Pizza Hut may soon be up for sale as Yum Brands, its parent company, announced a formal review of strategic options for the struggling brand. This decision comes in response to the competitive challenges Pizza Hut has faced in the crowded pizza market. Yum Brands CEO Chris Turner emphasized that despite Pizza Hut's strengths, such as its extensive global presence and notable sales growth in international markets, significant challenges remain, particularly in the United States.
As of now, Pizza Hut operates nearly 20,000 stores across more than 100 countries, with international sales showing a 2% increase in the first nine months of the year. However, nearly half of Pizza Hut's sales come from the U.S., where the brand has around 6,500 locations. Unfortunately, U.S. sales have declined by 7% during the same period. This decline can be partly attributed to the brand's struggle with large, outdated dine-in restaurants while consumer preferences have shifted towards fast pickup and delivery options.
Turner stated, “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.” The company's decision to initiate a thorough review of strategic options aims to maximize the brand's potential and explore different avenues for growth.
Yum Brands has not provided a timeline for the completion of this review, stating that it will refrain from making any further comments on the matter. Following the announcement, Yum Brands' shares experienced a nearly 7% uptick in morning trading, reflecting investor optimism amidst the ongoing assessment of Pizza Hut’s future. Yum Brands also oversees other popular fast-food chains, including KFC, Taco Bell, and Habit Burger & Grill, and reported an 8% revenue increase in the third quarter, driven primarily by strong sales from KFC and Taco Bell.
Founded in 1958 by brothers Dan and Frank Carney in Wichita, Kansas, Pizza Hut began with a modest loan of $600 from their mother. The brand’s name was selected because their sign could only accommodate eight letters. In 1969, they introduced the iconic red roof design, and by 1971, Pizza Hut had risen to become the world's leading pizza chain in terms of sales. The brand was acquired by PepsiCo in 1977 but was later spun off into what is now known as Yum Brands in 1997.
In recent years, Pizza Hut’s market position has been further challenged by competitors such as Domino's, which has prioritized delivery and carryout services. As a result, Domino's has secured its status as the world's largest pizza chain, now boasting 21,750 locations worldwide.
The announcement regarding Pizza Hut's uncertain future coincides with other recent developments in the restaurant industry, including the news that Denny’s, another renowned dine-in establishment from the 1950s, is being sold to an investor group and will transition to a private entity. Much like Pizza Hut, Denny’s has faced difficulties adapting to changing consumer behaviors, particularly the shift toward delivery services and increasing competition within the casual dining sector.
