Pizza Hut may soon be heading into a new era. According to a new report from Reuters, parent company Yum! Brands is in exclusive negotiations to sell the struggling pizza chain to private-equity firm LongRange Capital, marking what could be one of the biggest shakeups in the restaurant industry this year.
The reported talks come less than a year after Yum publicly announced it was exploring strategic alternatives for Pizza Hut, including a potential sale. Investors appeared to welcome the latest development, with Yum shares rising nearly 3% in after-hours trading following the report.
While neither company has officially confirmed a deal, the outelt reported that LongRange has emerged as the frontrunner after beating out other interested bidders and entering an exclusive negotiating period with Yum.
The potential sale reflects the increasingly difficult position Pizza Hut finds itself in. Once the dominant name in American pizza, the chain has spent years trying to regain momentum in a market where rivals such as Domino's Pizza and Little Caesars have aggressively expanded delivery operations, value-focused promotions, and digital ordering platforms.
While Yum's Taco Bell and KFC divisions have continued posting healthy growth, Pizza Hut's performance has lagged behind.
When Yum announced its strategic review last November, CEO Chris Turner acknowledged the challenge facing the brand. "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 at the time.
The numbers help explain why a sale is on the table. During Yum's most recent quarter, Pizza Hut's system sales were essentially unchanged from a year earlier, while Taco Bell and KFC posted growth of 10% and 6%, respectively.
Pizza Hut's adjusted operating profit also fell 16%, moving in the opposite direction of its sister brands.
The reported negotiations arrive during a particularly turbulent stretch for Pizza Hut. Earlier this year, Yum announced plans to close hundreds of underperforming locations.
More recently, one of the chain's largest franchisees filed a lawsuit seeking more than $100 million in damages, alleging that Pizza Hut's AI-powered Dragontail delivery system created operational problems that hurt sales and customer satisfaction. The lawsuit landed just months after Yum executives had promoted artificial intelligence as a major growth driver for the company's restaurant brands.
At the same time, Pizza Hut has been experimenting with a very different strategy: looking backward. Retro-themed "Pizza Hut Classic" locations featuring red booths, stained-glass lamps, salad bars, and revived Book It branding have generated significant attention.
