ByREUTERS

JUNE 17, 2026 13:23

Yum Brands announced on Tuesday plans to divest its Pizza Hut business through two separate transactions totaling $2.7 billion, reflecting distinct paths for its China operations versus the rest of the world.

Private equity firm LongRange Capital will purchase the Pizza Hut locations in the United States and international markets outside mainland China for $1.5 billion.

These units include more than 15,500 restaurants operating in over 100 countries and have faced ongoing challenges from inflation pressures, elevated ingredient expenses, and shifting consumer preferences influenced by GLP-1 weight-loss medications. Comparable store sales at US Pizza Hut locations have fallen across ten consecutive quarters.

Yum China Holdings, the longtime partner in the region, will buy the China-based business encompassing 4,375 outlets for $1.2 billion, capitalizing on stronger recent performance there.

"LongRange Capital gains a well-known global brand requiring renewed strategic direction, whereas Yum China gains greater autonomy in a vital growth market," noted Sam North, market analyst at eToro.

The company had initiated a review of strategic alternatives for Pizza Hut last year and began exclusive negotiations with LongRange during May.

Pizza Hut joined PepsiCo's portfolio in 1977 before being separated in 1997 with KFC and Taco Bell, forming the entity that evolved into Yum Brands by 2002. Yum plans to keep Taco Bell and KFC while targeting completion of the Pizza Hut sale in the third quarter of 2026, subject to regulatory clearance.

Local operators take charge

Yum China's purchase of the Pizza Hut brand in its home market signals strong confidence in future prospects within the world's second-largest economy, according to independent food sector analyst Zhu Danpeng based in China.

"Evidence from store growth, rising revenue and profit per location, plus expansion of the customer base shows that localization efforts have enhanced Yum China's competitive edge for long-term success," he added.

As a former Yum Brands spinoff backed primarily by Primavera Capital and Jack Ma's Ant Group, Yum China has focused on tailored offerings such as black truffle Yunnan mushroom pizza, innovative store designs, and value-driven menu choices suited to budget-conscious diners.

These steps have positioned Pizza Hut as China's top casual dining brand. The chain opened 207 net new locations in the first quarter and aims for over 6,000 outlets by 2028. Sales in China rose 4 percent last year, operating profit increased 19 percent, and the operating margin reached 7.9 percent, marking the best result since 2016.

The separation of the China business aligns with a wider pattern of American companies transferring oversight to domestic partners amid intensifying competition and evolving market conditions.

General Mills recently agreed to sell its Haagen-Dazs outlets in mainland China to investors led by tea chain Ningji, and Starbucks transferred majority control of its China business to Boyu Capital in the prior year.

Yum Brands and Yum China also established performance-linked incentives connected to KFC growth in China and will work jointly to expand Taco Bell across the mainland.

Yum Brands shares climbed roughly 2 percent on Tuesday after the firm also revealed an extra $4 billion share repurchase program. Yum China shares declined 2 percent in Wednesday trading in Hong Kong.