Yum Brands Eyes Potential Sale of Pizza Hut

Same-store sales at Pizza Hut declined 1 percent in the third quarter, marking the eighth consecutive quarter of declines.

A Pizza Hut store in Costa Mesa, Calif., on Dec. 27, 2023. John Fredricks/The Epoch Times

Yum Brands, owner of multiple globally recognized restaurant franchises, said on Nov. 4 it was initiating a formal review of strategic options for Pizza Hut, opening the door to a potential sale of the struggling fast-food chain.

Yum Brands, based in Louisville, Kentucky, said in a statement that the intention of the review proceedings is to explore ways to maximize value for the Pizza Hut brand and its franchisees, as well as for Yum shareholders.

Although the company stopped short of saying what those options might look like, CEO Chris Turner said the brand might benefit from a different parent company.

“The Pizza Hut team has been working hard to address business and category challenges; however, Pizza Hut’s performance indicates the need to take additional action to help the brand realize its full value, which may be better executed outside of Yum Brands,” Turner said.

“To truly take advantage of the brand we’ve built and the opportunities ahead, we’ve made the decision to initiate a thorough review of strategic options.”

Yum Brands had 19,872 Pizza Hut locations in more than 100 countries at the end of the third quarter, including more than 6,000 in the United States. In addition, Yum had 32,952 KFC restaurants and 8,816 Taco Bell eateries.

Quarterly sales at KFC increased by 3 percent and rose 7 percent at Taco Bell. Operating profit, calculated using standard accounting rules, was up 16 percent at KFC and 7 percent at Taco Bell. Combined, the two brands account for nearly 90 percent of Yum Brands operating profit.

Sales at Pizza Hut, however, declined 1 percent in the quarter ended Sept. 30, the eighth consecutive quarter of declining same-store sales, prompting Yum to explore multiple options for the brand. Operating profit, calculated using standard accounting rules, declined 8 percent.

Turner, who took the helm at Yum Brands on Oct. 1, said during the company’s Nov. 4 earnings conference call that a different approach—including potentially selling the brand—is needed for the Pizza Hut division.

“Our objective is to maximize value for Yum and position Pizza Hut and its franchise partners for greater success,” he said. “Pizza Hut holds key structural advantages: strong brand equity, experienced franchise partners, and meaningful scale, which give it a unique opportunity to reclaim the leading position in the highly fragmented pizza market.”

Yum Brand retained Goldman Sachs and Barclays as financial advisers for the review process. Yum’s third-quarter revenue of $1.98 billion topped analyst projections of $1.97 billion, and its earnings per share of $1.58 also exceeded forecast earnings of $.148 per share. The company’s stock jumped more than 6 percent in midday trading on the news.