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Pizza Hut franchisee NPC posts jump in 2Q profit

OVERLAND PARK Kan. Sales from newly acquired Pizza Hut restaurants helped franchisee NPC International Inc. post a 70-percent increase in second-quarter net income despite a big drop in same-store sales, the company said Friday.

NPC, the largest Pizza Hut franchisee with 1,153 units 28 states, reported net income of $3.4 million for the quarter ended June 30, compared with net income of $2.0 million in the year-ago quarter.

Total sales in the second quarter increased 35.6 percent to $223.8 million, primarily on the strength of more restaurants in operation. Between September 2008 and February 2009, NPC purchased 294 Pizza Huts from franchisor Pizza Hut Inc. and another 99 stores from another franchisee. During the same period, NPC also sold 112 stores to Pizza Hut Inc.

Same-store sales fell 12.6 percent in the second quarter, NPC said. The company blamed the falling sales on tightened consumer spending as well as a difficult comparison to last year's second quarter, when Pizza Hut's Tuscani Pasta rollout helped drive a 7.1-percent surge in same-store sales.

Looking forward, NPC said same-store sales would remain negative as the company battles high unemployment rates, declining home values and reduced consumer spending.

In its quarterly filing with the Securities and Exchange Commission, NPC also said it would defend itself against a labor lawsuit filed May 12 in federal court on behalf of a group of pizza delivery drivers. The suit, filed as a collective action under the Fair Labor Standards Act, alleges drivers were deprived minimum wage when the company did not reimburse them for automobile expenses. The suit also seeks compensation for delivery drivers in Colorado who claim their pay was deducted to cover cost of uniforms and special apparel.

NPC said in the filing that the lawsuit is “wholly without merit.”

Overland Park, Kan.-based NPC is owned by Merrill-Lynch Global Private Equity Group.

Contact Dina Berta at [email protected].

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