Flynn Restaurant Group’s journey to become America’s largest restaurant franchisee didn’t happen overnight – it was a steady and determined increase.
The franchisee started in the late 1990s with eight Applebees, and grew to over 200 in 2011. It was at this point that diversification became the company’s new priority. The goal was to reflect the makeup of the industry and plant flags in the leading brands of casual and fast food restaurants. As a result, Flynn Restaurant Group added Taco Bell in 2012, Panera in 2014, and Arby’s in 2018.
But the quick service industry has sub-segments, and the two most important are burgers and pizza, which the Flynn Restaurant Group had yet to crack. Then NPC International came along. Before the pandemic, NPC – the second largest restaurant franchisee – had about 1,200 Pizza Hut stores and nearly 400 Wendy’s. But COVID caught up with him, and Flynn Restaurant Group knew that NPC was likely to go bankrupt at some point. He did it in July and Flynn Restaurant Group was ready to step into the mix.
The franchisee acquired 937 Pizza Hut and 194 Wendy’s units for $ 552.6 million, bringing its total footprint to 2,355 restaurants and 73,000 employees in 44 states. Flynn Restaurant Group is now the largest operator for Applebee’s, Arby’s and Pizza Hut, second for Panera, third for Taco Bell and fifth for Wendy’s.
Not only did Flynn Restaurant Group fall into the desired categories, but NPC also closed the bottom 25% of its Pizza Hut portfolio, leaving the new franchisee with a clean set of restaurants.
“It’s kind of the unicorn of an opportunity,” says CEO Greg Flynn in an interview with QSR. “It hardly ever happens. … This is what every restaurateur dreams of. It’s very difficult to close restaurants at the best of times, but being able to shut down all your bad ones at once was a rare opportunity. And then we looked at it and said, there are very few people who can step in to buy the whole thing. We think we can, so we went.
Flynn Restaurant Group approached bankruptcy knowing that Pizza Hut was the main stressor. According to court documents, NPC’s Pizza Hut stores have seen their profitability decline due to a lack of sales growth, commodity market volatility and increased labor pressure. artwork. And this lack of sales expansion was due to the loss of market share, the ever-increasing optionality of pizzerias, price pressures and reduced traffic.
But in the experience of Flynn Restaurant Group, all mature brands go through cycles in which they see downward trends. Eventually they hit a moment of crisis and realize that what they are doing is not working and is triggering change. Greg Flynn says that moment hit Pizza Hut between mid to late 2019, when the chain welcomed Interim President Kevin Hochman, changed advertising agencies, and changed their marketing, food and beverage strategies. of technology.
Greg Flynn says the turnaround was brewing before March 2020. The arrival of COVID provided significant favorable winds and pumped money into the system. The improvement put the owner Yum! Brands and franchisees better positioned to make the changes that were going to be necessary for a broader turnaround. To illustrate this point, the national units of Pizza Hut saw same-store sales increase 8% in the fourth quarter, down from a 4% decline in 2019.