EYM Pizza, a large Pizza Hut franchisee with more than 100 stores, has announced it will sell 127 Pizza Hut locations in Wisconsin, South Carolina, Illinois, Indiana, and Georgia. According to the franchisee, these closures are a part of the company’s newest restructuring plan.
The chain made headlines for their struggles in California following Gavin Newsom’s minimum wage hike earlier this year. National Franchise Sales will help EYM Pizza manage the sales of these stores by finding qualified buyers for the franchisee.
EYM Files for Bankruptcy
This announcement that EYM Pizza will no longer own hundreds of Pizza Hut locations comes only a few months after the company filed for Chapter 11 bankruptcy protection. Even before this bankruptcy revelation, there were hints that EYM Pizza was struggling when they closed about a dozen Pizza Hut stores in June in Indiana alone.
Not too long ago, EYM was one of Pizza Hut’s largest franchisees, owning more than 100 locations around the United States. Now, in only a few months, that has all changed.
Prior to EYM’s bankruptcy filing, the franchisee sued Pizza Hut, claiming that Pizza Hut was not ensuring that they remained competitive. In this suit, EYM stated that the franchisor refused to adapt and install modern practices, such as new technologies, that could help their stores thrive.
As a result of these mistakes, EYM sued Pizza Hut over breach of contract. This ultimately led to Pizza Hut countersuing their large franchisee. According to Pizza Hut, EYM owned the company’s poorest-performing stores in the country.
Pizza Hut then claimed that EYM consistently posted declines in same-store sales — at the same time that other stores around the country saw same-store sales growth.
So far, there’s no official word on what will happen to the 100 Pizza Hut stores that will likely be sold to qualified buyers. However, the dozen Pizza Huts that EYM closed in June are set to transition to new owners. Pizza Hut expects them to reopen soon, once this ownership transfer is fully processed.
Pizza Hut Franchisees Struggle
This isn’t the first time a huge Pizza Hut franchisee has sold almost all of its stores. NPC International went bankrupt in 2020, which forced the large franchisee to sell all of its 925 units. These stores were ultimately bought by Flynn Group in 2021.
EYM Pizza’s sister company, EYM Chicken, also recently closed at least 25 KFC locations earlier this year. These KFC closures were mainly seen in the Midwest.
2024 has been a difficult year for fast food — and particularly fast food franchisees. Cost pressures have made it tricky for many franchisees to continue to post profits. A growth in sales has become incredibly difficult.
Many fast food locations have also seen a drop in customer traffic this year, as American consumers are finally refusing to pay the high menu prices that have become common thanks to high inflation.
As a result of this change in consumer behavior, as well as ongoing high inflation, franchisees have struggled to deal with their debt. This has led to Popeyes, Arby’s, and Subway operators ultimately declaring bankruptcy in the past year.
