Pizza Hut Shutters 15 Locations Amid Legal Battle With Franchisee

In a sudden move, Pizza Hut has closed 15 of its locations in the Midwest, with over 120 more at risk due to an ongoing legal conflict with its franchisee, EYM Group. This development has left many wondering about the future stability of the popular pizza chain in these regions.

According to the New York Post, EYM Group, the operator of 142 Pizza Hut locations across Illinois, Indiana, Georgia, South Carolina, and Wisconsin, was alleged to have defaulted on millions of dollars in payments owed to Pizza Hut by a June deadline.

To address these ongoing defaults, Pizza Hut entered into a forbearance agreement with EYM Group last year. Despite these efforts, the financial and operational tensions have persisted, culminating in the recent closures.

The closures, which occurred in Northwest Indiana, were reportedly a direct consequence of the heated dispute between Pizza Hut and EYM Group. The financial shortfall from the missed deadline led to the abrupt shutdown of the 15 locations last Friday, as noted by The Times of Northwest Indiana and confirmed by social media posts from affected employees.

EYM Group filed a lawsuit against Pizza Hut in March 2023, accusing the company of breaching their contract. EYM claims that Pizza Hut’s failure to modernize its menu and digital ordering system has left the franchise at a competitive disadvantage, particularly against rivals like Little Caesars and Domino’s. In response, Pizza Hut countersued, alleging financial discrepancies within EYM Group and claiming that the franchisee failed to make the required payments, thus violating their franchise agreement.

The impact of these closures is part of a broader trend for Pizza Hut. Last month, Yum Brands, the parent company of Pizza Hut, reported a 7% decline in same-store sales for the chain in its most recent quarter. This decline is stark when compared to the 7% growth in same-store sales reported during the same period last year. In the U.S. alone, same-store sales for Pizza Hut dropped by 6%.