Pizza Hut franchisee EYM Pizza L.P. and affiliated companies filed for Chapter 11 bankruptcy protection in the Eastern District of Texas on Monday.
The filing, which includes related companies in Wisconsin and Indiana, only listed two creditors: Manufacturers Bank, which it owes more than $21 million, and Pizza Hut itself, which is owed just under $2.25 million.
The filing comes after Pizza Hut sued EYM, which operates around 140 Pizza Hut restaurants in the South and Midwest, for not paying royalties on time even after a forbearance period granted last year that ended in February.
EYM had previously sued Pizza Hut for breach of fiduciary duty, among other claims, but the case was dismissed, opening the way for Pizza Hut’s own lawsuit.
EYM, which was founded by former McDonald’s Mexico president Eduardo Diaz in 2008, has been operating Pizza Hut restaurants since 2015, but recently closed more than 15 locations in Ohio and Indiana.
This is the latest in a spate of restaurant bankruptcies. Since April, Red Lobster, Rubio’s Coastal Grill, Melt Bar & Grilled, Sticky’s, Tijuana Flats, One Table Restaurants (parent of Tender Greens and Tocaya), Louisiana-based Arby’s franchisee Miracle Restaurant Group, and San Antionio-based Subway franchisee River Sub have all filed for protection. MOD Pizza reportedly narrowly avoided declaring bankruptcy by finding a buyer.
The moves for financial restructuring come after many operators took on debt as they struggled to get through the pandemic, which was followed by costly supply chain disruptions, rising labor costs, and inflation that both drove up the cost of doing business and also caused many consumers, especially low-income ones, to cut back on spending.
Contact Bret Thorn at [email protected]
