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Pizza Hut to permanently close 300 restaurants

The closings are the result of the bankruptcy of the chain’s largest franchisees

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Photo (c) jax10289 - Getty Images
Pizza hut is closing 300 of its U.S. restaurant locations after one of its largest franchisees declared bankruptcy in July. NPC International is closing about 25 percent of its restaurants and has agreed to sell the rest. A timeframe for the closings has not yet been announced.

It may seem odd that pizza restaurants would be shutting down at a time when pizza sales are booming -- sales are so strong that there’s now a pepperoni shortage -- but it turns out some kinds of pizza restaurants are doing better than others.

A spokesperson for NPC International said “a substantial majority” of the locations targeted for closing have dining rooms. Until recently, restaurant dining rooms have been closed due to the coronavirus (COVID-19), and these Pizza Hut locations have been relying on take-out business. Pizza chains like Domino’s, built around home delivery, have thrived during the pandemic.

Significant blow

The NPC International bankruptcy is a significant blow for the brand. The company is Pizza Hut’s largest franchisee in the U.S., operating 1,227 locations. That represents 20 percent of Pizza Hut’s U.S. restaurant base.

“We have continued to work with NPC and its lenders to optimize NPC’s Pizza Hut restaurant footprint and strengthen the portfolio for the future, and today’s joint agreement to close up to 300 NPC Pizza Hut restaurants is an important step toward a healthier business,” Pizza Hut, owned by Yum! Brands, said in a statement.

NPC International employs approximately 23,000 people, producing more than 68 million pizzas to consumers in 27 states. NPC has been a pizza restaurant franchisee for nearly 60 years. It joins 43 other retailers, mostly department stores and apparel retailers, that have declared bankruptcy since the beginning of 2020. 

CNBC reported in July that the franchisees operating fast-food restaurants are struggling. CEC Entertainment, the parent company of Chuck E. Cheese restaurants, filed for Chapter 11 bankruptcy protection in June.

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