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This Major Pizza Chain May Finally Be Done With Mass Store Closures

Closures of the iconic “Red Roof” restaurants appear to be over.
FACT CHECKED BY Mura Dominko

Last year, while the pandemic was wreaking havoc on the restaurant industry, one of the largest restaurant operators to be affected was NPC International, a major franchisor of several national fast-food brands, including Pizza Hut. NPC declared bankruptcy in July 2020, exposing its 1,200 locations of the beloved pizza chain to potential closure. But as it turns out, NPC's implosion couldn't have been better timed.

Based on comments from David Gibbs, CEO of Pizza Hut's parent company Yum! Brands, who spoke to investors in a conference call on Monday, the future of the Pizza Hut brand was never at stake in the NPC bankruptcy. In fact, it allowed Yum! to accelerate a strategy it's been pursuing since before the pandemic: ridding the Pizza Hut brand of less profitable dine-in locations. In fact, at the time of NPC's bankruptcy proceedings, 300 of its units were already scheduled for closure.

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According to Gibbs, in the past 18 months Yum! Brands has closed "a lot of the dine-in stores that didn't belong on the [Yum! Brands] portfolio." But as Gibbs reassured investors on Monday, the closures were part of a longer-term, system-wide pivot towards takeout and delivery, one that's been in the works since the year 2000 and was recently accelerated due in part to the pandemic.

More importantly, though, the shuttering of Pizza Hut locations seems to finally be over. Pizza Hut has phased out over a thousand restaurants since 2014, and at the end of 2020 had reduced its footprint to some 6,600 units. As Gibbs told investors, the dine-in locations that are still standing after the 18-month purge are here to stay. "For the most part, the stores we have in the portfolio now are good, long-term stores," he said.

Indeed, net unit growth is only one aspect of a healthy fast-food brand and does not necessarily correlate with sales performance. Pizza Hut is a perfect example. While the brand has been shrinking since 2014, its sales growth in recent years has been solid. Gibbs reported to investors that same-store sales at Pizza Hut (factoring out dine-in business) were up 20% over a two-year period, putting the pizza chain on par with competitors like Domino's and Papa John's.

To stay competitive, Yum! Brands recently acquired a number of technology companies in hopes of accelerating the transition of its brands into takeout and delivery business models. Exclusive access to companies like Kvantum (an AI startup) and Dragontail Systems (an order management solutions company), will help Pizza Hut and other Yum! subsidiaries make that leap.

In the meantime, fans of good old-fashioned dine-in Pizza Hut restaurants can breathe a sigh of relief. Closures of the iconic "Red Roof" restaurants are finally at an end. For now.

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Owen Duff
Owen Duff is a freelance journalist based in Vermont, home of Ben & Jerry’s. Read more