Nearly 150 Pizza Hut restaurants are set to close due to an ongoing financial dispute with a major franchisee.
Friday night saw 15 locations in Indiana suddenly close, leaving employees and customers stunned.
DailyMail.com can reveal that another 129 post offices in Illinois, Georgia, South Carolina and Wisconsin are about to be closed as part of the dispute.
EYM Group – which operates 144 Pizza Huts across five states – is facing a lawsuit by the chain in connection with millions of dollars in unpaid invoices.
When the deadline passed for Indiana restaurants last week, they quickly closed. The same will happen to others in the coming weeks and months.
Meanwhile, EYM blamed Pizza Hut for its financial woes. It says its sales have been hit hard by the pizza chain not updating its menus or its app to keep up with competitors like Domino’s and Little Caesar’s.
Pizza Hut abruptly closed 15 restaurants Friday night
Overall, Pizza Hut restaurants in the U.S. saw sales decline 6 percent this year compared to last year.
Pizza Huts employees in Indiana posted on social media that they received no warning before the closures. They said they were asked to apply for unemployment.
“The company is working to transition these locations and expects to reopen many of them soon,” a Pizza Hut spokesperson said.
Pizza Hut has set staggered EYM payment deadlines in each state. The chain will close the restaurants in each if the debts are not paid.
Indiana’s deadline was last Wednesday, June 12. The 15 restaurants were closed two days later.
They were in Cedar Lake, Chesterton, Crown Point, Griffith, Hammond, Hobart, LaPorte, Lowell, Merrillville, Michigan City, Munster, Portage, Schererville, Valparaiso and Winfield.
An insider told DailyMail.com: “This is how Pizza Hut bosses show they are not bluffing.”
Next is South Carolina with a June 27 deadline. Then Illinois on July 7, Georgia on July 11, and Wisconsin on September 5.
EYM, a Texas-based franchisor, was founded in 2008. Troubles between it and Pizza Hut — which has 6,700 locations across the United States — date back to last year.
In August, Pizza Hut offered patience until the franchisee could repay some of the money owed.
But on March 15, EYM sued Pizza Hut for breach of contract — saying the fast food chain was violating the terms of the agreement in August.
It also claimed that the company “has been unable to keep up with intense competition from its competitors, such as Dominos and Little Caesars.”[suchas}DominosLittleCaesars'[suchas}DominosLittleCaesars’
EYM pointed to outdated technology that caused online ordering to crash during the Super Bowl and new menus that “failed.”
The claim summed up a host of problems at Pizza Hut, including cutting its research and development budget, meaning it had “failed to innovate.”
“In recent years, the best Pizza Hut has been able to do is change the cheese in its stuffed crust from mozzarella to cheddar or offer the occasional ill-fated appetizer like the Philly steak melt.”
These “failed strategies” caused Pizza Hut to lose customers and not attract new ones.
Pizza Hut has also been sued by franchisee ERM, which says the chain’s menus are outdated
Furthermore, ERM then suffered when the cost of components was hit hard by inflation which eroded profit margins.
Pizza Hut filed a lawsuit on June 7 in Texas that also alleged breach of contract and explained how it would take control of the restaurants if the debts were not paid.
Court documents show EYM failed to pay Pizza Hut millions of dollars. It initially defaulted on $3 million in late 2022 and then $2.6 million in 2023.
Pizza Hut, owned by Yum Brands Inc., operates through several franchisees across the country.
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