July 2, 2020

The franchise owner of Pizza Huts in the Sioux Falls area has filed for bankruptcy.

Kansas-based NPC International negotiated a restructuring agreement with most of its lenders before the Chapter 11 filing, which will allow it to continue operations.

“As our industry has been in the midst of dynamic changes due to shifting consumer preferences and dining behavior, we also have been facing increased labor and commodities costs and a higher level of financial leverage that presents obstacles to achieving our long-term business objectives,” said Jon Weber, CEO and president of NPC’s Pizza Hut division. “These challenges have been magnified recently by the impact and uncertainty of COVID-19, and we believe it is necessary to take proactive steps to strengthen our capital structure, so we have the financial flexibility to continue to adapt to current industry trends. We also intend to use this process to continue to evaluate and optimize our restaurant portfolio so that we are best positioned to meet the needs of consumers across the country.”

Pizza Hut has reported same-store sales growth in April and May as the coronavirus pandemic pushed people from eating in restaurants to takeout and delivery. That increase, however, follows years of declining sales in the U.S. for the chain, and NPC carries $1 billion in debt, according to reports.

In addition to being the largest Pizza Hut franchisee, with more than 1,200 locations, NPC owns 400 Wendy’s restaurants.

While NPC is not the franchisee for Wendy’s in Sioux Falls, it does own the four Pizza Huts here and 16 others across South Dakota.

Those locations remain open, the company said, but it does plan to “optimize its portfolio of restaurants throughout the country.”