Economic pressure accelerates closures into 2026
The downturn in the U.S. pizza restaurant sector is extending into 2026, with major chains and franchise operators continuing to shutter locations after years of mounting financial strain. Rising labor expenses, higher food costs, intense competition, and elevated lease rates have reshaped the industry, forcing many operators to restructure, downsize, or seek bankruptcy protection.
These pressures have reduced consumer access to familiar brands and highlighted the growing challenges of operating large-scale, low-margin restaurant networks.
Mod Pizza downsizes after failed turnaround
Seattle-based Mod Pizza illustrates the sector’s difficulties. The company operated around 500 locations in 2024 but closed 27 restaurants and sold its assets to California-based Elite Restaurant Group in an effort to stabilize operations.
The transaction failed to resolve underlying issues. By early February 2026, Mod Pizza’s store count had fallen to 448, reflecting continued closures as the chain struggles to restore profitability.
Bankruptcies spread among chains and franchisees
Several smaller pizza brands filed for bankruptcy protection in 2025, signaling broader distress across the sector. Bertucci’s Restaurants entered Chapter 11 in April, followed by Backdraughts in July.
Large franchise operators also encountered severe financial pressure. People First Pizza Inc., a major Domino’s franchisee, sought bankruptcy protection in March 2025, while Red Door Pizza LLC, a Little Caesars operator, filed in July. These filings underscore how franchise-heavy models amplify risk during periods of declining traffic and rising costs.
Pizza Hut plans major restaurant reductions
Pizza Hut announced plans to close 250 underperforming restaurants in the first half of 2026 as part of its Hut Forward initiative. The decision followed a 1% global same-store sales decline in the fourth quarter and across full-year 2025.
International performance provided some offset, with Pizza Hut reporting 1% same-store sales growth outside the U.S., supported by demand in the Middle East, Latin America, and Asia.
Strategic overhaul paired with selective growth
The Hut Forward plan combines marketing support, updates to technology and franchise agreements, and targeted closures aimed at improving long-term performance. Despite the retrenchment in the U.S., Pizza Hut continues to expand globally, opening more than 440 gross locations in the fourth quarter and nearly 1,200 units in 2025 across 65 countries.
A broader strategic review of the brand, launched in late 2025, remains in progress and is expected to conclude in 2026.
Industry leaders diverge on growth trajectories
Domino’s remains the largest pizza chain in the United States with approximately 7,090 locations through the third quarter of 2025. Pizza Hut operates about 6,700 U.S. restaurants, although that footprint is set to shrink. Little Caesars, with more than 4,200 locations, ranks among the largest players despite facing franchise-level financial stress.
The contrasting strategies of expansion, consolidation, and restructuring reflect a sector searching for a sustainable equilibrium amid changing consumer behavior and cost structures.
