Yum! Brands sells struggling Pizza Hut in $2.7 billion deal
Yum! Brands announced on Tuesday that it has finalized a $2.7 billion deal to sell Pizza Hut, dividing ownership of the popular restaurant chain between a U.S. private equity firm and a Chinese restaurant company.
The sale will see Pizza Hut, excluding its mainland China business, being acquired by LongRange Capital for $1.5 billion, while Pizza Hut China will be sold by Yum China Holdings for $1.2 billion, according to a news release from the company.
“With the new ownership under LongRange and Yum China, Pizza Hut is poised for future growth with owners who bring extensive experience in the restaurant industry,” stated Yum Brands CEO Chris Turner.
LongRange Capital, established in 2019 by Bob Berlin, who previously led a successful turnaround at fast-food chain Arby’s, expressed excitement about collaborating with Pizza Hut’s executive team and franchisees to drive the brand’s next phase of growth.
Yum China was formerly a part of Yum! Brands but was separated in 2016.
Challenges with Sales
The decision to sell Pizza Hut comes after years of underperformance. Yum’s most recent earnings report shows that Pizza Hut has been lagging behind its sister brands like KFC and Taco Bell in terms of sales growth. In response to this, Yum! Brands announced earlier this year that it would be closing 250 Pizza Hut locations in the U.S. out of its over 6,000 nationwide outlets.
“Pizza Hut has consistently been the weakest link in Yum’s portfolio,” noted Neil Saunders, managing director and retail analyst at GlobalData. “Despite various attempts to revitalize the brand and shut down underperforming stores, it has become evident that achieving growth for the division will require a significant level of investment and patience that Yum is not willing to commit to.”
Domino’s has emerged as a strong competitor to Pizza Hut, outpacing the chain in areas such as ordering, delivery, menu innovation, and marketing. Additionally, the rise of food delivery services like DoorDash and Uber Eats has also impacted Pizza Hut’s market share as more customers opt for online orders over dining in-person.
Yum! Brands began exploring options for Pizza Hut last year following a decline in sales. Technomic, a restaurant consulting firm, reported an 8.2% drop in Pizza Hut’s U.S. sales in the previous year.
Founded in 1958 by brothers Frank and Dan Carney in Wichita, Kansas, Pizza Hut got its name due to the limitation of fitting only eight letters on their sign. PepsiCo acquired the chain in 1977, later spinning off its restaurant division in 1997 to form Yum! Brands.
