SouthernWorldwide.com – Yum! Brands announced on Tuesday its decision to sell Pizza Hut in a significant $2.7 billion transaction. This deal will see the ownership of the well-known pizza chain divided between a U.S.-based private equity firm and a Chinese restaurant enterprise.
The agreement stipulates that Pizza Hut, excluding its operations in mainland China, will be acquired by LongRange Capital for $1.5 billion. Concurrently, Pizza Hut China will be sold by Yum! China for $1.2 billion, as detailed in a company press release.
Yum Brands CEO Chris Turner expressed optimism about the transition, stating that under the stewardship of LongRange and Yum China, Pizza Hut is poised for future expansion. He highlighted the deep expertise in the restaurant industry that the new owners bring to the table.
This sale follows a period of considerable difficulty for the pizza chain, which has been hampered by underperformance in recent times. Analysts have pointed to Pizza Hut as a consistent challenge within Yum Brands’ portfolio.
“Pizza Hut has long been the weak link in Yum’s portfolio,” commented Neil Saunders, managing director and retail analyst at GlobalData. He elaborated that despite numerous attempts to revive the brand and close underperforming outlets, it has become evident that significant investment and sustained patience are required for its resurgence, a commitment Yum Brands is apparently unwilling to make.
Furthermore, Saunders noted that Pizza Hut is experiencing a decline in market share, largely attributed to the superior performance of Domino’s. Domino’s has consistently outpaced Pizza Hut in key areas such as order volume, delivery efficiency, menu innovation, and marketing strategies.
Yum! Brands, which also owns popular fast-food chains like KFC and Taco Bell, began evaluating strategic alternatives for Pizza Hut in November. This move was prompted by a downturn in comparable-store sales, signaling a need for decisive action.
Pizza Hut’s origins trace back to its founding in Wichita, Kansas, in 1958. The chain was acquired by PepsiCo in 1977. In 1997, PepsiCo spun off its restaurant division, which subsequently evolved into the entity known today as Yum! Brands.
