Struggling Pizza Hut restaurant chain sold for $2.7 billion
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Pizza Hut is getting a new home.
Yum Brands, based in Louisville, Ky., announced Tuesday that it has sold the struggling pizza chain in two separate sales totaling $2.7 billion.
LongRange Capital, a private equity firm based in Stamford, Conn., acquired Pizza Hut’s U.S. operation for $1.5 billion, Yum Brands said in a statement.
The company’s mainland China business was separately purchased by Yum China Holdings Inc. for $1.2 billion, the statement said.
The sale includes nearly 20,000 Pizza Hut restaurants, including 6,400 in the United States, and is expected to close in the third quarter.
Yum Brands first indicated a possible sale of the chain in November, saying in a statement that it would be reviewing strategic options following a decline in sales from the previous year. In February, it announced the closure of 250 Pizza Hut locations in the U.S.
Pizza Hut to close hundreds of locations around the U.S.
“Under LongRange and Yum China, Pizza Hut will be well-positioned for future growth with ownership that brings deep expertise in the restaurant industry,” Yum Brands Chief Executive Chris Turner said in Tuesday’s statement. “Pizza Hut is one of the most iconic restaurant brands in the world, and we are proud of the important role it has played in Yum!’s history.”
Pizza Hut first opened in Wichita, Kan., in 1958 and rapidly expanded before being sold to PepsiCo in 1977. Twenty years later, PepsiCo spun off Pizza Hut, KFC and Taco Bell to Yum Brands. Taco Bell was founded in Downey in 1962.
In April, Yum Brands reported a first-quarter net income of $432 million, up from $253 million a year earlier, boosted by strong sales from Taco Bell and KFC. Pizza Hut saw no change in same-store sales. Yum Brands’ total revenue in the first quarter was $2.06 billion.
As third-party delivery services such as DoorDash grew in popularity, Pizza Hut fell behind without the advantage of delivery convenience, said Aneurin Canham-Clyne, a reporter for trade publication Restaurant Drive.
Canham-Clyne added that Pizza Hut has “limited menu innovation possibilities” and a lack of a global audience, leaving little room for expansion. U.S. sales currently make up 40% of Pizza Hut’s global sales, compared with only 12% for Yum Brand’s KFC.
“Pizza Hut has tried to improve its value proposition and to retrench its store system, but the sort of large-scale investment necessary to turn the brand around would have been costly and taken years,” Canham-Clyne told The Times.
Yum Brands Inc.’s share price closed Tuesday at $157.78, up 3%.
The Associated Press contributed to this report.
