By Lynn Binnie
Whitewater Banner volunteer staff
whitewaterbanner@gmail.com
With apparently no notice, Whitewater’s Pizza Hut, 1107 W. Main Street, served its last pizza early this past week. A customer reported on social media that on Wednesday, August 28 there was a sign on the door stating that the restaurant was closed for maintenance. By Sunday, however, the dumpster was full to overflowing, the back parking lot was blocked off by shelving units, a large portion of the furnishings appeared to have been removed, and the host podium was on the sidewalk. The Pizza Hut website shows the Whitewater location as being closed.
Roy Rockwell posted on social media that he was the original manager of the store when it opened on October 17, 1976, nearly 48 years ago. “Sad to see it close,” he lamented.
Most recently the business was owned by EYM Pizza Wisconsin. EYM was started by Eduardo Diaz, a former president of McDonald’s Mexico. He started EYM Group in 2008 and in 2015 decided to jump into the Pizza Hut business. After purchasing the properties and franchises in several other states, EYM spent about $8.4 million in 2018 for restaurants in Wisconsin in two separate deals. By 2021 EYM decided to sell its approximately 140 restaurants, but a deal fell apart.
Nearly all Pizza Huts are owned and operated by independent franchisees; very few are company-owned. Pizza Hut is owned by YUM! Brands, Inc., which also owns Taco Bell and KFC. According to restaurantdive.com, “Pizza Hut and EYM have been embroiled in a legal battle since March when EYM filed a breach of contract lawsuit against the franchisor [Pizza Hut] accusing it of failing to remain competitive, not adapting modern practices and not using new technology. A judge denied a motion for a preliminary injunction in April.” In June, Pizza Hut counter-sued EYM, alleging that it wasn’t paying various fees as dictated by its franchise agreement. Per restaurantdive.com, “In its June lawsuit, Pizza Hut said EYM is one of its largest franchisees, but is among the worst performing in its system. The operator’s same-store sales declined 10% from 2019 to 2023, compared to Pizza Hut’s systemwide same-store sales growth of 7%. Pizza Hut accused the chain of poor operational performance, falling out of compliance for its development obligations and failing to make payments to the franchisor on a timely basis.”
EYM Pizza then filed for Chapter 11 bankruptcy protection on July 22, according to court records from the U.S. Bankruptcy Court for the Eastern District of Texas. A number of other multi-unit franchisees of national brands have filed for bankruptcy in the last couple of years, including those operating some Arby’s, Wendy’s, Denny’s, Popeye and McDonald’s. Restaurantdive.com states, “Franchisees have been particularly hit by rising labor and operational costs and difficulty raising capital to finance the remodels or expansions needed to boost sales.”
Pizza Hut has been pushing EYM to sell its restaurants, but they have been unsuccessful in finding a buyer. Consequently Pizza Hut has started to move to terminate a number of EYM’s franchises. It is not known whether the Whitewater store closure was initiated by Pizza Hut or simply an indication that it was one of EYM’s less profitable locations. Pizza Hut has been looking for other operators to take over some of the stores, which could occur here, but it could be anticipated that a new operator would have a significant investment in replacing worn-out equipment and remodeling.
By the way, another division of EYM, EYM Chicken of Wisconsin, has operated five KFC restaurants in the state. All of them were expected to close by the end of August, including the Janesville location, which EYM indicates is due to its inability to negotiate an acceptable contract with YUM!
