On Tuesday, Yum Brands Inc. (NYSE:YUM) confirmed the sale of its subsidiary, Pizza Hut, to private equity firm LongRange Capital for nearly $1.5 billion.
The Mainland China operations of Pizza Hut will be taken over by Yum China Holdings, Inc. (NYSE:YUMC) for nearly $1.2 billion. The total net proceeds from both transactions are projected to be around $2.3 billion after taxes, closing adjustments, and fees, excluding a potential earn-out of $75 million by 2030 from LongRange.
YUMC stock declined 1.2% in Tuesday’s pre-market trading session.
Yum Brands also expects to incur one-time expenses of approximately $85 million in 2026 related to these transactions. The sale comes in the wake of persistent financial struggles for Pizza Hut, which has been weighing down Yum’s overall financial performance.
“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," said Chris Turner, CEO of Yum! Brands.
PepsiCo Inc. (NASDAQ:PEP) acquired Pizza Hut in 1977, later adding Taco Bell and KFC by 1986. In 1997, it spun off its fast-food division as Tricon Global Restaurants, which was eventually renamed Yum Brands.
The deal marks the end of Pizza Hut's long-running association with Taco Bell and KFC under Yum's portfolio. It also reflects Pizza Hut's shift away from dine-in restaurants toward delivery and carryout, as it continues to fall behind its rivals.
Pizza Industry Faces Demand Slump
The sale of Pizza Hut follows a series of strategic moves by Yum Brands. In February, Yum Brands revealed plans to close underperforming Pizza Hut outlets during its fiscal 2025 fourth-quarter earnings call, as part of its “Hut Forward” program aimed at improving near-term performance.
Yum Brands said its strategic review is progressing on schedule and is expected to conclude this year, alongside its "Hut Forward" initiative, which includes store closures, marketing upgrades, tech modernization, franchise agreement updates, and a one-time marketing contribution to support the program.
The pizza industry in the U.S. has been under pressure due to weaker consumer spending and slowing restaurant traffic. In May, Washington-based wood-fired pizza chain Smoking Monkey Pizza filed for Chapter 11 bankruptcy, highlighting the challenges faced by pizza chains.
Pizza Hut rival Domino’s Pizza Inc. (NASDAQ:DPZ) has steadily gained market share from the brand over the years, while third-party delivery platforms like DoorDash Inc. (NASDAQ:DASH) have further reduced Pizza Hut's sales by capturing more customer demand.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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