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EYM Pizza, a major Pizza Hut franchise operator, has filed for Chapter 11 bankruptcy protection in the Eastern District of Texas. The company, which runs roughly 140 Pizza Hut locations across Texas, Wisconsin, Ohio, and Indiana, faces financial struggles that have led to this decision.
Last month the franchisee closed 15 restaurants in Ohio and Indiana, and now there are 127 more spread out over Illinois, Georgia, South Carolina and Wisconsin that could very well shut down.
EYM Pizza’s bankruptcy filing comes amidst a period of declining sales and defaulted payments. According to reports, the company’s same-store sales fell by 10% between 2019 and 2023, while Pizza Hut’s overall system saw a 7% growth during the same period. This disparity resulted in disputes with Pizza Hut, and EYM pointed the finger at Pizza Hut for the financial issues and not updating the menu to keep in competition with their competitors.
The filing lists Manufacturers Bank as EYM’s biggest creditor, with a debt exceeding $21 million. Pizza Hut itself is also listed as a creditor, owed roughly $2.25 million. The company also owes just under $25,000 to Doordash and smaller debts to vendors, landlords. and partners.
Pizza Hut said publically that EYM’s 140 restaurants will find new ownership. In a statement, a Pizza Hut spokesperson said: “The company is working to transition these locations and expects many of them will reopen soon.”
EYM Pizza is not alone in its struggles. The restaurant industry has witnessed a wave of bankruptcies in recent times, with chains like Red Lobster, Rubio’s Coastal Grill, and Arby’s franchisees facing similar financial difficulties. Rising operational costs and a competitive market are believed to be contributing factors.
EYM had previously closed 15 restaurants in Ohio and Indiana before the bankruptcy filing.
The future of EYM Pizza remains uncertain, but the positive spin is that the bankruptcy process offers an opportunity for potentially securing new ownership for the affected Pizza Hut locations. The negative spin is that all of the affected locations could go belly-up, which is a real possibility.
