The Pizza Hut restaurant chain, struggling with competition and outdated stores, will be sold for $2.7 billion by its parent company, Yum Brands. Yum Brands announced plans in February to potentially sell Pizza Hut, along with a possible closure of 250 U.S. locations.
Pizza Hut was established in 1958 in Wichita, Kansas. It was acquired by PepsiCo in 1977, but in 1997, PepsiCo spun off its restaurant segment, creating Yum Brands.
Restaurant Industry Sale Details
Private equity firm LongRange Capital will acquire Pizza Hut, excluding its mainland China operations, for approximately $1.5 billion. Yum China Holdings Inc. will purchase the mainland China business for about $1.2 billion.
The CEO of Yum Brands, Chris Turner, expressed confidence in the new ownership. He highlighted LongRange and Yum China’s experience in the restaurant industry as pivotal for Pizza Hut’s future growth.
Strategic Review and Brand Challenges
Yum Brands, which also owns KFC and Taco Bell, launched a strategic review of Pizza Hut last November. The review followed a decline in sales at comparable stores. Neil Saunders, managing director of GlobalData, noted that despite past attempts to revitalize Pizza Hut, its growth demands investments that Yum is not willing to make.
Saunders commented that Pizza Hut has been the weaker brand in Yum’s portfolio. By selling it, Yum Brands aims to concentrate on more profitable brands.
The transactions are expected to be finalized by the third quarter. Prior to market opening, Yum Brands’ stock experienced a slight decline.