Pizza Hut franchisee files for bankruptcy amid legal battle

Pizza Hut franchisee EYM Pizza has filed for Chapter 11 bankruptcy as it is in the middle of a legal feud with its creditors.

The franchisee, which operates 140 Pizza Hut locations in states like Georgia, South Carolina, and Wisconsin, listed Pizza Hut and Manufactures Bank as its creditors, owing $2.2 million to the pizza chain and $21 million to Manufactures Bank. Pizza Hut has assured that EYM Pizza’s 140 locations will transfer to different owners.

Just last month, EYM Pizza closed over a dozen restaurants in Indiana and Ohio.

EYM Pizza’s breach of contract lawsuit against Pizza Hut was filed in March, accusing the chain of failing to remain competitive, including failing to make use of modern technology. This was dismissed by a judge shortly after.

In its own lawsuit against the franchisee, Pizza Hut called EYM Pizza one of the worst performing franchisees in its catalog, despite being one of its biggest. The chain cited how its total sales grew by about 7% from 2019 through 2023, compared to EYM Pizza’s 10% sales decrease in the same time period.

EYM Pizza’s bankruptcy filing comes after other restaurant chains are struggling financially, with Red Lobster filing for bankruptcy in May. The filing came right after the seafood chain closed over 50 locations.

Rubio’s Coastal Grill also saw almost 50 locations close in June, citing rising business costs in the state of California.