Pizza Hut abruptly shutters 15 restaurants – with 129 more at risk – after huge bust-up with major franchisee
Almost 150 Pizza Hut restaurants are set to close due to an ongoing financial dispute with one of its major franchisees.
Friday night saw the abrupt shuttering of 15 locations in Indiana that left staff and customers stunned.
DailyMail.com can reveal a further 129 across Illinois, Georgia, South Carolina and Wisconsin are on the brink of shutting as part of the dispute.
EYM Group – which operates the 144 Pizza Huts across the five states – is being sued by the chain in relation to millions of dollars of unpaid bills.
When a deadline passed for the Indiana restaurants last week, they were quickly closed. The same will happen to the others in coming weeks and months.
Meanwhile, EYM blamed Pizza Hut for its finanical pronlems. It says its sales have been badly hit by the pizza chain not modernising its menus or app to keep up with rivals like Domino’s and Little Caesar’s.
Pizza Hut shut 15 restaurants abruptly on Friday night
Overall, Pizza Hut’s US restaurants have seen sales slip 6 percent this year compared to last.
Staff at Pizza Huts in Indiana posted on social media that they were given no warning ahead of the closures. They said they had been told to file for unemployment.
A Pizza Hut spokesperson said: ‘The company is working to transition these locations and expects many of them will reopen soon.’
Pizza Hut has set EYM staggered deadlines for payment in each state. The chain will close down the restaurants in each if the debts are not paid.
The deadline for Indiana was last Wednesday, June 12. The 15 restaurants were shuttered two days later.
They were in Cedar Lake, Chesterton, Crown Point, , Griffith, Hammond, Hobart, LaPorte, Lowell, Merrillville, Michigan City, Munster, Portage, Schererville, Valparaiso and Winfield.
‘This is Pizza Hut bosses showing they are not bluffing,’ an insider told DailyMail.com.
Next up is South Carolina with a deadline of June 27. Then it is Illinois on July 7, Georgia on July 11 and Wisconsin on September 5.
EYM, a Texas-based franchisee, was founded in 2008. Problems between it and Pizza Hut – which has 6,700 locations across the US – date back to last year.
In August, Pizza Hut offered forbearance so the franchisee could pay off some of the money owed.
But on March 15, EYM sued Pizza Hut alleging breach of contract – saying the fast food chain was violating the terms of the agreement in August.
It also claimed that the company had ‘not kept up with the heavy competition from its competitors, [such as} Dominos, Little Caesars.’
EYM pointed to outdated technology that caused online ordering to crash druing the Super Bowl and new menus that ‘flopped’.
The claim outlined a raft of problems at Pizza Hut, including a cut to its research and development budget that meant it ‘failed to innovate’.
‘In recent years, the best Pizza Hut managed to do is change the cheese in its stuffed crust from mozzarella to cheddar or trot out an occasional, ill-fated appetizer liked the Philly steak melt.’
These ‘failed strategies’ caused Pizza Hut to lose customers and not attract new ones.
Pizza Hut has also been suded by franchisee ERM, which says the chain’s menus had gone stale
On top of this, ERM then suffered when the cost of ingredients were badly hit by inflation which erorded profit margins.
Pizza Hut filed a lawuit on June 7 in Texas that also alleged breach of contract, and laid out how it would take control of the restaurants if debts were not paid.
The court documents show EYM failed to pay Pizza Hut millions of dollars. It initially defaulted on $3 million in late 2022 and then then $2.6 million in 2023.
Pizza Hut, owned by Yum Brands Inc., operates through several franchisees nationwide.
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