than $20 million and Pizza Hut $2.2 million, according to the filing.
EYM Pizza did not list estimated assets or liabilities in its initial filing.
EYM Pizza did not immediately respond to a request for comment from the Dallas Business Journal, nor did Pizza Hut. EYM is represented by Howard Mark Spector of the Dallas-based law firm Spector & Cox, who declined to comment.
EYM, one of Pizza Hut’s largest franchisees, filed for Chapter 11 bankruptcy protection following litigation between the franchisor and franchisees.
EYM, which operates about 140 Pizza Hut restaurants in Wisconsin, Illinois, Indiana, Georgia and South Carolina, filed a breach of contract lawsuit in March, alleging that Pizza Hut breached its fiduciary duties by failing to remain competitive, according to Restaurant Dive. The suit was later dismissed.
Pizza Hut, a subsidiary of Plano-based Yum Brands, sued EYM for failing to pay royalties on time, even though EYM was given a grace period in 2023 that ended in February. Pizza Hut argued in a June countersuit that EYM is one of its largest franchisees but also one of its worst performing. Restaurant Dive reported that Pizza Hut is working to transfer EYM’s stores to another owner.
The Plano-based pizza giant has struggled with rising labor and ingredient costs that came on the heels of coronavirus-related closures that have hit the restaurant industry hard.
EYM’s bankruptcy filing is the latest since the pandemic began, but not the largest.
NPC International, headquartered in Overland Park, Kansas, was once the largest Pizza Hut franchisee in the United States, but filed for Chapter 11 bankruptcy protection in the Southern District of Texas in June 2020. At the time of the filing, NPC International operated more than 1,200 Pizza Hut restaurants. In January 2021, a bankruptcy court judge approved the sale of NPC’s Pizza Hut and Wendy’s restaurants for approximately $800 million.
Pizza Hut operates about 6,500 restaurants in the U.S., down from about 7,300 in 2019, according to Restaurant Business magazine.
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