Yum Brands has agreed to sell Pizza Hut for a combined $2.7 billion, ending its ownership of the iconic pizza chain as the company seeks to focus on higher-performing brands amid declining sales at Pizza Hut.
The parent company of KFC, Taco Bell and Pizza Hut announced Tuesday that private equity firm LongRange Capital will acquire Pizza Hut’s operations outside mainland China for approximately $1.5 billion.
Pizza Hut’s mainland China business will be purchased by Yum China Holdings for about $1.2 billion. China is the chain’s second-largest market after the United States, accounting for nearly one-fifth of global sales.
Yum Brands began reviewing strategic options for Pizza Hut last November after the chain continued to lag behind the company’s other restaurant brands. While Yum’s global sales increased 5 percent last year, Pizza Hut recorded a 2 percent decline.
Earlier this year, Yum announced plans to shut down 250 Pizza Hut outlets in the United States. At the end of last year, the brand operated nearly 20,000 restaurants worldwide.
Industry analysts said Pizza Hut has struggled for years to regain momentum amid intense competition and changing consumer preferences.
Neil Saunders, managing director of GlobalData, described Pizza Hut as the weakest performer within Yum’s portfolio, saying efforts to revive the chain and close underperforming stores had failed to return the business to sustained growth.
Founded in 1958 in Wichita, Kansas, by two brothers using a $600 loan from their mother, Pizza Hut grew into the world’s largest pizza chain by sales in the early 1970s. The company became part of PepsiCo in 1977 before being spun off into what later became Yum Brands in 1997.
The chain’s business model came under pressure in the 1980s as rivals such as Domino’s expanded rapidly through home delivery services. Pizza Hut’s large dine-in restaurants became less suited to evolving consumer habits.
In recent years, the growth of food delivery platforms such as DoorDash and Uber Eats has further intensified competition by giving consumers access to a wider range of food options beyond pizza.
Yum Brands Chief Executive Officer Chris Turner said the sale would allow Pizza Hut to pursue growth under owners with extensive restaurant industry experience.
He added that LongRange Capital and Yum China are well positioned to support the brand’s future development in their respective markets.
The Louisville, Kentucky-based company expects both transactions to be completed during the third quarter of the year. Yum Brands’ shares rose about 3 percent following the announcement.