Pizza Hut Shuts Down 15 Stores, Surprises Employees; 129 More at Risk Amid Intense Struggle
A conflict between Pizza Hut and EYM Group, one of its largest franchisees, has precipitated the shutdown of 15 Pizza Hut stores in Indiana, with prospects of additional closures across several other states including Illinois, Georgia, South Carolina, and Wisconsin. The closures are attributed to a legal tangle over unpaid franchise fees that EYM allegedly owes to Pizza Hut. EYM tried to seek a preliminary injunction against Pizza Hut to halt the termination of its franchise rights but was unsuccessful.
Despite these local challenges, Pizza Hut maintains that it intends to transition these closed locations and hopes to reopen them eventually. Meanwhile, the financial performance of Pizza Hut has also been on a downturn with a reported drop in same-store sales.
This ongoing conflict and the associated store closures have resulted in abrupt job losses, with affected employees advised to file for unemployment benefits. The situation underscores a significant strain in the relationship between the franchise holder and the franchisor, as well as the struggles within the broader restaurant industry.
By Jack Davis June 18, 2024 at 10:43am
A long-running battle between Pizza Hut and one of its largest franchises has led to the closing of 15 stores, with more closings to come across multiple states.
The first shoe dropped on Friday when 15 Pizza Hut outlets in Indiana owned by EYM Group closed, according to the Northwest Indiana Times.
The outlet reported that employees posted on social media the closings came with no notice, and that employees were merely told to file for unemployment benefits.
Pizza Hut closes several restaurants in Indiana, Ohio. Pizza Hut’s shuttered Indiana locations are owned by EYM Group, which has been tangled up in a lawsuit against its franchisor. https://t.co/FVVEfE3IA4 pic.twitter.com/SyCCdva14W
— Restaurant News (@NRNonline) June 17, 2024
According to the U.K. Daily Mail, another 129 Pizza Hut locations operated by EYM will be closing in the coming weeks.
Restaurants in Illinois, Georgia, South Carolina and Wisconsin are all on the list of potential closings.
The closings are due to a legal squabble between EYM and Pizza Hut. EYM said Pizza Hut is the reason stores have fallen behind and need updating.
Pizza Hut claims that EYM owes it millions in unpaid franchise fees and other bills. As deadlines for payment pass, the chain closes the stores in that state.
Yum Brands and EYM Group are in a legal battle over unpaid franchise fees leading to sudden closure of 15 Pizza Hut locations, with 129 more at risk. The heart of the dispute lies in the failure of Pizza Hut to keep up with its competitors and deliver a… https://t.co/cQjP5e5QNL
— The America One News (@am1_news) June 18, 2024
“This is Pizza Hut bosses showing they are not bluffing,” the Mail quoted what it called an insider as saying.
South Carolina Pizza Huts have a deadline of June 27, followed by a July 7 deadline for outlets in Illinois, a July 11 deadline in Georgia and a Sept. 5 deadline in Wisconsin.
EYM Group had sued Pizza Hut in March, claiming Pizza Hut violated its contract with the franchise.
EYM had sought a preliminary injunction that would prevent Pizza Hut from terminating EYM’s ability to operate its restaurants, but was unsuccessful, according to court records.
In a statement, Pizza Hut told Nation’s Restaurant News, “While some local franchisee-operated restaurants have temporarily closed, Pizza Hut remains committed to providing outstanding service and products to our valued customers.”
“The company is working to transition these locations and expects many of them will reopen soon,” Pizza Hut said in its statement.
Yum! Brands, the parent of Pizza Hut, reported last month that same-store sales dropped 7 percent in the last quarter, according to the New York Post.
Same-store Pizza Hut sales in the U.S. fell 6 percent in the last quarter. Sales had risen 7 percent in the same quarter last year.
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