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Pizza Hut to close up to 300 locations operated by bankrupt franchisee

A Pizza Hut restaurant is seen in Plano, Texas, the United States, on July 2, 2020.

Dan Tian | Xinhua News Agency | Getty Images

Pizza Hut will close up to 300 locations as part of a deal between the Yum Brands chain and its largest U.S. franchisee, NPC International.

NPC will also put its remaining 927 Pizza Hut locations up for sale. The franchisee, which also operates nearly 400 Wendy’s restaurants, filed for Chapter 11 bankruptcy protection in early July after struggling with its debt burden of roughly $1 billion.

“In the event NPC executes a sale of its Pizza Hut business, Pizza Hut’s focus would be to ensure that new ownership brings to NPC’s Pizza Hut restaurants a strong capital structure, healthy balance sheet, commitment to operational excellence, and a growth mindset,” a Pizza Hut spokesperson said in a statement to CNBC.

NPC’s 1,227 Pizza Hut locations account for a fifth of the chain’s total U.S. footprint.

The closing Pizza Huts underperform the rest of the chain’s locations, and the majority are expected to be dine-in locations. In recent years, the pizza chain has shied away from its reputation as a dine-in restaurant and sought to draw more attention to its delivery and takeout, a change that has been accelerated by the coronavirus pandemic. Pizza Hut reported its highest average sales week for delivery and carryout in the past eight years during the month of May.

Employees at shuttered Pizza Hut restaurants operated by NPC will be moved to better-performing locations, if possible, according to Pizza Hut’s statement. NPC has not made final determinations as to which locations will close or the timing of the closures.

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