Pizza Hut exits Lebanon as economic crisis takes bite out of business

A pizza is ready for a delivery at a Pizza Hut store in Las Mercedes in Caracas, Venezuela, November 30, 2020/ CFP

Lebanon's economic crisis has taken a bite out of Pizza Hut, forcing the U.S. restaurant chain to shut down its outlets in the struggling country.

In a series of emotional posts on social media, Pizza Hut announced "with a heavy heart" that it is exiting the country after 27 years of market presence.

"In this place, we made plenty of unforgettable memories. Throughout the years, we shared some of the best days," the company said Sunday on Instagram.

"Offering the best quality and experience has always been our top priority. Until we are able to do that, with a heavy heart we say goodbye!"

The pizza chain, which opened its first outpost in the small Middle Eastern nation in 1994, had 13 branches, according to Rinnoo, a local business directory service.

Lebanon has fallen on hard times and is currently in the throes of its worst financial and economic crisis in 30 years. The monetary meltdown has knocked down over 80 percent of the local currency, obliterating people's purchasing power and trapping more in poverty.

The predicament has been compounded by the COVID-19 fallout and a massive blast at Beirut Port last August that killed 211 people and injured thousands more. The government resigned as a result amid public anger, but nine months on, no replacement is in sight.

Hard currency, needed by the import-reliant country to buy fuel, medicine and food from abroad, is also hard to come by as U.S. dollar inflows dry up.

"We faced an issue in importing our raw materials and transferring our money abroad and we tried to resist the pandemic impact as much as possible," Riad Sabbagh, Pizza Hut Lebanon's General Manager, told the

Arab News newspaper

on Monday.

The chain had to temporarily shut its doors in February 2020 because of a delay in getting primary ingredients from abroad. It had blamed the hold-up on the "current conditions" in the country.

Pizza Hut Lebanon is operated by Americana Group, a behemoth in the food manufacturing and restaurant management sectors in the Middle East and North Africa (MENA) region, through local affiliates. The conglomerate's portfolio includes Hardee's, KFC, TGI Fridays, Krispy Kreme and Costa Coffee.

The pizza chain joins a growing list of international franchises, from frozen yogurt brand Pinkberry to clothing retailer American Eagle Outfitters, which have closed up shop in Lebanon since last year because of the liquidity crunch and the slump in consumption.

Coca-Cola, in May 2020, announced it is halting its operations in the country. Adidas and Rebook also exited the market but returned recently after Beirut-based Azadea Group acquired their franchise rights and announced a phased reopening of their stores.

The head of the Lebanese Franchise Association Yahya Kasaa told

Sky News Arabia

(in Arabic) that the ongoing turmoil has caused the licensing and franchising industry in the country to shrink by 20 percent.

When it comes to food brands, "the local management cannot procure raw materials from the Lebanese market," Kasaa said, explaining that the franchise agreement dictates what ingredients a franchisee should use and where to procure them.

But Pizza Hut could still rise again in the country. Sabbagh, the chain's general manager in Lebanon, said that the local operator had found a potential investor who can "take the lead" but declined to name them, citing confidentiality.

"There will be a return [of Pizza Hut] to Lebanon within five to six months," he said.