According to Fox News, one of the largest hotel franchisees in the United States is expected to file for bankruptcy. NPC International, with more than 1200 Yum Brand (New York Stock Exchange: YUM) Pizza Hut restaurant and nearly 400 restaurants Wendy’s (NASDAQ: WEN), The earliest possible application for Chapter 11 protection today.
For many years, franchisees have been striving for Yum! The brand found that reversing the pizzeria chain was much trickier than originally thought. At the same time, Wendy struggles to maintain growth McDonald’s with Restaurant Brand Internationalof (New York Stock Exchange: QSR) Burger King.
Bankruptcy is already on the menu
NPC International violated the financial agreement in its loan agreement last year and missed interest payments on nearly $800 million in loans in January. Franchisers with $1 billion in debt began to consider filing for bankruptcy protection, when declining sales and rising labor costs already put pressure on restaurants across the country.
Although the coronavirus pandemic has caused several restaurant chains to file for bankruptcy, including children’s food and entertainment chain Chuck E. Cheese, the restrictions on restaurants offering only take-out and delivery should help increase the chances of NPC survival.
Yum there! The brand admits that the franchise’s troubles will cause Pizza Hut’s performance to be “unstable” this year. Over the past three years, chain stores have been transforming themselves in an attempt to attract consumers, thereby improving their menus and efficiency. Recently, it has transformed its sit-down restaurant into a smaller take-out and delivery location. Wendy’s also invested in its pass-through technology.
Obviously, this is not enough to overcome the serious impact of the COVID-19 pandemic. Although NPC’s private equity owner Eldridge Industries promised to provide the necessary support through its recovery, it may now be over.