Yum Brands to Sell Pizza Hut for $2.7 Billion Amid Challenges

The chain of Pizza Hut restaurants, currently grappling with declining sales, will undergo a sale valued at $2.7 billion. Yum Brands, its parent company, revealed that it might sell Pizza Hut earlier this year following plans to shut down 250 U.S. restaurants.

Pizza Hut has faced difficulties due to outdated outlets and increasing competition in the market. Established in Wichita, Kansas, in 1958, it was acquired by PepsiCo in 1977. However, PepsiCo’s restaurant division later became Yum Brands in 1997.

The private equity firm, LongRange Capital, plans to purchase Pizza Hut, excluding its business in mainland China, for around $1.5 billion. As for the Chinese operations, Yum China Holdings Inc. will buy them for about $1.2 billion.

“Under LongRange and Yum China, Pizza Hut will be well positioned for future growth with ownership that brings deep expertise in the restaurant industry,” said Chris Turner, CEO of Yum Brands, in a statement.

Yum Brands owns popular names like KFC and Taco Bell. It began a strategic evaluation of Pizza Hut in November amid falling sales at comparable store locations.

According to Neil Saunders, managing director of GlobalData, Pizza Hut remains the weakest link in Yum’s portfolio. Despite numerous attempts to refresh the brand and close less profitable venues, the path back to growth demands significant investment and patience, which Yum is unwilling to provide.

Selling Pizza Hut allows Yum Brands to concentrate on its more successful brands, Saunders noted. Based in Louisville, Kentucky, Yum Brands anticipates finalizing both transactions by the third quarter. The company’s stock experienced a slight dip before market opening.