Tom Olsen, Duluth News Tribune
Pizza Hut locations on London Road and Grand Avenue in Duluth closed Wednesday, adding to the growing number of the popular chain’s now-shuttered restaurants in the Northland.
Locations in Superior, Two Harbors, Grand Rapids, Hibbing and Ely have also closed in recent months.
The reason? The restaurants’ franchise owner has filed for bankruptcy, wanting to get out of the pizza business, and could not complete a deal to sell the restaurants in time to keep them open.
Sky Ventures of New Hope, Minn., filed for Chapter 11 bankruptcy in U.S. District Court last month, according to court documents. The company is a subsidiary of Border Foods, which operates more than 80 Taco Bell restaurants, including the one in Duluth, according to company’s website.
In December, Sky Ventures sold 54 restaurants to San Antonio-based Muy Brands, according to court documents. That included a Pizza Hut location on Central Entrance in Duluth.
“The reason for the sale was the business decision of (Sky Ventures) to exit the Pizza Hut franchise business,” Barry Zelickson, senior vice president of Border Foods and Sky Ventures said in a bankruptcy affidavit. “The decision was based upon the fact that sales have remained stagnant, costs have increased and, under the Pizza Hut Franchise Agreement, (Sky Ventures) would be required to invest substantial sums in capital improvements.”
Not included in the sale were the Grand Avenue or London Road restaurants, along with more than a dozen other locations that were leased from landlord Spirit Master Funding. The property management company sued Sky Ventures in February, seeking $8 million in back rent and fees, in a case that is still going through the legal process.
Sky Ventures said in a court filing that an agreement was in place for Muy to purchase six of the remaining locations, including the two in Duluth, for $951,000. However, the agreement requires court-approval, and the landlord has filed an objection to the proposed sale.
Sky Ventures said in an affidavit that it would not continue to operate the remaining restaurants after June 30. It’s unclear if and when the Duluth locations would be able to reopen under Muy ownership if a judge allows the sale to proceed.
A message left at the corporate headquarters for Border Foods was not returned Thursday.
The Duluth closings are the latest in a string of Pizza Hut closings in the Northland. The Ely location closed in December, followed by Superior, Two Harbors, Grand Rapids and Hibbing in April.
The manager of the Superior location, Brandon Holmes, told the Superior Telegram in April that his restaurant would return within a year, just not in its previous Hammond Avenue location.
Calls to the Grand Avenue and London Road locations were being rerouted to the Central Entrance location Thursday, and managers from the now-closed restaurants could not be reached for comment.
Employees at the restaurant, Duluth’s only remaining Pizza Hut, said they were doing brisk business Thursday and were working to expand delivery areas.