In what would be a monumental franchisee acquisition, Flynn Restaurant Group put in a bid for the entirety of NPC International.
NPC filed for bankruptcy protection in July, blaming COVID-19 for compounding ongoing struggles. According to CEO Jon Weber, the company was pushed to the brink by the pandemic and was forced to "take proactive steps to strengthen our capital structure."
What would happen to major Pizza Hut and Wendy's operator NPC, the No. 2 company on the Franchise Times Restaurant 200, was top of mind for a lot of people and there have been many novel ideas, including Wendy's looking to partner with franchisees to split up locations. But Greg Flynn, the CEO of Flynn Restaurant Group, offers a simple solution—he'll just buy the whole thing.
In a press release, Flynn Restaurant Group (No. 1 on the Restaurant200) offered a bid for the entirety of NPC. The initial, "stalking horse" bid for the assets of a bankrupt company sets the price for NPC at least $816 million. Under the agreement, Flynn would acquire all of the 1,300-plus Pizza Hut and Wendy's locations, the company's home office assets and offer employment to "substantially all of NPC's more than 30,000 full and part-time employees," according to the press release.
The largest franchisee at $2.3 billion in sales acquiring the second largest would have some interesting effects on the industry and would form a nearly $4 billion franchise juggernaut under Flynn's "state and federal" operating model.
"This is a significant step in our restructuring process, and we are very pleased to have reached this agreement with Flynn, which validates the strong value and long-term potential of NPC’s business," said Weber, also president of NPC’s Pizza Hut division.
Carl Hauch, CEO and president of the Wendy's division, said roping the team into the deal was a big win for everyone.
"An important aspect of the stalking horse agreement is Flynn’s commitment to offer employment to substantially all of NPC’s employees," said Hauch. "We are pleased that Flynn recognizes the unique value of our team of employees, and we are tremendously proud of the commitment our employees have shown during this challenging year as we navigate the effects of the COVID-19 pandemic."
Flynn, who has been diversifying his restaurant group with brands such as Panera, Taco Bell and Arby's, said this would be an exciting deal. Calling a doubling up location count and expanding by more than $1.6 billion in sales "exciting" seems like an understatement, but would certainly continue his diversification efforts.
"These are great assets and iconic restaurant brands, and we are confident we can maximize the long-term value of the business as we continue to pursue our goal of being the premier franchise group in the restaurant industry," said Flynn.
A November 13 hearing will approve or deny the bid. A sale hearing with this and all other bids is expected on December 4.