A massive pizza franchisee now files an unexpected bankruptcy after battling with its franchisor in a heated lawsuit, a filing confirms.
EYM Pizza, which has traded lawsuits with Pizza Hut over the franchisor’s efforts to terminate the stores over unpaid royalties, has now filed for Chapter 11 bankruptcy protection in the grand state of Texas.
EYM Pizza, which operates 140 locations in Indiana, Illinois, Georgia, Wisconsin and Texas, filed for Chapter 11 debt protection in a handful of filings in Texas on Monday.
That move was likely inevitable, after Pizza Hut sued EYM, seeking to terminate its franchise agreement over underperformance and not paying its royalties on time, per Restaurant Business.
EYM tried avoiding that fate with its own lawsuit accusing Pizza Hut of underperformance of its own, saying that the company has “no image or identity that sticks with patrons” and that it lost ground to rivals in recent years. A judge dismissed that lawsuit in April, however.
Eduardo Diaz, a former president of McDonald’s Mexico, started EYM Group 2008 and in 2015 started buying up Pizza Huts in several deals in various states. Diaz served on various committees for the brand over those years.
But by 2021, the company started looking for a buyer and had an $89 million offer that ultimately collapsed after the buyer lowered its proposed purchase price.
The franchisee then struggled with higher food costs and lower margins as well as new restaurant projects that were delayed due to COVID. The cost of those projects increased, too.
Pizza Hut in its lawsuit against EYM said that the franchisee’s sales underperformed the brand by 1,700 basis points between 2019 and 2023 and that more than 12% of its restaurants failed inspection between 2023 and 2024.
In 2022 the operator started falling behind on royalty payments.
EYM has tried and failed to find a buyer over the past couple of years but has accused Pizza Hut of trying to force the operator to accept a low price for some of its restaurants.
EYM as of March had bank debt of $23 million and over the years has spent $46.6 million to buy and renovate its Pizza Hut restaurants, per Restaurant Business.
The bankruptcy filing of EYM is the latest in a string of restaurant company bankruptcies including Red Lobster, Tijuana Flats, Rubio’s and the owner of Tender Greens.
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Also Read: Another Mall Clothing Retailer Now At High Risk of Bankruptcy
Other Economy News Today
A massive rental company with 34k locations now shuts down its operations after filing for bankruptcy and 22 years in business.
Users of movie rental company Redbox were left saddened after it was announced that it would be shutting down operations.
The announcement comes after the rental company’s parent company, Chicken Soup for the Soul Entertainment, filed for Chapter 11 bankruptcy.
According to court documents obtained by the Washington Post, the Connecticut-based company claimed to be one billion dollars in debt.
As a result, Redbox, which was a staple of many grocery stores including Walgreens, and CVS will be shuttered.
Many fans took to social media to express how upset they were with the loss.
“I knew it was coming, sadly,” UltraVada wrote in a post on X, formerly Twitter.
“It was inevitable,” a second person mourned.
“I knew this would happen when I heard they filed for Bankruptcy but its still sad to hear. I have a lot of fun memories of Redbox,” a third person lamented.
“I still don’t think this will be or ever be the end of physical media as we do still get remasters of some movies in 4k/Bluray.”
One person revealed that they had forgotten the rental service had existed.
Some users were not surprised by the announcement.
“Not surprised since nobody really rents videos anymore with the rise of streaming and what not,” one user admitted.
“Also kinda remember getting into a feud with them on here.”
One user also pointed out that the last remaining Blockbuster, located in Bend, Oregon, managed to outlive Redbox.
Redbox was acquired by Chicken Soup for the Soul Entertainment (CSSE) in 2022 and became one of the company’s flagship video-on-demand streaming services.
At its peak, CSSE operated more than 20,000 DVD rental kiosks across the country.
The company’s filing means that the company’s more than 1,000 employees will be laid off, per The Wall Street Journal.
It was also reported by Deadline that many employees at CSSE hadn’t received their paychecks and had medical benefits cut in late June.
Also Read: This Massive Mall Retailer Is Now Closing In California
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