127 Pizza Hut branches to close down as franchisee files for bankruptcy

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The franchisee of some 127 branches of Pizza Hut across five states in the South and Midwest has put them up for sale after filing for bankruptcy in July due to mounting debts. Those branches are now at risk of closing for good.

Moreover, some 15 locations of the pizza parlor in Indiana and Ohio were abruptly shuttered at the end of June as a result of the dispute. They were in Cedar Lake, Chesterton, Crown Point, Griffith, Hammond, Hobart, LaPorte, Lowell, Merrillville, Michigan City, Munster, Portage, Schererville, Valparaiso and Winfield. (Related: Kevin Hart’s vegan food chain closes all locations in California following minimum wage hike for fast-food workers.)

The reason cited a major financial bust-up between Pizza Hut’s parent company Yum Brands Inc. and franchisee EYM Group. EYM, which was founded by former McDonald’s Mexico President Eduardo Diaz, has asked advisory firm National Franchise Sales to help find a buyer.

EYM, a Texas-based franchisee, was founded in 2008. Problems between it and Pizza Hut, which has 6,700 locations across the U.S., date back to last year. It has been operating Pizza Hut restaurants since 2015. The company owes the pizza restaurant $2.25 million and another $21 million to Manufacturers Bank. It is being sued by the chain concerning millions of dollars of unpaid bills.

Overall, Pizza Hut’s U.S. restaurants have seen sales slip six percent this year compared to last. Pizza Hut had set EYM staggered deadlines for payment in each state. The chain had warned it would close down the restaurants in each if the debts were not paid.

EYM blames Pizza Hut for financial problems

In turn, EYM has blamed Pizza Hut for its financial problems. It says its sales have been badly hit by the pizza chain not modernizing its menus or app to keep up with rivals like Domino’s and Little Caesar’s.

The chain revealed that it was unveiling a brand new style of pizza and eight new toppings, describing the change as “its biggest toppings transformation in over a decade.”

“Pizza Hut’s take on the tavern-style pizza offers a trendsetting, modern experience that delivers a deliciously crispy bite with its thin-crust and innovative, contemporary flavors available in four recipes: Pesto Margherita, The Ultimate, Spicy Chicken Sausage, and Double Pepperoni,” said a press release.

Rachel Antalek, chief Food Innovation officer at Pizza Hut said of the change: “These menu additions represent a bold step forward as part of our culinary mission to bring our guests modern innovation that embraces what we know our customers are loving and looking for in a pizza. We perfected these recipes to truly pay homage to Chicago and the hundred-year-old style in a modern way while pushing the boundaries of what’s possible in a pizza with fresh new toppings and flavors.”

However, EYM said that in recent years, the best Pizza Hut managed to do was “change the cheese in its stuffed crust from mozzarella to cheddar or trot out an occasional, ill-fated appetizer like the Philly steak melt,” adding that these “failed strategies” caused Pizza Hut to lose customers and not attract new ones.

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