The global pizza giant Pizza Hut is heading toward a major ownership transition. Yum Brands has decided to sell the 68-year-old fast-food chain for 2.7 billion dollars. Meanwhile, declining sales and rising competition pushed the company toward this major decision. The deal marks a significant shift in the global fast-food industry structure.
Deal Split Between Two Major Buyers
Yum Brands confirmed that the transaction will happen in two separate parts. Long Range Capital will acquire Pizza Hut’s global business, excluding China, for 1.5 billion dollars. Additionally, Yum China Holdings will take control of Pizza Hut restaurants in mainland China.
This China segment deal is valued at 1.2 billion dollars.
Notably, Yum China already operates independently after separating from Yum Brands in 2016.
China remains Pizza Hut’s second-largest market after the United States.
Furthermore, the region contributes nearly 19 percent of total sales.
From 1958 Startup to Global Pizza Powerhouse
Pizza Hut began its journey in 1958 in Wichita, Kansas. Two brothers started the brand with a 600-dollar loan from their mother. Interestingly, they chose the name due to limited space for eight letters on signage.
By 1969, the brand introduced its iconic red roof design. Later, by 1971, Pizza Hut became the world’s largest pizza chain in sales. Over time, ownership shifted when PepsiCo acquired the brand in 1977.
Yum Brands Era and Business Struggles
In 1997, PepsiCo separated its restaurant division, forming Yum Brands. Today, Yum Brands also includes KFC and Taco Bell in its portfolio. However, Pizza Hut has struggled compared to other brands in the group.
Last year, Yum Brands reported 5 percent global sales growth overall. In contrast, Pizza Hut sales declined by 2 percent during the same period. Additionally, the company announced closure of 250 US outlets in February.
Market Shifts Behind Pizza Hut’s Decline
Industry experts link the decline to changing consumer behavior and competition. Domino’s changed the market by promising 30-minute delivery service. Meanwhile, Pizza Hut remained focused on large dine-in restaurant formats.
During the 2020 pandemic, delivery demand surged globally. Still, Pizza Hut closed 300 stores in the United States during that period. Later, delivery platforms like DoorDash and Uber Eats intensified competition further.
Consequently, Pizza Hut’s US sales dropped by 8.2 percent last year. According to analysts, major investment would be needed to revive growth. However, Yum Brands chose divestment instead of heavy reinvestment.
