Wendy’s is considering submitting a bid to acquire restaurants from the bankrupt NPC International, according to an SEC filing.

NPC, Wendy’s largest franchisee, operates 393 units across eight markets. The fast-food chain said it’s actively participating in the court proceedings and continuing to evaluate strategic alternatives, including a “consortium bid together with a group of pre-qualified franchisees.” If the deal were to occur, Wendy’s expects that existing and new franchisees would purchase most of the markets while Wendy’s would acquire one or two at the most. However, no final decision has been made.

The restaurant said it wants to optimize its system through facilitating franchisee-to-franchisee transfers, evaluating acquisitions of franchised restaurants, and refranchising company-owned stores in an effort to “strengthen the franchisee base, drive new restaurant development, and accelerate restaurant reimages.” Wendy’s prefers to own 5 percent of its system.

Wendy’s said each of the 393 locations are open and that NPC has remained current with obligations except those that weren’t due as of the bankruptcy. Those will be paid upon the closing of a sale.

“There can be no assurances regarding the outcome of NPC’s chapter 11 proceedings, including whether the company will submit a consortium bid to acquire NPC’s Wendy’s restaurants or whether the consortium bid or any other sale will be successful,” the filing said. “In addition, there can be no assurances that NPC’s bankruptcy, including the contemplated sale of the Wendy’s restaurants, will not have an adverse impact on the Company’s results of operating, cash flows, or financial condition or on the performance of the Wendy’s system.”

NPC, which filed bankruptcy in July, also had roughly 1,200 Pizza Hut units before it worked with the brand to reduce the footprint by roughly 300 stores.

The operator’s plan is to sell the Wendy’s and Pizza Hut assets separately or combined. The Wendy’s operation is valued at $400 million while the Pizza Hut stores are valued at $325 million. If no sale occurs, or only a portion of the business is sold, NPC will pivot to a restructuring plan to reduce debt and inject capital.

NPC has been with Wendy’s for seven years and became its largest franchisee in 2017 when it acquired 140 units in Maryland and Washington, D.C.

While NPC lamented the decline of Pizza Hut’s brand and its turnaround strategy, Chief Restructuring Officer Eric Koza largely spoke positively about how Wendy’s has performed. In the court filing, he said Wendy’s has experienced growing sales over the years that’s been “bolstered by various initiatives undertaken by the Wendy’s Franchisor to develop the brand to address evolving consumer trends.” He also said the menu and digital footprint have evolved in response to ever-changing consumer demand. 

Fast Food, Finance, Story, Wendy's