Pizza Hut Sold: Yum Brands Strikes $2.7B Deal To Divest Pizza Hut Amid Shifting Global Markets

Yum Brands said on Tuesday it would sell its Pizza Hut chain for a combined $2.7 billion in two deals that highlight separate trajectories for its business in China and the rest of the world. The chain's stores in the U.S. and the rest of the world except for mainland China will be sold to private equity firm LongRange Capital for $1.5 billion.

Those operations, which encompass over 15,500 restaurants in more than 100 countries, have struggled in recent years, hit by rising inflation, higher commodity costs and the growing use of GLP-1 weight-loss drugs, which have nudged consumers toward healthier options. U.S. Pizza Hut comparable store sales have declined for 10 straight quarters.

The China business, which has 4,375 stores but has been doing much better, will be acquired by its longtime operator, Yum China Holdings, for $1.2 billion.

"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," said Sam North, market analyst at eToro.

Yum said last year it was exploring strategic options for Pizza Hut, and entered exclusive talks with LongRange in May.

Pizza Hut was acquired by PepsiCo in 1977 and spun off in 1997 alongside KFC and Taco Bell to form the company that became Yum Brands in 2002. Yum, which will retain Taco Bell and KFC, expects the sale to close in the third quarter of 2026, pending regulatory approvals.

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Local Operators Take Charge

The acquisition of the Pizza Hut brand in China by Yum China underscores the company's optimism about the chain's future in the world's second-biggest economy, said a China-based independent Food industry analyst, Zhu Danpeng.

"From store expansion to growth in revenue and profit per store, as well as an increase in its customer fan base, it is evident that after localisation, Yum China has strengthened its core competitiveness for sustainable development," he said.

Yum China, a spinoff of Yum Brands, which counts private Equity firm Primavera Capital and Jack Ma's Ant Group as its Main backers, has invested in China-specific products such as black truffle Yunnan mushroom pizza, new store formats and more affordable menu items aimed at cost-conscious consumers.

As a result, Pizza Hut has become the largest casual dining restaurant brand in China. It added 207 net new stores in the first quarter and plans to expand to more than 6,000 outlets by 2028. Last year, sales for the chain in China increased 4%. Operating profit jumped 19 per cent, and its operating profit margin of 7.9% was the highest since 2016.

The sale of the China business mirrors a broader trend of U.S. firms handing control to local operators to navigate tougher competition and shifting demand. General Mills this month agreed to sell its Häagen-Dazs shops in mainland China to a group led by tea chain Ningji, while Starbucks sold a majority stake in its China operations to Boyu Capital last year.

Yum Brands and Yum China also agreed to financial incentives tied to KFC China's growth and will collaborate on expanding Taco Bell in mainland China. Shares of Yum Brands, which also announced an additional $4 billion share buyback, rose about 2 per cent on Tuesday. Yum China shares slipped 2 per cent in Wednesday's Hong Kong trade.

Disclaimer: This story has been directly published from the agency feed (Reuters). No changes have been made except the headline.