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Yum Brands plans to offload Pizza Hut in two deals worth $2.7bn that it hopes will allow it to focus its efforts on its faster-growing KFC and Taco Bell businesses.
Private equity firm LongRange Capital has agreed a $1.5bn deal with Yum for Pizza Hut, excluding the brand’s mainland China operations. LongRange owns a mix of other businesses, including gym chain 24 Hour Fitness, a funeral services provider and a maker of synthetic diamonds for mining.
Yum China, which spun off from the main company in 2016, will buy Pizza Hut’s Chinese arm for $1.2bn.
The sale joins a series of major food and restaurant deals in the past year, including Ferrero’s $3.1bn acquisition of Corn Flakes maker WK Kellogg and spice group McCormick’s $66bn merger with Unilever’s food division. US food wholesaler Sysco in March announced a $29.1bn deal for rival Jetro Restaurant Depot, which is awaiting regulatory approval.
Pizza Hut has been a drag on Yum’s bottom line for several years. Homebound consumers boosted appetite for pizza during the Covid-19 pandemic, but chains have struggled to maintain that performance: shares in rival purer-play groups such as Domino’s Pizza and Papa John’s have failed to regain their peaks from late 2021.
Yum launched a strategic review of Pizza Hut last November, with chief executive Chris Turner saying at the time he believed “a different approach, including, but not limited to, a sale of the business, would allow Pizza Hut to realise its full potential”.
The company announced in February that it would close hundreds of underperforming Pizza Hut locations.
Yum’s other major brands, KFC and Taco Bell, have remained strong. Excluding Pizza Hut, Yum’s core operating profit grew 10 per cent last year, and the brand represented less than 10 per cent of total group operating profit.
The Pizza Hut sale would allow Yum to be a more “focused” company and to deliver value for shareholders, Turner said in a statement on Tuesday.
Yum China said the acquisition of the Chinese Pizza Hut operations would be “transformative” and immediately accretive to net income this year, rising to “mid-single-digit” accretive in 2027 and 2028.
With the purchase, Yum China will no longer owe licence fees for its use of the Pizza Hut brand. The company plans to grow its Pizza Hut store footprint on the mainland by almost 50 per cent by 2028.
China has long been a bright spot for the struggling brand. Pizza Hut’s sales in China, which represent about 19 per cent of the brand’s overall sales, have grown steadily, while Pizza Hut US has declined for five straight quarters.
Yum said it expected both transactions to close in the third quarter of 2026, subject to regulatory approval.
Yum Brands’ shares were up 2.2 per cent just before midday in New York on Tuesday. Shares in Yum China, which is dual-listed in Hong Kong and New York, were down 0.6 per cent on Wall Street.
