Pizza Hut and Wendy's US operator NPC files for bankruptcy

[NEW YORK] NPC International, the largest franchisee of Pizza Hut restaurants in the US, filed for bankruptcy after coronavirus-related shutdowns added to competitive pressures in the restaurant industry.

The closely held company sought Chapter 11 protection in the Southern District of Texas court on Wednesday. NPC opened its first Pizza Hut restaurant in 1962 and operates more than 1,225 Pizza Hut and over 385 Wendy's stores across the US, according to its website.

NPC and Pizza Hut have struggled with rising labour and food costs while trying to expand delivery and move away from traditional dine-in restaurants. The Overland Park, Kansas-based company also faces cut-throat competition from rivals such as Domino's Pizza and Papa John's International.

The Chapter 11 filing doesn't mean Pizza Hut and Wendy's are going out of business. NPC can keep operating while it works out a plan to pay its bills and turn the business around, and the bankruptcy doesn't affect the thousands of other Pizza Hut and Wendy's outlets owned by other franchisees.

Ahead of the pandemic, NPC, backed by private investment firm Eldridge Industries, brought in the help of restructuring advisers at law firm Weil Gotshal & Manges as well as investment bank Greenhill & Co and operational adviser AlixPartners, Bloomberg reported. Eldridge wrote off its equity investment in NPC last year.

Restaurants are facing new pressures with the temporary closures of locations across the country to stem the spread of coronavirus. The drain on revenue has been too much for some, causing them to file for bankruptcy protection. Recent filings include CEC Entertainment, the parent of Chuck E Cheese and Peter Piper Pizza, and the US arm of Le Pain Quotidien. Greenwich, Connecticut-based Eldridge bought Le Pain Quotidien out of bankruptcy.

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