EYM Pizza, the Pizza Hut franchisee that filed for bankruptcy this summer amid a dispute with the franchisor, is selling its remaining restaurants in five states.
The sale of EYM Pizza’s 127 stores is part of a financial restructuring for the company, which is under multi-brand operator EYM Group. EYM Group, led by President Eduardo Diaz, is also a KFC, Denny’s and Panera Bread franchisee. Its pizza entity is working with M&A advisory and brokerage firm National Franchise Sales to identify buyers and facilitate the sale of restaurants in Illinois, Indiana, Georgia, South Carolina and Wisconsin.
Alan Gallup, lead adviser for the NFS Asset Recovery Team, noted EYM Pizza was able to shed some “undesirable locations” through the bankruptcy process, and he expects to see a “very reasonable level of interest” in the remaining units.
“The stores were shaken a little bit in terms of top-line sales over the summer, given the issues between the franchisee and franchisor,” Gallup said, as he added “negative press” surrounding the back-and-forth lawsuits and bankruptcy caused some store-level disruption. Pizza Hut, though, “is in an attractive segment,” he continued, and the 127 units available will draw qualified buyers.
“We think we’re going to see a lot of interest, and there’s money to be made in these restaurants,” Gallup said.
Pizza Hut in June sued EYM Pizza for allegedly not paying royalties on time and for what the chain called store underperformance. The lawsuit came after EYM sued Pizza Hut in March to keep the franchisor from terminating its franchise agreements, but a judge dismissed the complaint in April. At the time, EYM Pizza had more than 140 units.
Pizza Hut reported same-store sales increased 7 percent from 2019 to 2023, while EYM’s same-store sales decreased by 10 percent in that time. EYM allegedly doesn’t pay its fees on time and is “among the worst” performing of all large Pizza Hut franchisees, according to the suit.
EYM purchased stores in Illinois for $10.8 million and stores in Indiana for $8.6 million in 2016 to get into the Pizza Hut system, according to court documents. In 2017, EYM bought its Georgia and South Carolina markets for $9 million. The group purchased some stores from a franchisee in Wisconsin for $6.8 million and 16 corporate-owned stores for $1.5 million in 2018. EYM in its initial lawsuit criticized Pizza Hut for what it said was a failure to keep up with modern times and modern technology.
Gallup and NFS are now gathering information for prospective buyers to evaluate as part of the due diligence process, with the expectation to release marketing materials early next week. A deadline of October 30 has been set for stalking horse bidders.
Among the 127 Pizza Huts for sale are 15 units in Indiana that closed this summer after the franchise agreements were terminated, Gallup said. Those stores are being offered with the possibility of reopening as Pizza Huts or the assets could be converted for another use.
EYM Chicken, a sibling company to EYM Pizza, in August closed more than two dozen of its KFC restaurants in cities across Illinois, Indiana and Wisconsin.