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QSR Feature
Behind the Brand
Quick-serves strongest franchise-holding companies

Franchisees are the backbone of the quick-service restaurant industry. It’s their entrepreneurial spirit and support that gives chains the staying power and reach to compete across the country and beyond. Without them The Colonel might never have left Kentucky and Pizza Hut would be nothing but a hut. Here, in no particular order, is a look at some of the biggest movers and shakers in the franchisee world and where they’re headed.

NPC International

Founded: 1962

HQ: Overland Park, Kansas

CEO/Senior Executives: James K. Schwartz, President/CEO/COO;
Troy D. Cook, Executive Vice President– Finance/ CFO

Concepts: Pizza Hut

Annual Revenues:
$602 million

Total Units: 816

AUV: $706,000

Last year saw big changes at NPC International. A Merrill Lynch Global Private Equity-controlled company purchased the world’s largest Pizza Hut franchisee in a May 2006 deal that resulted in the departure of the company’s chairman and founder.

All the uproar seems to be taking a toll, with the company posting first-quarter 2007 net profits of only $2.4 million, compared with $15.4 million from first quarter 2006. A press release announcing the earnings report blamed the lagging profits on fallout from the sale of the company coupled with lower restaurant operating margins, which President and CEO Jim Schwartz says NPC is working to better.

“We are refocusing our efforts in that regard in an effort to improve store labor productivity and reduce unproductive discounting from our customer pricing equation,” he said in a recent press release.

On the upside, the company, which operates Pizza Hut restaurants and delivery units in at least 24 states, was able to increase comparable store sales by 0.7 percent while rolling over its most challenging comparable store sales growth quarter from 2006. A January 12, 2007 story in the Kansas City Business Journal also speculated that the acquisition by Merrill Lynch will provide NPC with more capital to finance its expansion. Already there is evidence that this is the case: The company acquired 39 Pizza Hut stores in and around Nashville, Tennessee, in October 2006 and added an additional 59 units in Idaho, Oregon, and Washington in March 2007.

NPC’s strategy has been to focus on non-metro locations and small cities, and it already has significant presence in the Midwest, South, and Southwest regions. Bolstered by its new heavyweight backer, look for NPC to continue adding territory.

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