Pizza Hut could soon be up for sale.
Yum Brands, Pizza Hut’s parent company, said Tuesday it’s conducting a formal review of options for the brand, which has struggled to compete in a crowded pizza market.
Yum CEO Chris Turner said Pizza Hut has many strengths, including a global footprint and strong growth in many markets. Pizza Hut has nearly 20,000 stores in more than 100 countries, and its international sales were up 2% in the first nine months of this year. China is its second-largest market outside the U.S.
But Pizza Hut gets nearly half its sales from the U.S., where it has around 6,500 stores, and U.S. sales fell 7% in the same period. Pizza Hut was long saddled with large, outdated dine-in restaurants at a time when consumers wanted fast pickup and delivery.
In 2020, one of Pizza Hut’s largest franchisees filed for bankruptcy protection and closed 300 stores. Pizza Hut now controls 15.5% of U.S. pizza chain sales, down from 19.4% in 2019, according to Technomic, a food service consulting 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 in a statement. “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 has not set a deadline for the completion of the review. The company said it will not make any further comments on the review.
Yum Brands shares were up nearly 7% in early afternoon trading Tuesday. The company also owns KFC, Taco Bell and Habit Burger & Grill. Yum said Tuesday that its third-quarter revenue rose 8% thanks to strong sales at both KFC and Taco Bell.
Pizza Hut was founded in 1958 in Wichita, Kansas, by two brothers who borrowed $600 from their mother to open the store. They chose the name because their sign only had room for eight letters.
Pizza Hut’s familiar red roof debuted in 1969 and by 1971 it was the top pizza chain in the world by sales. PepsiCo acquired Pizza Hut in 1977 but spun off its restaurant division — which became Yum Brands — in 1997.
Domino’s, with its focus on delivery and carryout pizza, has since become the world’s largest pizza chain, with 21,750 stores.
The news of Pizza Hut’s uncertain future comes the day after another 1950s-era dine-in icon, Denny’s, announced it was being sold to an investor group and taken private. Like Pizza Hut, Denny’s has also struggled with customers’ shift to delivery and growing competition in casual dining options.