PIZZA HUT FRANCHISE DECLARED BANKRUPTCY

NPC International Inc. appealed to the court of the US and declared bankruptcy. The company is the largest franchisee in the US restaurant market, working with Pizza Hut and Wendy's brands.

The company operates 1,600 establishments representing both brands in 27 states of the US. According to analysts, the chain has about 40 thousand employees, who will continue to work during the debt restructuring procedure.

The experts note that the COVID-19 pandemic, which hit the entire US restaurant market, has already led to the chain of liquidations of many American catering establishments that worked as franchise. In particular, Chuck E. Cheese family restaurants chain didn’t manage to avoid bankruptcy. Bankruptcy was previously declared by the subsidiaries of the Le Pain Quotidien chain of bakeries located in the United States.

However, according to sources, NPC International could have gone bankrupt even before the pandemic.

The main reason for the bankruptcy is the debts accumulated in recent years, and associated with the decreasing sales. It is quite clear that the restaurants that had been closed for the period of quarantine and the violated supply regime did not allow the company to reduce debt obligations, which resulted in a debt of $ 1 billion.    

Last year, an increase in the company's debts to the creditors has already led to a decrease in the credit ratings. Rating agencies S&P Global Ratings and Moody's Investors Service instantly reacted to the fact that company delayed a payment of $ 800 million on loans in January. Then the company began to discuss the prospect of possible bankruptcy with the creditors.   

According to some analysts, the owner of the Pizza Hut and Wendy's (Yum) brands may suffer losses of up to $ 54.2 million per year if he does not receive the royalties due from the NPC.

And this is not to mention the losses from the income from the sale of shares, which will inevitably fall in price if the company is unable to pay regular payments to the owner of the restaurant brands. This opinion was expressed even before it became known that the company has filed for bankruptcy protection on June 30.

One can imagine how insulting it is to the owners of the company that Pizza Hut chain not only haven’t worsen, but, on the contrary, have improved the sales figures during the pandemic, in April and May. A maximum was recorded in terms of sales of the company's products since 2012. However, NPC International management is unlikely to be pleased with the changes in consumer behavior, the positive effects of e-sales, and the delivery services launched earlier. The increase in the number of orders was unable to cope with the multimillion-dollar debts.