Bankrupt pizza chain operator unloads dozens of restaurants

Rising inflation, high interest rates, and fallout from the Covid-19-19 pandemic were major economic factors that led to financial distress for eaterie operators over the last two years.

The pizza chain segment suffered economic hardship at some point soon of the pandemic, as Chuck E. Cheese's parent company CEC Entertainment and California Pizza Kitchen filed for Chapter Eleven financial ruin in June and July 2020, respectively.

Related: Struggling retailer closes more stores in Chapter Eleven financial ruin

Pizza buffet chain Cici's became one of a couple of buffet restaurant chains, akin to Place of birth Buffet and Souplantation, that were hit demanding by the Covid-19 shutdowns and filed for financial ruin. Cici's filed Chapter Eleven in January 2021 and closed about forty three locations.

Economic pressures put more stress on the pizza segment this year, as Seattle-based Mod Pizza thought about a financial ruin filing in July after closing 27 of its Five hundred stores. It as a substitute found a buyer in Chatsworth, Calif.-based Elite Restaurant Group.

Well known Sonoma, Calif.-based chain Mary's Pizza Shack Sept. 10 filed for Chapter 7 protection within the U.S. Bankruptcy Court for the Northern District of California because the final step of a restructuring with the intention to remodel the business from a single corporation into smaller family-owned units.

Mary's Pizza Shack began a corporate restructuring in fall 2022, which resulted within the corporate closing five restaurant locations, through it'd reopen one location after eight months and continue operating 10 Northern California units.

EYM Pizza to sell 127 Pizza Hut locations

Indirectly, EYM Pizza L.P., the operator of 127 Pizza Hut locations in five states, hired franchise business brokerage National Franchise Sales to sell its restaurants through its Chapter Eleven financial ruin case, per a statement from the broker.

Related: Some other troubled motor oil company files for Chapter Eleven financial ruin

"National Franchise Sales is dedicated to navigating this tough period with EYM Pizza L.P. and its affiliates" said Alan Gallup, lead advisor for the NFS Asset Recovery Team. "Our goal is to make certain a smooth transition and maximize value for all parties impacted by this process.”

The brokerage will market the restaurant units on hand for purchase, identify qualified buyers and facilitate the sale of the locations.

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EYM Pizza, which operates Pizza Hut locations in Illinois, Indiana, Ohio, Texas, and Wisconsin, filed for Chapter Eleven financial ruin protection within the U.S. Bankruptcy Court for the Eastern District of Texas on July 22.

The corporate listed less than $50,000 in assets and $Five hundred,000 and $1 million in liabilities in its petition.

The Irving, Texas-based pizza franchisee had ahead of now been sued by Yum Brands' (YUM) Pizza Hut after it stopped paying royalties when a forbearance period with its parent company ended.

A previous lawsuit filed by EYM against Pizza Hut for alleged breach of fiduciary duty and other charges became brushed off, Nation's Restaurant News reported. EYM Pizza is an affiliate of EYM Group.

The debtor owes $21 million to Manufacturer's Bank and just less than $2.25 million Pizza Hut.

EYM's other creditors encompass the IRS, to which it owes nearly $Four hundred,000, and just less than $25,000 to Doordash, to boot to a lot of different vendors, landlords. and partners.

EYM became founded by former McDonald’s Mexico president Eduardo Diaz in 2008 and has been operating Pizza Hut restaurants since 2015. It recently closed greater than 15 locations in Ohio and Indiana.

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