Yum Brands announced on Tuesday that it has entered into definitive agreements to sell Pizza Hut for $2.7 billion, as the restaurant chain is struggling in the fast-food market due to intense competition and cautious consumer spending.
According to an exchange filing, Pizza Hut in Mainland China will be acquired by Yum China for $1.2 billion while the remainder of the business will be acquired by private equity firm LongRange Capital for $1.5 billion.
“Following a comprehensive review of strategic options for Pizza Hut that commenced in November 2025, Yum’s leadership team and Board of Directors determined the sale provides the strongest path to maximize shareholder value while providing Pizza Hut an ownership structure tailored to its distinct markets, competitive strengths and long-term priorities under leadership with significant relevant QSR experience,” the company said in a statement.
Stiff competition and changing consumer habits weigh on Pizza Hut
The development comes after Yum entered exclusive talks with LongRange Capital in May, following a strategic review of options for Pizza Hut, including a possible sale, news agency Reuters reported. The pizza chain has lagged behind Yum's other fast-casual dining brands, particularly Taco Bell, the news report said.
The fast-food industry has been grappling with softer demand as consumers become more health-conscious. The growing adoption of GLP-1 weight-loss drugs has prompted some customers to cut back on calorie-dense fast food and opt for healthier alternatives.
At the same time, restaurant operators are facing pressure from rising inflation and a decline in consumer sentiment that has weighed on US pizza giants already facing elevated commodity costs, the news report said.
Pizza Hut accounted for about 12% of Yum's total revenue in 2025. Louisville, Kentucky-based Yum Brands expects both transactions to close in the third quarter of 2026, subject to customary closing conditions and regulatory approvals, the company said.
Additionally, Yum will no longer report on the Pizza Hut division.
Share repurchase program
The company also noted that the net after-tax proceeds will be used in accordance with the company’s capital allocation strategy, including investing in the business and returning excess capital to shareholders.
As per the approval of the transactions, Yum’s Board of Directors approved an incremental $4 billion authorisation for the repurchase of common stock.
Share price movement
The development was announced before US market opening. Shares of the company, which will now be left with just its Taco Bell and KFC chains, were up 1.3% in premarket trading, according to NYSE data.
Barclays and Goldman Sachs are serving as financial advisers to Yum, while Weil, Gotshal & Manges LLP and Mayer Brown LLP are serving as legal advisers to Yum, according to the latest exchange filing.
Pizza Hut was acquired by PepsiCo in 1977 and spun off in 1997 alongside KFC and Taco Bell to form a restaurant company that later took the name Yum Brands in 2002. The parent firm and its subsidiaries franchise operate more than 63,000 restaurants in 155 countries and territories.
