Yum! Brands announced Tuesday that it has agreed to sell Pizza Hut in a transaction valued at $2.7 billion, dividing control of the restaurant brand between a U.S. private equity investor and a China-based restaurant operator.
Under the deal, Pizza Hut’s business outside mainland China will be acquired by LongRange Capital for $1.5 billion. Separately, Pizza Hut China will be sold by Yum! China for $1.2 billion, according to a company news release.
“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 CEO Chris Turner said in a statement.
The sale follows a difficult stretch for the pizza chain, which has struggled to keep pace with the company’s stronger-performing brands. Yum’s most recent earnings report showed Pizza Hut posting weaker sales growth than KFC and Taco Bell. Earlier this year, in February, Yum! Brands said it would close 250 Pizza Hut restaurants across the U.S. The chain currently operates more than 6,000 locations nationwide.
“Pizza Hut has long been the weak link in Yum’s portfolio,” Neil Saunders, managing director and retail analyst at GlobalData, said in an email Tuesday. “Despite efforts to revitalize the brand and shut underperforming locations, it has become increasingly clear that pushing the division back into growth will require a level of investment and patience that Yum is just not prepared to commit to.”
Saunders added that Pizza Hut has been ceding market share to Domino’s, which he said has pulled ahead in areas including ordering, delivery, menu innovation and marketing.
Yum! Brands started exploring options for Pizza Hut in November following declining comparable-store sales.
Pizza Hut was founded in 1958 in Wichita, Kansas. PepsiCo acquired the chain in 1977 but spun off its restaurant division in 1997, which became Yum! Brands.
