- NPC International has entered into a stalking horse asset purchase agreement with Flynn Restaurant Group. Flynn would acquire NPC’s 1,300-plus Pizza Hut and Wendy’s restaurants for $816 million, according to a press release.
- A court hearing to approve Flynn as a stalking horse bidder will take place Nov. 13, but NPC said it would continue to solicit bids from other interested parties. A sale hearing is expected on Dec. 4.
- Given Flynn’s financial strength — its annual sales are over $2 billion — and its breadth as the country’s largest franchisee, this is the best-case scenario for Pizza Hut and Wendy’s. Both restaurant chains were ready to take part in the bidding process for their 900 and 400 units, respectively.
If this deal is approved, it would alleviate Pizza Hut's concerns that its units would be bought by a competitor, one of its original worries when NPC started soliciting bids early in its bankruptcy process. Wendy’s said earlier this week that it would also consider making a bid as part of a group of pre-qualified franchisees. Flynn, which operates over 1,200 Applebee’s, Taco Bell, Panera and Arby’s restaurants, said in the press release that it would offer employment to substantially all of NPC’s 30,000-plus full- and part-time employees.
NPC International, which declared bankruptcy during the summer with over $900 million in debt, already came to an agreement with Pizza Hut in August to close up to 300 restaurants. A substantial portion of those were traditional Red Roof dining rooms, which were significantly underperforming compared to the rest of NPC’s network. Pizza Hut was already working toward moving away from its dine-in format toward its delivery and carryout model. Under a franchisee like Flynn, this transition could get the pizza chain back on track.
"These are great assets and iconic restaurant brands, and we are confident we can maximize the long-term value of the business," Greg Flynn, CEO of Flynn Restaurant Group, said in the press release.
Flynn has shown an interest in innovation of late, as well, with one of its subsidiaries testing alcohol in five Panera locations in Kansas City as part of the dinnertime rollout of flatbread pizzas.
Bankruptcies are providing opportunities for private equity firms and other franchisees to buy companies or units during the current economic climate. Sun Holdings bought 41 IHOP locations from CFRA Holdings, which filed for Chapter 11 bankruptcy in May. Bankrupt Friendly’s agreed to a $2 million sale to Amici Partners Group in November, while Aurify bought bankrupt Le Pain Quotidien U.S. for $3 million in May.