NPC International Inc., the largest franchisee of Pizza Hut restaurants in the U.S., filed for bankruptcy after coronavirus-related shutdowns added to competitive pressures in the restaurant industry.
The closely held company sought Chapter 11 protection in the Southern District of Texas court on Wednesday. NPC, founded in 1962, operates 1,227 Pizza Hut and 393 Wendy’s stores across the U.S., according to court papers.
NPC and Pizza Hut have struggled with rising labor and food costs while trying to expand delivery and move away from traditional dine-in restaurants. The Overland Park, Kansas-based company also faces cut-throat competition from rivals such as Domino’s Pizza Inc. and Papa John’s International Inc.
The company has $903 million in debt and has pre-negotiated a restructuring agreement with about 90% of its first-lien lenders and 17% of second lien lenders. The plan is aimed at reducing the company’s debt, with first-lien lenders taking equity and potentially participating in a new cash injection. It also includes the sale of at least part of the company’s restaurants, according to the filing.
The Chapter 11 filing doesn’t mean Pizza Hut and Wendy’s are going out of business. NPC can keep operating while it works out a plan to pay its bills and turn the business around, and the bankruptcy doesn’t affect the thousands of other Pizza Hut and Wendy’s outlets owned by other franchisees.
Under the deal with its lenders, NPC will start trying to sell its Wendy’s restaurants in the coming days. Meanwhile, the company has until July 24 to work out a deal with certain creditors and Pizza Hut itself on how to restructure NPC’s pizza business. If they can’t come to a deal, NPC will try to sell an unspecified number of its Pizza Hut restaurants, according to a restructuring outline filed with the court.
“While NPC’s Chapter 11 filing was expected, we view it as an opportunity to create a better future for NPC’s Pizza Hut restaurants,” a Pizza Hut spokesperson said in an emailed statement. “We are working with NPC and its lenders to ensure that NPC’s Pizza Hut restaurants emerge from this process with the support they need to succeed.”
Ahead of the pandemic, NPC, backed by private investment firm Eldridge Industries LLC, brought in the help of restructuring advisers at law firm Weil Gotshal & Manges as well as investment bank Greenhill & Co. and operational adviser AlixPartners LLP, Bloomberg reported. Eldridge wrote off its equity investment in NPC last year.
Restaurants are facing new pressures with the temporary closures of locations across the country to stem the spread of coronavirus. The drain on revenue has been too much for some, causing them to file for bankruptcy protection. Recent filings include CEC Entertainment Inc., the parent of Chuck E. Cheese and Peter Piper Pizza, and the U.S arm of Le Pain Quotidien. Greenwich, Connecticut-based Eldridge bought Le Pain Quotidien out of bankruptcy.
The case is NPC International Inc., 20-33353, U.S. Bankruptcy Court for the Southern District of Texas (Houston).
Consultancy firm Accenture is planning to ax up to 900 jobs in the UK as the firm tries to cut costs to deal with the coronavirus crisis and an uncertain future.
Accenture is a US firm headquartered in New York, but it employs more than 10,000 people in the UK.
The UK's most iconic luxury department store is axing nearly 700 jobs to cut down on costs after being hit hard by the pandemic.
Harrods CEO Michael Ward told employees about the cuts in a memo early on Tuesday, June 30.
"With a heavy heart, today I need to confirm that due to the ongoing impacts of this pandemic, we as a business will need to make reductions to our workforce," Ward said, adding that 14% of its 4,800 staff would be impacted.
"The necessary social distancing requirements to protect employees and customers is having a huge impact on our ability to trade, while the devastation in international travel has meant we have lost key customers coming to our store and frontline operations.
"I am sorry to say that after exploring every option available, we now recognize that we need to make changes to our operational structure," he added.
Ward said the ax would fall in areas of the business hardest hit by the lockdown.
Harrods is one of many retailers across the globe to have faced immense financial pressure during the pandemic. Its flagship store in Knightsbridge, London, remained closed for several months.
In May, the company announced plans to open its first outlet store in London, as it looked to shift excess stock that had built up during lockdown.