Most of those changes were physical and tangible. Originally, Pizza Hut was more of a dine-in experience than its peers—by some distance—but the chain spent the past couple of years moving toward an off-premises-heavy format to meet industry changes. When NPC closed roughly 300 of its units and whittled its footprint from 1,200 to 937, many of the shuttered locations were dine-in. There’s still about 200 dine-in locations left for Flynn Restaurant Group to deal with.
“We're going to have to make significant investments going forward evaluating the entire estate, probably relocating a lot of the dine-in restaurants to become Delco [delivery/carryout] or multiple Delco units and then refurbishing, remodeling much of the rest of the portfolio,” Greg Flynn says. “So I think our strategy is to transform the estate, control what we can control, run them well, but also participate in the turnaround of the brand, which was already underway.”
On Tuesday, Pizza Hut unveiled its “Hut Lane” experience at 1,500 locations, with more to come. The dedicated digital order pickup window is going to play a key role for Flynn Restaurant Group in particular.
The franchisee said it plans to prioritize The Hut Lane “in many of its stores” going forward.
“As we transition into the Pizza Hut system, we are excited about The Hut Lane and the seamless customer experience it offers," Ron Bellamy, chief improvement officer at Flynn Restaurant Group, said in a statement. "We know from our [quick-service restaurant] experience how much value a pick-up window can unlock for the business, and we plan to prioritize The Hut Lane in future builds and relocations of existing stores."
In the fall, Flynn Restaurant Group was designated as the stalking horse bidder for NPC’s assets as part of an $816 million agreement. That meant Flynn Restaurant Group’s bid set the bar for other qualified bidders. While the operator reached an agreement with Pizza Hut, negotiations with Wendy’s took much longer.
Wendy’s objected to the franchisee’s breakup fee, or funds that would’ve been owed if it didn’t win the bid, and its ownership of Arby’s and Panera, which Wendy’s said were competitors, according to court documents. At the time, Wendy’s also said it couldn’t reach a final agreement on personal guarantees, reimaging and development obligations, store count limitations, or maximum leverage requirements.
In response, Flynn Restaurant Group called the issues solvable, but also argued Wendy’s allowed other franchisees to operate Arby’s and Panera units and noted more than 363 of NPC’s franchise agreements don’t name Arby’s or Panera as competitors. In addition, the franchisee agreed to invest significant capital in both brands.
After an impasse, Flynn Restaurant Group and Wendy’s entered mediation and decided to split the Wendy’s restaurants.
The other benefit of having multiple brands across segments is it provides more opportunities for employees to make changes.