Fierce competition in the pizza restaurant sector has led to hundreds of closed locations this year and bankruptcy filings from franchisees of major chains like Papa John’s.
Pizza chains have been forced to close underperforming locations as they seek to turn around declining sales.
Pizza Hut’s parent Yum Brands set a goal to close 250 underperforming restaurants in the first half of 2026, while Papa John’s said it would close 300 locations by the end of 2027.
Papa John’s franchisee files bankruptcy
And now, Papa John’s pizza chain franchisee Papa ZHS LLC and four affiliates filed for Chapter 11 bankruptcy seeking to reorganize their businesses.
The New Kensington, Pa.-based debtor filed its petition on Nov. 9, listing $100,000 to $500,000 in assets and $1 million to $10 million in liabilities, including over $2.9 million in unsecured creditor claims.
The debtor’s largest unsecured creditors include Itria Ventures LLC, owed $909,000 on three loans; Small Business Administration, owed over $811,000 on two loans; Bizcap, owed $275,000; CFG, owed $270,000; Ascentium Capital, owed over $259,000 on three loans, and Balboa Capital, owed over $194,000.
Franchisee opened chain’s 6,000 location
Papa ZHS owner Yasir Hussain, listed as “member” on the petition, was credited with opening Papa John’s 6,000th restaurant in February 2025, according to the papajohns.com website. Hussain operated 12 restaurants at the time and was about to open his 13th location in Cleveland, Ohio, which was later listed on the debtor’s Chapter 11 petition.
Hussain began his journey to ownership of Papa John’s franchises 20 years ago when he took his first pizza job as a dishwasher. Over the first six years of pizza restaurant employment, he held several positions before becoming restaurant manager and overseeing several locations.
“For me, it was never about the title,” Hussain said. “It was about doing my job to the best of my ability. I wanted to be the best dishwasher in the company.”
Hussain took a big step in 2019 when he opened his first Papa John’s franchise and would continue acquiring locations over the next seven years.
“Growth is something I love – I can’t live without it,” Hussain said in 2025.
Chain faces declining sales
Declining Papa John’s sales in 2025 and 2026 have not helped franchisees, like Papa ZHS.
Papa John’s sales deteriorated in 2025, as North American company-owned restaurant sales declined by 3% year-over-year and franchised restaurant sales were down by 2%, in its year ended Dec. 28, 2025.
Sales deteriorated even further in the nine months ended Sept. 27, 2026, as comparable sales of domestic company-owned restaurants declined by 7.4% year-over-year and franchised restaurant sales decreased 7.8%, according to Papa John’s third quarter 2026 financial results released on Nov. 5.
Hundreds of locations close
The pizza chain, which operated 5,969 locations in 50 countries and territories at the end of the third quarter, has closed 239 restaurants worldwide year-to-date.
The pizza chain has closed 146 locations in North America as part of its goal to close 300 units by the end of 2027, according to the third quarter 2026 earnings call.
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