Pizza Hut, McDonald's and More Chains Permanently Close Hundreds of Locations amid Pandemic
Pizza Hut, Denny’s, TGI Fridays and McDonald's are among the restaurant chains permanently shuttering locations
The coronavirus pandemic has prompted various businesses to close their doors, some permanently.
Chain restaurants across the U.S. have been facing major hardships brought on by the pandemic, and many including Pizza Hut, McDonald's and IHOP have been forced to permanently shutter various locations.
In early July, NPC International, Pizza Hut's biggest franchisee that accounts for 20% of all the locations in the U.S., filed for bankruptcy, Restaurant Business Online reported. The company just announced that up to 300 Pizza Hut locations will be closing, while their remaining 927 locations they franchise will be sold.
The exact locations that will be closing have not been disclosed yet, but NPC did state that employees of shuttering locations will be moved to better-performing Pizza Huts.
McDonald’s is closing 200 U.S. locations for good. The closings come as McDonald’s reported its lowest quarterly profits in 13 years, according to the Financial Times. The chain’s net income fell by 68% to $483.8 million
“In many markets around the world, most of notably in the U.S., the public health situation appears to be worsening,” Chris Kempczinski, McDonald's CEO told CNBC. “Nonetheless, I believe that Q2 represents the trough in our performance as McDonald’s has learned to adjust our operations to this new environment.”
CFRA Holdings, a franchisee operating 49 IHOP locations, filed for bankruptcy in early May and cited the coronavirus as the primary reason, according to FSR Magazine. All employees working at the closing locations were paid and laid off prior to the bankruptcy filing.
A Denny’s franchisee, Feast American Diners, closed 15 locations of the popular breakfast chain.
"Due to the severe financial environment caused by the COVID-19 pandemic, some of our franchisees have regrettably decided to close their locations. Denny's has been working with its franchise owners to assist in helping them through this crisis, but the final decision to close is in the hands of each franchise business owner and their particular circumstances," a spokesperson for Denny's told Today.
Aziz Hashim, the founder and managing partner of Ruby Tuesday owner NRD Capital, told Restaurant Business the pandemic will likely spur the closure of many more restaurants. The chain has already significantly downsized this year, going from 470 locations at the beginning of 2020 to “between 270 and 300,” according to Hashim.
"The final tally as to the permanent number of closures is to be determined for us,” Hashim said. “Some of it depends on how quickly sales come back.”
Locations of the Indianapolis-based Steak ‘n Shake and of TGI Fridays have also closed down permanently due in part to the pandemic.
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"Due to COVID-19, there have been a lot of changes throughout the restaurant industry. With business being dramatically cut overnight and the lack of rent forgiveness when it comes to landlord and rent, some of our restaurants will not recover," a spokesperson for TGI Fridays told Today, noting that 10-20% of locations may permanently close in the future.
Though many chains are only shuttering certain locations, some have closed for good. Popular west coast chain Souplantation — also known as Sweet Tomatoes outside of Southern California — announced it will not be reopening its doors after all of its locations were temporarily shut down at the start of the coronavirus pandemic.
Le Pain Quotidien, a fast-casual bakery chain, announced it would close all 98 of its U.S. locations after filing for Chapter 11 bankruptcy protection in May, though at least 35 stores will potentially be reopened at a future date following a partial buyout by Aurify Brands.
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