Yum Brands is reviewing strategic options for Pizza Hut, including a sale of the business, as the pizza chain has seen lagging sales compared to other divisions of the company.
The restaurant operator announced on Tuesday it had initiated a formal review of strategic options for Pizza Hut. The intent of the move is for Pizza Hut to reach its full potential and to maximise value for the company’s shareholders.
“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 realise its full value, which may be better executed outside of Yum! Brands,” CEO Christopher Turner said in a press release.
“We believe a different approach, including but not limited to a sale of the business, would allow Pizza Hut to realise its full potential,” he later added during an earnings call.
Yum Brands said it has not set a deadline for the completion of the review, and that there is no assurance the process would result in a transaction. The company has retained Goldman Sachs and Barclays as financial advisers for this strategic review.
Lagging sales
The move comes as Pizza Hut recorded a 1 per cent decline in both system sales and same-store sales for the third quarter, which ended on September 30.
This marked the seventh consecutive quarter of falling sales for the chain. Most of the sales decline during the quarter was driven by a 7 per cent drop in the US market.
In contrast, Taco Bell continued to see strong growth in the third quarter, with system sales up 9 per cent and same-store sales up 7 per cent. KFC also performed well with system sales and same-store sales rising 6 per cent and 3 per cent, respectively.
Yum Brands’ global system sales grew 5 per cent during the period, while unit count increased 3 per cent.
The review of Pizza Hut also took place shortly after Turner began his CEO tenure at the beginning of last month. The company also announced a new leadership team, with Sean Tresvant named as CCO, Jim Dausch as global chief digital and technology officer, and Ranjith Roy as CFO.
Based in Louisville, Kentucky, Yum Brands currently operates more than 62,000 restaurants in more than 155 countries and territories.
