Nearly 150 Pizza Hut restaurants will close due to an ongoing financial dispute with one of its major franchisees.
Friday night saw the abrupt closure of 15 Indiana locations that left staff and customers stunned.
DailyMail.com can reveal that another 129 in Illinois, Georgia, South Carolina and Wisconsin are set to close as part of the dispute.
EYM Group, which operates 144 Pizza Huts across the five states, is being sued by the chain over millions of dollars in unpaid bills.
When the deadline for Indiana restaurants passed last week, they were quickly closed. The same will happen with the others in the coming weeks and months.
Meanwhile, the EYM blamed Pizza Hut for its financial problems. He says his sales have been hit hard because the pizza chain didn’t modernize its menus or app to keep up with rivals like Domino’s and Little Caesar’s.
Pizza Hut abruptly closed 15 restaurants Friday night
Overall, Pizza Hut restaurants in the United States have seen sales drop 6 percent this year compared to last.
Pizza Huts staff in Indiana posted on social media that they did not receive any notice before the closure. They said they had been told to apply for unemployment.
A Pizza Hut spokesperson said: “The company is working to transition these locations and expects many of them to reopen soon.”
Pizza Hut has established staggered payment terms for EYM in each state. The chain will close each restaurant if the debts are not paid.
The deadline for Indiana expired last Wednesday, June 12. All 15 restaurants closed 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 proving they’re not lying,” a source told DailyMail.com.
Next up is South Carolina with a June 27 deadline. Then there’s Illinois on July 7, Georgia on July 11, and Wisconsin on September 5.
EYM, a Texas-based franchise, was founded in 2008. The problems between it and Pizza Hut, which has 6,700 locations across the United States, date back to last year.
In August, Pizza Hut offered a forbearance so the franchisee could pay 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.
He also stated that the company “had not been able to cope with strong competition from its competitors (such as Dominos and Little Caesars).”
EYM pointed to outdated technology that caused online ordering to crash during the Super Bowl and new menus to “fail.”
The claim outlined a series 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 thing Pizza Hut has done is change the cheese on its stuffed crust from mozzarella to cheddar or trot out an occasional, unfortunate appetizer like the Philly steak melt.”
These ‘failed strategies’ caused Pizza Hut to lose customers and not attract new ones.
Pizza Hut has also been sued by franchisee ERM, which says the chain’s menus had become obsolete.
In addition to this, ERM suffered when the cost of ingredients was severely affected by inflation, which eroded profit margins.
Pizza Hut filed a lawsuit 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.
Court documents show EYM failed to pay Pizza Hut millions of dollars. He initially defaulted on $3 million in late 2022 and then $2.6 million in 2023.
Pizza Hut, owned by Yum Brands Inc., operates through several franchisees nationwide.
