Yum! Brands (YUM.N) said on Tuesday it will sell its Pizza Hut chain for $2.7 billion, as the fast-food sector struggles amid fierce competition and declining consumer spending.
Yum China Holdings (9987.HK) will acquire Pizza Hut's mainland China business for $1.2 billion, while the remaining operations will go to private equity firm Lone Range Capital for $1.5 billion.
Rising inflation and higher commodity costs have weighed on American pizza chains, which are already facing weak demand, compounded by the growing use of GLP-1 weight-loss drugs that are pushing consumers toward healthier options.
Sam North, market analyst at eToro, said: "Lone Range Capital is effectively buying a globally recognised brand that needs greater focus, while the Yum China move gives local operators greater control over a key market."
North added: "The price is not spectacular for a name like this, but it removes an ongoing burden and gives Pizza Hut a chance to be run as a turnaround and recovery success story."
Last year, Yum said it was exploring strategic options following consecutive quarters of declining sales at Pizza Hut. Yum entered exclusive talks with Lone Range in May.
PepsiCo (PEP.O) acquired Pizza Hut in 1977, before it was spun off in 1997 alongside KFC and Taco Bell to form the company that became known as Yum! Brands in 2002.
Yum, which will retain the Taco Bell and KFC brands, expects to complete the deal in the third quarter of 2026, pending regulatory approvals.
The sale of the China business reflects a broader trend of American companies handing control to local operators to adapt to intense competition and shifting demand.
Earlier this month, General Mills (GIS.N) agreed to sell its Häagen-Dazs stores in mainland China to a group led by tea chain Nongfu Spring's Ningji, while Starbucks (SBUX.O) sold a majority stake in its China operations to Boyu Capital last year.
Yum China — a Shanghai-based subsidiary that was spun off from Yum! Brands — operates more than 18,000 stores on a franchise basis and aims to expand Pizza Hut locations to more than 6,000 branches by 2028.
Yum! Brands and Yum China also agreed on financial incentives tied to KFC's growth in China, and will collaborate on expanding Taco Bell in mainland China.
Yum China's US-listed shares stabilised after early losses, while Yum! Brands shares — which also announced an additional $4 billion share buyback programme — rose approximately 2%.