Yum! Brands announced the sale of Pizza Hut globally, excluding Mainland China, to LongRange Capital for approximately $1.5 billion as part of a $2.7 billion split deal. Under the agreement, Pizza Hut China will be sold to Yum China for approximately $1.2 billion. According to Elara Capital's Karan Taurani, this move will lead to new management perspective and strategic-level changes for the struggling brand. The sale follows a strategic review that began last year after Pizza Hut posted its eighth straight quarter of same-store sales declines, with CEO Chris Turner stating the brand needs additional action to unlock its full value. As per Kearney's Rajat Tuli, the new owner will undertake market-specific fixes for the brand, potentially including increased digitalisation, leaner operations, smaller store formats, and product innovation to reduce wastage and boost revenues.
Both Indian franchise partners reported concerning financial results for Pizza Hut operations. Devyani International's same-store sales growth (SSSG) for FY26 stood at -5.3 per cent, while revenue from Pizza Hut declined 1.6 per cent to ₹720.6 crore. Sapphire Foods India reported an even steeper decline with SSSG at -9 per cent in the previous financial year, and Pizza Hut revenue fell 7 per cent in FY26 to ₹506.5 crore. The transaction comes as Pizza Hut faces broader operating pressure, including planned closures of 250 underperforming locations in the first half of 2026. However, Pizza Hut remains one of the largest pizza chains globally by unit count and has real strengths in markets like the Middle East, China, and Latin America, where it posted 11% and 8% system sales growth respectively in the first quarter of 2026.
Evolving consumer preferences and intense competition from Domino's, operated by Jubilant FoodWorks, and local players have significantly impacted Pizza Hut's performance. As per Elara Capital's Karan Taurani, the brand has not aligned to one strategy – delivery or dine-in, unlike rival Domino's, which has seen exponential growth through delivery. Motilal Oswal's Naveen Trivedi noted that the new PE player could lead to competitive intensity increase in the pizza segment. As of March 31, Pizza Hut had 980 stores in India. The brand's struggle reflects the broader casual dining sector's pivot to delivery-focused operations, which Pizza Hut has not successfully adapted to, creating a significant competitive disadvantage.
The upcoming merger of Devyani International and Sapphire Foods, expected to close by the fiscal year, is also expected to buoy the brand's trajectory in India. According to Elara Securities, the merger and deeper operational integration could create incremental synergy opportunities through procurement efficiencies, supply-chain optimisation, and better overhead rationalisation. Earlier this year, both companies announced a merger through a share-swap ratio under which Devyani International will issue 177 shares for every 100 shares of Sapphire Foods India. As part of the acquisition, Devyani International will acquire 19 KFC restaurants currently operated by Yum! India in Hyderabad. The sale sharpens Yum's attention on KFC, Taco Bell, and Habit Burger & Grill, while the company anticipates approximately $85 million in one-time separation costs. Both deals have been unanimously approved by Yum's board of directors, with Barclays and Goldman Sachs serving as financial advisers, and transactions expected to close in the third quarter of 2026 pending regulatory approvals.
