A security guard stands in front of a Pizza Hut in Abidjan, Ivory Coast, on 5 October 2024. Photograph: Luc Gnago/Reuters
The struggling Pizza Hut restaurant chain is set to be sold in two separate transactions totaling $2.7 billion, parent company Yum Brands has announced. The sale comes as the pizza chain grapples with outdated stores and intensifying competition.
Sale Details
Yum Brands revealed in February that it was considering divesting Pizza Hut after the chain closed 250 US restaurants. The pizza chain, founded in 1958 in Wichita, Kansas, has faced challenges due to aging locations and a highly competitive market. PepsiCo acquired Pizza Hut in 1977 but spun off its restaurant division, which later became Yum Brands, in 1997.
Private equity firm LongRange Capital will purchase Pizza Hut, excluding its mainland China operations, for approximately $1.5 billion, the company confirmed on Tuesday. Meanwhile, Yum China Holdings Inc will acquire the mainland China segment of Pizza Hut for roughly $1.2 billion.
Future Growth Prospects
“Under LongRange and Yum China, Pizza Hut will be well positioned for future growth with ownership that brings deep expertise in the restaurant industry,” Yum Brands CEO Chris Turner said in a statement. Yum Brands, which also owns KFC and Taco Bell, initiated a strategic review of Pizza Hut in November amid declining sales at comparable stores.
Neil Saunders, managing director of GlobalData, commented: “Pizza Hut has long been the weak link in Yum’s portfolio. Despite efforts to revitalize the brand and shut underperforming locations, it has become increasingly clear that pushing the division back into growth will require a level of investment and patience that Yum is just not prepared to commit to.”
Strategic Focus
By selling Pizza Hut, Yum Brands can concentrate on its stronger-performing brands, Saunders added. Yum Brands, based in Louisville, Kentucky, anticipates that both transactions will close in the third quarter. The company’s stock experienced a slight decline ahead of the market open.
