Yum! Brands has lost its taste for Pizza Hut, agreeing to sell the chain for US$2.7 billion (A$3.8 billion) as the growth of food delivery services slices demand for its restaurants.
The fast food restaurant operator said it would sell Pizza Hut to a United States private equity firm, LongRange Capital, for $1.5 billion, except for the operations in mainland China business, which would be purchased by Yum China Holdings for $1.2 billion.
“These transactions enable Yum! to be a more focused company that continues to leverage scale, technology and talent to accelerate our raising the B.A.R. priorities and deliver sustained value for our stakeholders,” Chief Executive Chris Turner said in a news release.
BAR stands for Boldly Act, Relentlessly Improve, and Raise the Bar internal operating framework.
Yum! said it expected to receive $2.3 billion in net proceeds after taxes, fees and closing adjustments and possibly also an earn-out payment of up to $75 million from LongRange by 2030.
The transactions are expected to be completed in the third quarter of 2026, subject to regulatory approvals and other conditions.
The decision to sell followed a strategic review of Pizza Hut, precipitated by falling sales at a time when Yum!'s revenue continued to grow and means the company can focus on its faster-growing KFC and Taco Bell businesses.
Pizza Hut has struggled with changing consumer habits in the face of competition from delivery platforms such as DoorDash and Uber Eats.
In February, Yum! Announced plans to close 250 U.S. Pizza Hut locations.
Industry analysts said the transaction gave Pizza Hut an opportunity to pursue a turnaround under owners focused on the brand.
"LongRange Capital is effectively buying a globally recognised brand in need of sharper focus, while Yum China’s move gives local operators more control over a key market," eToro market analyst Sam North was quoted by Reuters saying in this story.
Yum! Brands (NYSE: YUM) shares ended $3.00 (1.94%) higher at $157.67 on Tuesday (Wednesday AEST), capitalising the company at $43.46 billion.
Yum China Holdings (NYSE: YUMC) shares eased 60 cents (1.36%) to $43.65, capitalising the company at $15.24 billion.
Yum! Brands franchises or operates more than 63,000 restaurants in 155 countries and territories under brands like KFC, Taco Bell, Pizza Hut and Habit Burger & Grill.
Founded in Wichita, Kansas in 1958, Pizza Hut was acquired by PepsiCo in 1977 before being spun off with KFC and Taco Bell as part of the company that became Yum! Brands.
