Yum Brands Is Selling Struggling Pizza Hut Chain For Nearly $3 Billion

Things aren't looking so good over at the Pizza Hut. Its parent company, Yum Brands (one of the world's largest restaurant companies and the owner of Taco Bell and KFC), is selling the pizza chain to private equity firm LongRange Capital. The private equity firm is purchasing Pizza Hut for a cool $1.5 billion. Meanwhile, the mainland China Pizza Hut locations will be purchased by Yum China for $1.2 billion, bringing the overall value of the sale to $2.7 billion. 

This move to private equity is certainly not a good omen, as these firms often scoop up restaurant chains on the brink of bankruptcy only to cut down on services and menu items. But it has become clear that Pizza Hut is struggling to keep up with an ever-changing fast food landscape. In recent years, the once dominant chain has been outperformed by Domino's. Meanwhile, chains like Pizza Hut and Papa John's have been shuttering hundreds of locations this year, possibly due to a dwindling customer base. Some suggest this may be tied to the growing popularity of GLP-1 drugs, which can suppress one's appetite, as it's led to menu changes at other restaurant chains.

The path forward for Pizza Hut is still unclear, and the exact terms of the chain's sale to LongRange Capital haven't been revealed. LongRange currently holds several companies in varying business sectors, none of which are restaurant chains. So it is unclear how the firm will navigate the future of such an established fast food chain.

This is far from the first big business shift for Pizza Hut. The restaurant, which was originally opened by brothers Frank and Dan Carney in 1958, has changed hands and business models several times. Originally, Pizza Huts operated as a local business in Wichita, Kansas. Within just a year, the business grew into a chain and adopted a franchised business model. By 1969, Pizza Hut went public, and for several decades, it stood as the dominant pizza chain on the market.

Yet another new era for Pizza Hut began in 1977, when PepsiCo purchased the chain. The soda company later purchased fellow fast food giants Taco Bell and KFC (which is probably why these restaurants exclusively sell Pepsi beverages). In 1997, these restaurants were split off into a separate business from PepsiCo called Tricon Global Restaurants, which was later renamed to Yum Brands. 

This is all to say that Pizza Hut has been part of the company since the start of Yum's formation. So, while the news of Pizza Hut's move to private equity is not wholly unexpected based on its struggles in recent years, it could mark a large shift for the restaurant brand's operations as a whole. And oh, what will happen to my favorite combination Pizza Hut and Taco Bell?