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A significant Pizza Hut franchisee abruptly closed 15 sites, and in a continuing conflict with the financially troubled brand owner, over 130 more could close permanently.

EYM Group owes Yum Brands millions in franchise fees despite owning and operating 144 Pizza Hut restaurants in Indiana, Illinois, Georgia, South Carolina, and Wisconsin. Following the boarded-up sites of all 129 restaurants in Indiana on Friday of last week, the Daily Mail today claimed that the remaining 129 businesses in Illinois, Georgia, South Carolina, and Wisconsin are on the verge of closing due to the ongoing conflict.

One of those tales that business masters students will tell for years to come as a lesson in “What Not to Do” is how Yum Brands and EYM came to be.

Due to a variety of factors, including inflation driving up food prices more quickly than EYM could raise pricing to suit the needs of increasingly frugal customers, the Texas-based company ended up paying Yum millions of dollars. However, Pizza Hut’s problems extend well beyond inflation.

Yum showed patience with EYM by extending the deadline for them to pay their unpaid franchise fees. However, EYM filed a lawsuit against the company in March of last year for breach of contract, primarily for not providing franchisees with a competitive product to sell. Pizza Hut has “not kept up with the severe rivalry from its competitors, Dominos and Little Caesars,” the lawsuit claims.

“The best Pizza Hut has done in recent years is change the cheese in its loaded crust from mozzarella to cheddar or bring out an infrequent, ill-fated appetizer like the Philly steak melt,” read another complaint.

In a counterclaim earlier this month, Yum sued EYM. For its part, Pizza Hut stated that it “is trying to transition these locations and thinks many of them will reopen soon.” If and when the other 139 EYM restaurants close, they intend to follow suit.

Since Pizza Hut has 6,700 locations nationwide, even if 144 are closing temporarily, the brand won’t disappear soon. However, Pizza Hut has changed, and I cannot describe its current or future state.

Pizza Hut transitioned from being a fast-casual dine-in chain to a rival to Little Ceasar’s low-cost delivery services. Then they began setting up unusual take-out/delivery combo shops alongside other Yum brands like KFC and Taco Bell.

This year’s addition of cheeseburgers to the menu and the company’s brief experimentation with Beyond Meat’s fake pepperoni only added to the uncertainty.

“After laboring under the strain of $1 billion in debt, Pizza Hut’s largest U.S. franchisee, NPC International, sought Chapter 11 bankruptcy protection” during the idiotic pandemic lockdowns.

Yum forgot what the brand’s original purpose was, which has been a major contributing factor to Pizza Hut’s long-term problems.

In the middle of the 1980s, I spent a lot of time and money at Pizza Hut because it was the only authentic pizza business near my high school in Mexico, Missouri. It was also excellent. The personal pan pizza, served in a cast-iron pan heated just below “molten,” was my particular favorite. I used to always order extra pepperoni so that while I was hunting for quarters to play the tabletop Galaga machine, I could snack on the crispy extras.

Though it’s been years since Pizza Hut enjoyed fresh crust, high-quality toppings, and a pleasant dine-in experience, nobody can predict what will happen to the restaurant chain going forward.

Author: Steven Sinclaire

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