NPC Global, the greatest franchisee of Pizza Hut eating places, submitted for Chapter eleven personal bankruptcy on Wednesday as the decrease of the Pizza Hut brand name continues to try to eat into its profits.

The firm has $903 million in personal debt and has pre-negotiated a restructuring agreement with about 90{312eb768b2a7ccb699e02fa64aff7eccd2b9f51f6a579147b7ed58dbcded82a2} of its to start with lien lenders and seventeen{312eb768b2a7ccb699e02fa64aff7eccd2b9f51f6a579147b7ed58dbcded82a2} of second lien lenders.

As CNN reports, privately-held NPC, which also franchises Wendy’s eating places, has been dealing with “a excellent storm of problems” that led to the Chapter eleven submitting, like coronavirus-linked shutdowns, its massive personal debt stress and increasing labor and food fees.

Amid declining revenue at Pizza Hut, it experienced earlier attained $35 million in emergency financing from lenders following warning it would exhaust its operating funds by mid- to late January 2020. NPC reported Wednesday it intends to use the personal bankruptcy course of action to “engage in further more conversations with its brand name associates, landlords and other creditors to reach a consensual Chapter eleven system of reorganization.”

The worries facing the firm “have been magnified not long ago by the affect and uncertainty of COVID-19, and we imagine it is necessary to acquire proactive actions to fortify our funds structure,” Jon Weber, CEO of NPC’s Pizza Hut division, reported in a news launch.

NPC operates additional 1,600 franchised eating places, 1,200 of them in the Pizza Hut program. In a courtroom declaration, Chief Restructuring Officer Eric Koza reported the Pizza Hut eating places have been “a substantial drag on [its] profitability thanks to a deficiency of revenue growth and a substantial inflationary price environment.”

“The Pizza Hut business enterprise has primarily been impacted by a brand name image and products providing that has lagged powering its opponents,” he extra, noting that “the substantial shift and escalating prevalence and use of third-get together shipping solutions, these types of as DoorDash and GrubHub, has also elevated the opposition for shipping site visitors and off-premises orders.”

According to NPC, its Pizza Hut eating places noticed “a sizeable spike” in revenue as the COVID-19 pandemic lowered choices for food shipping and acquire-out but Wendy’s has been hit by decreases in revenue as a consequence of a “dramatic decrease in foot and drive-thru site visitors.”

Presley Ann/Getty Illustrations or photos for Pizza Hut/em>

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