Yum Brands is getting rid of Pizza Hut with a $2.7 billion deal that marks the end of a long period of difficulties for one of the most iconic brands in American dining.
The chain will be split between the private equity fund LongRange Capital and Yum China, confirming the very different performance recorded by the Chinese business compared to the rest of the world. The transaction will allow the group to focus exclusively on KFC and Taco Bell and will be accompanied by a new $4 billion share buyback plan.
WHAT THE SALE ENTAILS
Yum Brands has announced the sale of Pizza Hut through two separate transactions. LongRange Capital will acquire the chain’s operations outside mainland China for $1.5 billion, while Yum China Holdings will take over the Chinese business for $1.2 billion. After accounting for taxes, fees, and closing adjustments, Yum expects to net about $2.3 billion, with a potential additional variable payment of up to $75 million by 2030 linked to achieving certain targets.
The company, reports Quartz, also estimates one-off costs of about $85 million by the end of the year. The completion of the two transactions is expected in the third quarter of 2026, subject to regulatory approvals.
THE BIRTH AND DECLINE OF PIZZA HUT
Pizza Hut was founded in 1958 in Wichita, Kansas, by brothers Dan and Frank Carney. In 1977 it was acquired by PepsiCo, which used the brand as an entry point into the restaurant sector. In the following years, the group completed its portfolio with Taco Bell and KFC.
In 1997, the restaurant operations were separated from PepsiCo and merged into Tricon Global Restaurants, which in 2002 was renamed Yum Brands.
However, in recent years Pizza Hut has progressively become the weakest brand in Yum’s portfolio. The share of the group’s revenues attributable to the chain, writes Bloomberg, has fallen from over 18% in 2019 to about 12% in 2025, despite Yum’s total revenues increasing by 47% to reach $8.2 billion last year.
CAUSES OF THE CRISIS
The network to be sold to LongRange includes over 15,500 restaurants in more than 100 countries. The difficulties, explains Reuters, have been fueled by rising inflation, increasing raw material costs, and changing consumer eating habits, also influenced by the spread of weight loss drugs.
In the United States, which represent about 40% of the chain’s sales, Pizza Hut’s comparable sales have declined for ten consecutive quarters, states the news agency. After the boom during the pandemic thanks to increased delivery orders, the brand has not been able to maintain momentum. Domino’s Pizza, Bloomberg says, surpassed Pizza Hut as the largest pizza chain in the world as early as 2017, succeeding through menu innovation, marketing, ordering technology, and delivery infrastructure.
According to Neil Saunders, managing director of GlobalData, Pizza Hut has also lost appeal in the dine-in segment: “The strong results of KFC and Taco Bell have been overshadowed by the continued decline in Pizza Hut’s sales and profitability.”
IN CHINA IT’S A DIFFERENT STORY
But the situation, according to Reuters, is radically different in mainland China, where Yum China has managed the brand for years and invested in strong localization of the offering. The company, supported among others by Primavera Capital and Ant Group, has introduced products developed for the local market, such as Yunnan mushroom and black truffle pizza, new dining formats, and more affordable menus for price-conscious consumers.
With 4,375 restaurants, Pizza Hut has become the largest casual dining chain in the country. In the first quarter of the year, 207 new net outlets were opened, with the goal of exceeding 6,000 by 2028.
In 2024, the brand’s sales in China increased by 4%, operating profit grew by 19%, and the operating margin reached 7.9%, the highest level since 2016. The Chinese operations represent about 19-20% of the brand’s total global sales.
WHAT THE ANALYSTS SAY
According to Michael Halen of Bloomberg Intelligence, the sale will allow Yum to focus resources and capital on the higher-growth brands. “This allows them to dedicate their resources, staff, energy, and capital to one very high-growth chain and another with very solid growth,” he said referring to Taco Bell and KFC.
Also Sam North, an analyst at eToro, interprets the deal as a separation of two very different realities. “LongRange Capital is buying a globally recognized brand that needs more focus, while Yum China’s move gives local operators greater control over a key market.”
Observers, writes Finimize, also believe that the $4 billion buyback program announced alongside the sale signals management’s intention to prioritize shareholder remuneration and a corporate structure more focused on the best-performing brands.
MARKET REACTION
The announcement was positively received by investors. Yum Brands shares closed Tuesday’s session in New York up about 2%, reaching gains of up to 3.6% during the day.
The reaction was different for Yum China, whose shares fell between 1.4% on Wall Street and 2% in Hong Kong trading following the announcement.
After the completion of the transaction, Bloomberg writes that Yum Brands will retain only KFC, which generates about $3.5 billion in annual sales, Taco Bell with about $3 billion, and Habit Burger & Grill with about $570 million in annual revenues.
