Yum Brands plans to sell the struggling Pizza Hut chain for $2.7 billion. The decision comes after Yum Brands indicated in February that it was considering a sale and the subsequent closure of 250 U.S. locations.
Founded in 1958 in Wichita, Kansas, Pizza Hut faced challenges with outdated stores and increasing competition. PepsiCo initially acquired the chain in 1977 and later spun off its restaurant division to form Yum Brands in 1997.
The sale of Pizza Hut will be split. Private equity firm LongRange Capital will acquire the business, excluding mainland China, for about $1.5 billion. Simultaneously, Yum China Holdings Inc. will purchase the mainland China operations for approximately $1.2 billion.
Yum Brands CEO, Chris Turner, expressed confidence in the new ownership, citing their expertise in the restaurant industry as a catalyst for future growth.
Yum Brands, which also owns KFC and Taco Bell, conducted a strategic review starting in November due to declining sales at Pizza Hut’s comparable stores. Neil Saunders of GlobalData noted the challenges Pizza Hut represented within Yum’s portfolio, emphasizing that significant investment and patience were needed, which Yum was not willing to provide.
The transaction allows Yum Brands to prioritize its more successful brands. Based in Louisville, Kentucky, Yum Brands aims to finalize both transactions by the third quarter. Prior to the market opening, the company’s stock experienced a slight dip.