Pizza Hut is changing hands in a pair of deals worth a combined $2.7 billion, as parent company Yum Brands moves to offload the struggling chain.
Back in February, Yum Brands announced it was exploring a sale of Pizza Hut, around the same time the chain was looking to shut down roughly 250 locations across the United States. The brand has faced ongoing challenges, including aging restaurant locations and stiff competition in the pizza industry.
Pizza Hut got its start in 1958 in Wichita, Kansas. PepsiCo took over the chain in 1977, and later spun off its restaurant division in 1997 — a move that eventually gave rise to Yum Brands.
Private equity firm LongRange Capital has agreed to purchase Pizza Hut — excluding its mainland China operations — for roughly $1.5 billion, the company confirmed Tuesday. Separately, the mainland China portion of the business will be acquired by Yum China Holdings Inc. for approximately $1.2 billion.
Yum Brands CEO Chris Turner expressed confidence in the new ownership arrangements. “Under LongRange and Yum China, Pizza Hut will be well positioned for future growth with ownership that brings deep expertise in the restaurant industry,” Turner said in a written statement.
Yum Brands — which also owns KFC and Taco Bell — kicked off a formal strategic review of Pizza Hut’s future back in November, following a period of falling sales at comparable store locations.
Neil Saunders, managing director of GlobalData, offered a blunt assessment of the situation. “Pizza Hut has long been the weak link in Yum’s portfolio,” Saunders said. “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.”
Saunders also noted that shedding Pizza Hut will allow Yum Brands to put more energy and resources behind its stronger-performing brands.
Yum Brands, headquartered in Louisville, Kentucky, anticipates both transactions will be finalized during the third quarter of this year. The company’s stock dipped slightly in early pre-market trading following the announcement.
