In December we previously reported that Pizza Hut was shifting away from its Dine-in model and adding more Carryout-focused stores. Exactly how many stores are set to be replaced is uncertain. Will they be able to rebound?
KEY POINTS
Bloomberg reported that Pizza Hut’s largest U.S. franchisee is considering restructuring options, including bankruptcy.
NPC International, which is the largest Pizza Hut and Wendy’s franchisee in the United States, has about $1 billion in debt, and operates nearly 400 Wendy’s restaurants and more than 1,200 Pizza Huts.
Yum Brands’ Pizza Hut, historically known as a dine-in restaurant, has struggled because more consumers want their food delivered.
Bloomberg reported that the franchisee has begun negotiating with its lenders. The company is trying to keep the restructuring out of court but is considering the possibility of filing for bankruptcy with a pre-negotiated plan in place.
In 2019, the franchisee saw its debt slide further into junk territory after credit downgrades from S&P Global Ratings and Moody’s. Both ratings agencies downgraded NPC’s debt this week after it did not make interest payments due to lenders on Jan. 31.
Yum Brands’ Pizza Hut, historically known as a dine-in restaurant, has struggled because more consumers want their food delivered.
High food and labor costs have eaten into profits. Same-store sales at U.S. restaurants fell 2% during the pizza chain’s fourth quarter.
Shares of Yum, which has a market value of $31.3 billion, were trading down 1% on Thursday morning.
The stock of rival Domino’s Pizza, which has a market value of $15.1 billion, surged 24% after its fourth-quarter earnings topped estimates.