(Bloomberg) -- Yum! Brands Inc. said near-term results may be hurt by weaker sales and higher wage costs at its Pizza Hut chain in the U.S.

The Louisville, Kentucky-based company called out its largest U.S. Pizza Hut operator, NPC International Inc., which Bloomberg News reported is considering financial options, including bankruptcy, as it struggles with falling sales and debt. Yum also said in a filing that Pizza Hut sales may be affected by lower spending on advertising and the closing of underperforming stores.

As of the end of 2019, NPC owned about 1,225 Pizza Hut locations, or 17% of the U.S. total, Yum reported. Yum, which also owns the KFC and Taco Bell brands, said that it’s hard to forecast the potential effect on 2020 results “given the fluid nature of issues surrounding our Pizza Hut U.S. franchisees.”

The shares fell as much as 2.9% to $102.16 on Thursday, exceeding the drop for the S&P 500 Index.

Pizza Hut same-store sales, which are a key gauge of restaurant success, fell 4% in the fourth quarter of 2019 in the U.S. The falling sales, coupled with NPC’s struggles, show how rising labor costs and a highly saturated U.S. restaurant market are creating headaches for the industry. Debt levels for restaurant operators have risen to fund expansion, while many big companies have reported falling customer traffic.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editors responsible for this story: Sally Bakewell at sbakewell1@bloomberg.net, Jonathan Roeder, Kevin Miller

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