If you’re someone who loves pizza, you might want to pay attention. Pizza Hut announced today that they’ll be closing as many as 500 dine-in locations, instead opting to increase their focus on carryout and delivery.
“We are leaning in to accelerate the transition of our Pizza Hut U.S. asset base to truly modern delivery/carryout assets,” said David W. Gibbs, president, chief operating officer and chief financial officer for Yum! Brands. “This will ultimately strengthen the Pizza Hut business in the U.S. and set it up for a faster long-term growth.
Right now there are currently 6,100 Pizza Hut locations in the United States where you can actually go in and sit to eat your meal. There are also about 1,350 express units that focus on delivery and carryout. Gibbs says that over the next two years, these numbers will decline.
“During this transition, we expect a temporary deceleration in the pace of new unit development for the Pizza Hut division as continued healthy international unit growth will be partially offset by a short-term decline in the absolute number of U.S. units,” Gibbs said. “As a result, our U.S. store count could drop to as low as 7,000 locations over the next 24 months, primarily driven by closures of underperforming dine-in restaurants before rebounding to current levels and above in the future.”
Gibbs couldn’t confirm exactly when the stores close, but he does admit that some locations will receive replacement units, presumably that are only carryout and delivery locations.
“But as far as the numbers and how the math works, it’s hard to estimate how soon the timing of when a store will close and then when the replaced unit will open,” Mr. Gibbs said. “There will be gaps on some of those, but certainly, our goal is to try to minimize those gaps.”
Yum! Brands will be collaborating with Pizza Hut and already work with KFC and Taco Bell. Both of those restaurants already focus on delivery.
“We are excited about collaborating with franchisees who are capable, well-capitalized, committed to the brand and who have a growth mindset to accelerate the closure of underperforming dine-in stores and replacement with new delivery or fast casual delivery assets,” said Greg Creed, chief executive officer for Yum! Brands.
Creed also noted that the Pizza Huts with lower volumes will just close all together.
“By the same token, we also know we’ll need to directly address franchisees who are burdened with too much debt, don’t have access to capital or aren’t committed to the long term,” Creed said. “Thus, in a few cases, some of these businesses will need to be restructured in the near term to address capital structure and leverage issues, particularly those franchisees with greater dine-in exposure.”
It’s not yet clear which locations will be closing, but I hope none of them are near me!