Rising inflation, high interest rates, and fallout from the Covid-19 pandemic were major economic factors that led to financial distress for restaurant operators over the last two years.
The pizza chain segment suffered economic hardship during the pandemic, as Chuck E. Cheese's parent company CEC Entertainment and California Pizza Kitchen filed for Chapter 11 bankruptcy in June and July 2020, respectively.
Related: Struggling retailer closes more stores in Chapter 11 bankruptcy
Pizza buffet chain Cici's was among the buffet restaurant chains, such as Hometown Buffet and Souplantation, that were hit hard by the Covid shutdowns and filed for bankruptcy. Cici's filed Chapter 11 in January 2021 and closed about 43 locations.
Economic pressures put more stress on the pizza segment this year, as Seattle-based Mod Pizza considered a bankruptcy filing in July after closing 27 of its 500 stores. It instead found a buyer in Chatsworth, Calif.-based Elite Restaurant Group.
Popular Sonoma, Calif.-based chain Mary's Pizza Shack Sept. 10 filed for Chapter 7 protection in the U.S. Bankruptcy Court for the Northern District of California as the final step of a restructuring that will convert the business from a single corporation into smaller family-owned units.
Mary's Pizza Shack began a corporate restructuring in fall 2022, which resulted in the company closing five restaurant locations, through it would reopen one location after eight months and continue operating 10 Northern California units.
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EYM Pizza to sell 127 Pizza Hut locations
Finally, 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 11 bankruptcy case, according to a statement from the broker.
Related: Another troubled motor oil company files for Chapter 11 bankruptcy
"National Franchise Sales is dedicated to navigating this challenging period with EYM Pizza L.P. and its affiliates" said Alan Gallup, lead advisor for the NFS Asset Recovery Team. "Our goal is to ensure a smooth transition and maximize value for all parties impacted by this process.”
The brokerage will market the restaurant units for sale, 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 11 bankruptcy protection in the U.S. Bankruptcy Court for the Eastern District of Texas on July 22.
The company listed under $50,000 in assets and $500,000 and $1 million in liabilities in its petition.
The Irving, Texas-based pizza franchisee had previously 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 was dismissed, Nation's Restaurant News reported. EYM Pizza is an affiliate of EYM Group.
The debtor owes $21 million to Manufacturer's Bank and just under $2.25 million Pizza Hut.
EYM's other creditors include the IRS, to which it owes nearly $400,000, and just under $25,000 to Doordash, as well as a number of other vendors, landlords. and partners.
EYM was founded by former McDonald’s Mexico president Eduardo Diaz in 2008 and has been operating Pizza Hut restaurants since 2015. It recently closed more than 15 locations in Ohio and Indiana.
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