Pizza Hut is facing a potential franchisee firestorm after 15 restaurants in Indiana were abruptly shuttered on Friday after not paying debts. The closures stem from a heated financial dispute with EYM Group, one of Pizza Hut’s largest franchisees. EYM…
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Pizza Hut is facing a potential franchisee firestorm after 15 restaurants in Indiana were abruptly shuttered on Friday after not paying debts. The closures stem from a heated financial dispute with EYM Group, one of Pizza Hut’s largest franchisees.
EYM Group, which operates over 140 Pizza Hut locations across five states, is reportedly behind on millions of dollars in payments to the pizza giant. This resulted in a lawsuit and missed deadlines, leading to the swift closure of the Indiana Pizza Huts. Employees at the closed restaurants were reportedly caught off guard and advised to seek unemployment benefits.
EYM filed a lawsuit in March against Pizza Hut claiming the brand could “not keep up with the heavy competition from its competitors, [such as} Dominos, Little Caesars.’ They also said the brand failed to innovate their menu, and update outdated technology.
The situation doesn’t end in Indiana. Up to 129 additional Pizza Hut locations across Illinois, Georgia, South Carolina, and Wisconsin could be on the chopping block. These closures hinge on EYM Group meeting outstanding financial obligations. Pizza Hut has reportedly set staggered deadlines for each state, with Indiana being the first domino to fall.
The situation brings to mind Red Lobster’s plight. The seafood chain declared bankruptcy and has since closed dozens of locations…with more rumored to be on the way.
While Pizza Hut claims they are “working to transition these locations” and “expect many to reopen soon,” the future remains uncertain for both franchisee and franchisor.
The closures come at a time when Pizza Hut is already grappling with a national sales decline of 6% compared to last year. Whether EYM Group can reach an agreement with Pizza Hut and avoid further closures, is the question. The amount of Pizza Hut restaurants on the chopping block is disheartening, and several states may soon find their favorite Pizza Hut location boarded up.