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Franchisee to close up to 300 Pizza Hut locations

Andy Uhler Aug 18, 2020
Heard on: Marketplace
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A customer picks up pizzas at a Pizza Hut in Miami on Aug. 17. The chain's largest franchise operator was having financial problems even before the pandemic. Joe Raedle/Getty Images

Franchisee to close up to 300 Pizza Hut locations

Andy Uhler Aug 18, 2020
A customer picks up pizzas at a Pizza Hut in Miami on Aug. 17. The chain's largest franchise operator was having financial problems even before the pandemic. Joe Raedle/Getty Images
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The largest franchise operator for Pizza Hut in the United States said Monday it will close as many as 300 stores.

But analyst Peter Saleh at BTIG said that doesn’t speak to the pizza industry as a whole.

“The pizza space in general is actually doing quite well,” he said. “People are ordering, they’re staying home, it’s being delivered. And the major chains are seeing some of the best same-store sales in decades, if not in their history.”

The Pizza Hut closures are tied to the franchisee that runs them, NPC International. It runs 1 in 5 Pizza Huts in the United States, and even before the pandemic, it was carrying too much debt.

“There were rumors that the company was going to declare bankruptcy before the COVID-related shutdown went into effect,” said R.J. Hottovy, a restaurant analyst at Morningstar.

NPC filed for Chapter 11 protection under the U.S. Bankruptcy Code in July. The company said it doesn’t know exactly which restaurants it will close.

Pizza Hut said in a statement that a substantial majority of them are dine-in locations.

“These were the so-called ‘red-roof stores,’ the stores that I saw back in the early ’70s,” said John Gordon with Pacific Management Consulting.

He said these locations don’t make money anymore. 

“Domino’s, Papa John’s and others have kind of shown us that this delivery, carryout, small-format model is really what consumers are looking for with pizza these days,” Hottovy said.

Pizza Hut said employees at the shuttered NPC franchises will move to better-performing locations, if possible. Pizza Hut has 6,700 restaurants nationwide.

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