Yum Brands to sell struggling Pizza Hut restaurant chain for $2.7 billion
Yum Brands announced Tuesday that it has entered into definitive agreements to sell Pizza Hut for $2.7 billion, as the restaurant chain struggles in the fast-food market due to intense competition and cautious consumer spending.
Mainland China’s Pizza Hut will be acquired by Yum China for $1.2 billion, while the rest of the business will be acquired by private equity firm LongRange Capital for $1.5 billion, according to a stock exchange filing.
“Following a comprehensive review of strategic options for Pizza Hut that began in November 2025, Yum’s leadership team and Board of Directors determined that the sale provides the strongest path to maximize shareholder value and provides Pizza Hut with an ownership structure tailored to diverse markets, competitiveness and long-term priorities under leadership with significant QSR experience,” the company said in a statement. he said.
Fierce competition and changing consumer habits weigh on Pizza Hut
The development comes after Yum entered into exclusive talks with LongRange Capital in May following a strategic review of options for Pizza Hut, including a possible sale, Reuters news agency reported. The news stated that the pizza chain lagged behind Yum’s other fast-casual food brands, especially Taco Bell.
The fast-food industry is struggling with declining demand as consumers become more health-conscious. The increasing adoption of GLP-1 weight loss medications has led some customers to cut back on calorie-dense fast food and opt for healthier alternatives.
At the same time, restaurant operators face pressure from rising inflation and a decline in consumer confidence, which is putting pressure on U.S. pizza giants that are already facing high commodity costs, the report said.
Pizza Hut accounted for approximately 12% of Yum’s total revenue in 2025. Yum Brands, based in Louisville, Kentucky, said it expects both transactions to close in the third quarter of 2026, subject to customary closing conditions and regulatory approvals.
Additionally, Yum will no longer report on its Pizza Hut division.
Share the buyback program
The company also said the after-tax net proceeds will be used in accordance with the company’s capital allocation strategy, including investing in the business and returning excess capital to shareholders.
Pursuant to approval of the transactions, Yum’s Board of Directors approved an additional $4 billion authorization for stock repurchases.
share price movement
The development was announced before the US market opened. Shares of the company, which will now only have Taco Bell and KFC chains, rose 1.3% in pre-market trading, according to NYSE data.
Barclays and Goldman Sachs are serving as Yum’s financial advisors, while Weil, Gotshal & Manges LLP and Mayer Brown LLP are serving as Yum’s legal advisors, according to the latest stock exchange filing.
Pizza Hut was acquired by PepsiCo in 1977 and spun off in 1997, along with KFC and Taco Bell, to form a restaurant company that became Yum Brands in 2002. The parent company and its subsidiaries operate more than 63,000 restaurants in 155 countries and territories.
