Legal Battle Not Stalling Pizza Hut’s Expansion
Pizza Hut filed a lawsuit against Lundy Enterprises, a corporation of Larry Lundy who owned 44 Pizza Hut restaurants, for royalty payment default. Lundy counterclaimed that “Pizza Hut imposed unfair credit terms, refused his restaurants the chance to offer new products available in other markets and, over time, opened independent stores that became his competition”, according to Nola.com. Amidst this legal rambling, Pizza Hut has reopened stores and employed 500 staff in affected areas.
The proverbial brick oven of justice is beginning to heat up for Larry Lundy, the New Orleans native and former Pizza Hut magnate who was forced to shutter his 44 restaurants earlier this year after years of souring relations with the Dallas-based pizza chain.
Starting in the mid-1980s, Larry Lundy rose up the corporate ranks at Pizza Hut’s headquarters in Kansas. In five years, Lundy became the highest-ranking African-American in any national restaurant company, he once boasted in an interview.
Lundy owned 44 Pizza Hut restaurants, including 11 New Orleans-area locations, that closed after the pizza chain filed suit Jan. 3 against his company, Lundy Enterprises, claiming it had fallen behind on royalty payments.
Pizza Hut and Lundy Enterprises, which had 1,200 employees across 64 stores in south Louisiana at its height a decade ago, spent much of last year in arbitration. Both sides reached a deal that would have transferred Lundy’s assets to Pizza Hut, records from the U.S. District Court for the Northern District of Texas show, but the value of the assets, pegged at $7.8 million, was not enough to pay off all liens, claims and other expenses.
Lundy contends that Pizza Hut failed to assist him in clearing the liens, which were to be paid from the proceeds of the award as determined in arbitration.
Still, the ongoing legal battle hasn’t stalled Pizza Hut’s effort to re-enter the market. The company has reopened 18 restaurants in south Louisiana, with four more soon to come near Baton Rouge, and plans to open additional locations next year, said Chris Fuller, a spokesman for Pizza Hut, which is owned by Yum! Brands.
Each restaurant was built new, and overall, Pizza Hut has hired more than 500 employees to staff the locations, Fuller said.
That’s expected to climb as the company finalizes its plans for setting up shop in New Orleans, with officials now “determining where Pizza Hut restaurants are needed, and what type of format is best for that area,” mainly dine-in or carry-out, Fuller said. A “broader” announcement could come at the beginning of next year.
By then, the legal wrangling will be starting to crisp: Lundy has alleged that Pizza Hut imposed unfair credit terms, refused his restaurants the chance to offer new products available in other markets and, over time, opened independent stores that became his competition.
Rather, after moving to shutter the restaurants, Pizza Hut said in a Feb. 22 court filing that the claims “serve no purpose other than to deliberately paint (Pizza Hut) in as unfavorable of a light as possible both to the court and the public.”
Last month, U.S. District Judge David Godbey denied Pizza Hut’s motion to dismiss the claims, potentially setting the case up to go to trial by mid-2012.
The court ruling, filed Sept. 19, also dismissed Lundy’s claims for intentionally interfering with contract and business relations, but let his remaining grievances stand.
Photo by C-Bunny