One of the largest restaurant franchises in the United States is expected to file for bankruptcy, according to Fox News. NPC International, which owns more than 1,200 of Yum brands (NYSE: YUM) Pizza Hut restaurants and almost 400 for Wendy’s (NASDAQ: WEN), you can apply for Chapter 11 protection as soon as today.
The franchisee has struggled for years as Yum! Brands found that changing the pizza chain was a more insoluble problem than originally believed. Meanwhile, Wendy’s struggled to keep pace with its growth along with McDonald’s and Restaurant Brands International‘s (NYSE: QSR) Burger King.
Image source: Getty Images.
Bankruptcy already on the menu
NPC International defaulted on the financial covenants in its loan agreement last year and missed interest payments of nearly $ 800 million in loans in January. The franchisee, who has a billion dollar debt, began considering filing for bankruptcy at the time, as declining sales and rising labor costs have pressured restaurants across the country.
While the coronavirus pandemic has led several restaurant chains to file for bankruptcy, including the Chuck E. Cheese children’s food and entertainment chain, restrictions placed on restaurants to offer only takeout and delivery should have helped increase the survival chances of NPCs.
Where mmm! The brands recognized that the problems of the franchisee would lead to a “turmoil” in the performance of the Pizza Hut segment this year, the chain has been transformed in the last three years in an attempt to attract consumers again, improving its menu and efficiency . More recently, it has been transitioning from its sit-down restaurants to smaller take-out and delivery places. Wendy’s has also invested in its drive-thru technology.
Apparently, that has not been enough to overcome the severe impact of the COVID-19 pandemic, and although NPC private equity owner Eldridge Industries has pledged support as needed through his recovery, that may come to an end. .
