Pizza Hut has abruptly closed 15 restaurants in Indiana, and 129 more locations in Illinois, Georgia, South Carolina, and Wisconsin face potential closure due to a financial dispute with a major franchisee.
EYM Group, the Texas-based franchisee operating 144 Pizza Hut restaurants across these five states, is at the center of this dispute. The pizza chain is suing EYM for millions of dollars in unpaid bills. As deadlines pass without payment, Pizza Hut is shutting down the affected locations.
EYM blames Pizza Hut for its financial troubles, citing the chain’s failure to modernize its menu and technology to compete with rivals like Domino’s and Little Caesars. According to EYM, outdated technology has caused issues such as online ordering crashes during major events like the Super Bowl, while new menu items have failed to attract customers. These factors, combined with inflation-driven ingredient costs, have eroded profit margins.
Pizza Hut’s spokesperson stated, “The company is working to transition these locations and expects many of them will reopen soon.” However, staff in Indiana reported receiving no prior warning and were advised to file for unemployment.
Pizza Hut has set staggered deadlines for EYM to settle its debts in each state. Following Indiana’s deadline on June 12, South Carolina’s deadline is June 27, Illinois’s on July 7, Georgia’s on July 11, and Wisconsin’s on September 5.
The financial conflict between EYM and Pizza Hut dates back to last year. In August, Pizza Hut granted forbearance to allow EYM to pay off some of its debt. However, EYM sued Pizza Hut on March 15, alleging breach of contract and accusing the chain of not adhering to their August agreement. EYM also claimed Pizza Hut had failed to innovate, citing examples like changing the cheese in its stuffed crust from mozzarella to cheddar and launching unsuccessful appetizers like the Philly steak melt.
On June 7, Pizza Hut filed its own lawsuit in Texas, also alleging breach of contract and outlining plans to take control of the restaurants if debts remained unpaid. Court documents indicate EYM initially defaulted on $3 million in late 2022, followed by an additional $2.6 million in 2023.
This dispute underscores broader challenges for Pizza Hut, which has seen a 6% decline in US sales this year. As the chain navigates these difficulties, its parent company, Yum Brands Inc., continues to operate through multiple franchisees nationwide.
Customers and staff now await further developments, with many hoping for a resolution that allows their local Pizza Hut restaurants to reopen soon.