Pizza Hut, which has been the favorite of pizza lovers all over the world, is now going to be sold. Due to the ever-increasing competition and aging restaurant model, the parent company of this legendary pizza chain 'Yum Brands' has decided to sell it for $2.7 billion.
While giving official information about this big deal, Yum Brands has clarified that this sale will be in two parts. Under the deal, Pizza Hut's global business (except China) will be purchased by private equity firm 'Long Range Capital' for approximately $1.5 billion. On the other hand, Pizza Hut's restaurants located in mainland China will be handed over to 'Yum China Holdings Inc.' for $1.2 billion. Yum China has already been separated from Yum Brands in 2016 and became an independent company. China is the second largest market for Pizza Hut after America. From here the company gets 19 percent of sales.
Pizza Hut was started in the year 1958 in Wichita, Kansas. Then two brothers borrowed only 600 dollars from their mother and opened its first store. They chose the name 'Pizza Hut' because there was only eight letters on their signboard. The chain's famous red roof came into existence in 1969 and by 1971, it had become the world's largest pizza chain in terms of sales.
It was purchased by PepsiCo in 1977 and its restaurant division was spun off in 1997, which later became Yum Brands. Today, the chain had been lagging behind the Yum Brands portfolio (which also includes KFC and Taco Bell) for a long time. Yum Brands' global sales grew 5% last year, but Pizza Hut's sales fell 2%. In February, the company had also announced the closure of 250 outlets in America. According to Neil Saunders, managing director of GlobalData, bringing the brand back to growth required huge investment, for which Yum Brands was not prepared.
The changing nature of the market has been a major reason behind this decline. When Domino's promised 30-minute delivery in the 1980s, Pizza Hut was left stuck with the huge expenses of its large dine-in restaurants. Even when pizza delivery was at its peak during the 2020 pandemic, Pizza Hut had to close 300 of its stores in America. After this, competition became very tough with the entry of food delivery companies like 'DoorDash' and 'Uber Eats' in the market. According to Technomic Consulting, there has been a huge decline of 8.2% in the sales of Pizza Hut in America last year.
