Yum Brands will sell the struggling Pizza Hut chain for $2.7 billion as the company moves to exit a business that has faced declining sales, outdated restaurants and intense competition. The deal follows months of speculation after Yum said in February that it was considering a sale and noted that Pizza Hut could close 250 U.S. locations.
Under the agreement announced Tuesday, private equity firm LongRange Capital will acquire Pizza Hut’s business outside mainland China for about $1.5 billion. Yum China Holdings Inc. will separately buy the mainland China Pizza Hut operations for approximately $1.2 billion. Yum Brands said both transactions are expected to close in the third quarter.
Pizza Hut, founded in 1958 in Wichita, Kansas, has long been one of the best-known names in American fast food, but it has struggled in recent years to keep pace with rivals and refresh its store base. PepsiCo bought the chain in 1977 and later spun off its restaurant division in 1997, creating Yum Brands, which also owns KFC and Taco Bell.
Yum Brands said the sale would allow Pizza Hut to pursue future growth under new ownership with stronger restaurant industry expertise. CEO Chris Turner said in a statement that LongRange and Yum China would position the chain well for its next phase. The company did not give additional details on how the brands would be managed after the split.
The decision marks the end of a strategic review that Yum launched in November as Pizza Hut continued to report falling comparable-store sales. Analysts have said the brand has become the weakest performer in Yum’s portfolio and that turning it around would require significant investment and patience. Neil Saunders, managing director at GlobalData, said the company appears unwilling to commit the time and capital needed to restore growth.
For Yum Brands, selling Pizza Hut could sharpen its focus on businesses with stronger momentum and better performance. The company has been under pressure to improve results across its portfolio, and the divestiture removes a major underperforming unit while preserving relationships with buyers that already have deep experience in the restaurant sector.
Pizza Hut’s challenges reflect broader pressures in the restaurant industry, where chains must continually invest in menus, technology and store modernization to stay competitive. As customer preferences shift and rivals expand, legacy brands with older locations can find it difficult to maintain sales without major reinvestment.
Yum Brands, based in Louisville, Kentucky, said the stock fell slightly before the market opened after news of the deal. The transaction now sets up a split of Pizza Hut between LongRange Capital and Yum China, with the brand’s future depending on whether the new owners can revive growth in a crowded market.
