Yum! Brands sells struggling Pizza Hut in $2.7 billion deal
Yum! Brands said Tuesday that it is selling Pizza Hut in a $2.7 billion deal that will split ownership of the restaurant chain between a U.S. private equity firm and a Chinese restaurant company.
Pizza Hut, excluding the mainland China business, will be sold to LongRange Capital for $1.5 billion, while Pizza Hut China will be sold by Yum China Holdings for $1.2 billion, the company said in a news release.
"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.
LongRange Capital was founded in 2019 by Bob Berlin, who led a turnaround at fast-food chain Arby's. On Tuesday, he said he was looking forward to working with Pizza Hut's executive team and franchisees "to drive its next phase of growth."
Yum China was previously part of Yum! Brands but was spun off in 2016.
Lagging sales
The Pizza Hut sale follows years of underperformance. Yum's latest earnings report shows Pizza Hut's sales growth lagging that of its other major restaurant chains, such as KFC and Taco Bell. In February, Yum! Brands said it would close 250 Pizza Hut locations in the U.S. The pizza chain has over 6,000 locations nationwide.
"Pizza Hut has long been the weak link in Yum's portfolio," Neil Saunders, managing director and retail analyst at GlobalData, said in an email Tuesday. "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."
Pizza Hut is losing market share to Domino's, which has surpassed the chain in ordering, delivery, menu innovation and marketing, Saunders added. The company has also been squeezed in recent years by the growth of DoorDash, Uber Eats and other restaurant delivery companies as diners migrate from in-person dining to online orders.
Yum! Brands started exploring options for Pizza Hut in November, following declining sales. Pizza Hut's U.S. sales were down 8.2% last year, according to restaurant consulting firm Technnomic.
Pizza Hut was founded in 1958 in Wichita, Kansas, by two brothers, Frank and Dan Carney. They chose the name because their sign could fit only eight letters, according to the Associated Press. PepsiCo bought the chain in 1977 but spun off its restaurant division in 1997, which became Yum! Brands.
