More Pizza Hut Closures Ahead of July 30 Earnings Announcement
In a banner year for the pizza delivery industry, Pizza Hut has struggled. Its competitors are at all-time highs. Just this year, Papa John’s (NASDAQ:PZZA) has rallied 44% to date. Domino’s (NYSE:DPZ) has rallied 31% this year.
In contrast, The Guardian reports today that Pizza Hut’s U.K. operations are on the verge of insolvency, affecting the country’s 244 locations and 5,700 employees.
This piles atop a June 30 report that Pizza Hut’s largest franchisee, NPC International, has filed for bankruptcy protection. While negotiating with creditors during the Chapter 11 process, NPC International intended to keep its 1,200 Pizza Hut locations open.
Shares of Yum! Brands have declined 8% year-to-date. The company is scheduled to report earnings tomorrow. Wall Street analysts’ consensus is for $0.54 per share of earnings on $1.16 billion of revenue. Investors can join its earnings conference call live tomorrow at 8:15am New York time.
It all seems surreal for a company that was on a “hiring blitz” in the middle of the pandemic, posting 30,000 job openings on March 23 and promising to have new hires trained and on the road within five hours. Granted, Pizza Hut does operate over 18,000 restaurants in more than 100 countries, so there is a large cushion to fall through.
In early May, when seated diners had decreased a stunning 98% according to OpenTable data, an Emerson College poll of California respondents revealed that only 35% would be comfortable returning to dine at sit-down restaurants. Nationwide, a poll by The University of Maryland revealed that only 22% of Americans felt comfortable eating out at a restaurant as of May 3.
Nowadays, that ratio has flip-flopped. Survey results released yesterday from Izea show 94% of its 1,251 respondents would wear a mask to visit their favorite restaurant. Additionally, social media mentions of “mask” overtook mentions of “coronavirus” in June, and the keyword has continued to outpace since. Social media posts containing the hashtag #wearamask have increased 288% since June.
On June 10, Pizza Hut U.S. delivered same-store sales growth of a “low-teens” percentage from the end of April through the end of its fiscal quarter, up from a “mid-teens” percentage decline at the end of March. The result was quarter-to-date same-store sales growth of a “low-single digits” percentage. Despite growth within the U.S., Pizza Hut Global same-store sales declined 10% during that same period. In early April, during the peak of the pandemic, 25% of international Pizza Hut restaurants were closed.