Indianapolis, Indiana – Nearly 150 Pizza Hut restaurants are facing closure as a result of an ongoing financial dispute with a major franchisee, EYM Group. The sudden closure of 15 locations in Indiana last Friday left both staff and customers surprised, with an additional 129 restaurants in Illinois, Georgia, South Carolina, and Wisconsin on the verge of shutting down due to the conflict.
EYM Group, which operates 144 Pizza Hut locations across the five states, is being sued by the chain for millions of dollars in unpaid bills. Following a missed deadline for the Indiana restaurants, they were promptly shut down, with plans to do the same for the remaining locations in the coming weeks and months.
The root of the financial disagreement stems from EYM Group blaming Pizza Hut for their financial struggles, citing a decline in sales due to the pizza chain’s failure to update menus and apps to compete with rivals like Domino’s and Little Caesar’s. Pizza Hut, on the other hand, has reported a 6% decrease in sales across its US restaurants this year compared to last.
Staff members at the affected Pizza Hut locations in Indiana expressed shock on social media after receiving no prior warning about the closures and being instructed to file for unemployment. A Pizza Hut spokesperson mentioned that the company is actively working to transition these locations and anticipates that many will reopen in the near future.
The chain has set staggered deadlines for EYM Group to make payments in each state, with impending closure for restaurants in any state where debts remain unpaid. The sequence of deadlines includes South Carolina on June 27, Illinois on July 7, Georgia on July 11, and Wisconsin on September 5.
EYM, established in Texas in 2008, has been in conflict with Pizza Hut since last year. Despite a forbearance offer from Pizza Hut in August to help settle outstanding debts, EYM initiated a lawsuit on March 15, alleging breach of contract by the fast-food chain. The lawsuit detailed issues such as outdated technology leading to online ordering failures and unsuccessful menu additions, ultimately resulting in a loss of customers for Pizza Hut.
Moreover, EYM suffered additional setbacks when inflation inflated ingredient costs, diminishing profit margins. Pizza Hut retaliated by filing a lawsuit on June 7 in Texas, accusing EYM of breach of contract and outlining plans to assume control of the restaurants if outstanding debts are not settled. The documents submitted to the court revealed EYM Group’s failure to pay millions of dollars owed to Pizza Hut, leading to the present stalemate between the two entities.