Pizza Hut is up for sale.

"The King of Pizza," Pizza Hut, is about to be packaged and sold to a PE fund.

According to Reuters, the multinational fast-food giant Yum! Brands is in exclusive negotiations with the US PE firm LongRange Capital regarding the sale of Pizza Hut, and a final agreement is expected to be reached in the coming weeks.

Pizza Hut was founded in 1958 and was acquired by PepsiCo in 1977, becoming its bridgehead into the food service industry. In 1997, PepsiCo spun off its food service business (including KFC, Pizza Hut, and Taco Bell) to form Yum! Brands. Since then, these three brands have been the "three driving forces" of this famous global food service empire.

For decades, Pizza Hut firmly held the top position among global pizza chain brands, with over 20,000 stores at its peak. However, it is reported that the total valuation of Pizza Hut in this sale is only between $3.5 billion and $4.3 billion, which can almost be called a "fire sale." On the day the news broke, Yum! Brands' stock price rose by more than 3%, indicating that shareholders are very welcoming of this deal.

What's wrong with Pizza Hut?

The Store Closure Storm

Yum! Brands' decision to sell Pizza Hut was not a sudden idea. As early as November 2025, after a comprehensive strategic assessment of Pizza Hut, Yum! Brands decided to "explore various asset divestment options, including an overall sale." The reason behind this decision is simple: Pizza Hut has become a performance burden that the group has to shed.

In fact, Pizza Hut's revenue has not grown for nearly a decade and has been continuously declining in recent years. Financial reports show that from 2019 to 2025, Pizza Hut's annual revenue remained stagnant at the level of $1 billion, with no growth at all. It should be noted that during the same period, both KFC and Taco Bell performed well, and Yum! Brands' total revenue increased by as much as 47%. This directly led to the proportion of Pizza Hut's contribution to Yum! Brands' total revenue structure shrinking sharply from over 18% in 2019 to only about 12% in 2025.

Between 2017 and 2018, Pizza Hut was overtaken by another rapidly rising pizza chain brand, Domino's, and lost its throne as the "world's largest pizza chain." Beyond the revenue figures, what is even more worrying is the defeat of Pizza Hut in the major European and American markets, especially the wave of store closures that began in 2025.

In the crucial US domestic market, Pizza Hut's comparable same-store sales have shown negative growth for 10 consecutive quarters, which has made it increasingly difficult for more and more Pizza Hut stores to operate. Yum! Brands had to close 375 US stores in the fiscal year 2025. At the beginning of 2026, Pizza Hut announced another closure of 250 underperforming US stores. This means that Pizza Hut will lose about 10% of its US stores within two years, and the US market contributes more than 60% of Pizza Hut's revenue.

In the important UK market, the situation is even more disastrous. DC London Pie Limited, the general franchise operator of Pizza Hut in the UK, entered bankruptcy proceedings in October 2025 due to a broken capital chain. In the end, Yum! Brands stepped in and acquired 64 chain restaurants in relatively good operating conditions, avoiding the embarrassing situation of Pizza Hut's "total defeat" in the UK.

In addition, Pizza Hut has also had bad luck in some emerging markets. In Turkey, due to "compliance and profit" issues, Pizza Hut terminated its master franchise agreement with the operator, resulting in the collective closure of 254 Pizza Hut stores in Turkey.

"Pizza Lost"

To be fair, Pizza Hut's failure in recent years is, to some extent, due to the changing times, not because of its own mistakes.

In 2021, the "weight-loss wonder drug" semaglutide was approved in the US for long-term weight management, and then GLP - 1 drugs such as semaglutide quickly became popular. Unexpectedly, the century - old pizza chain market has become a "victim" of this wonder drug.

From a scientific mechanism perspective, modern food industries, including Pizza Hut, have long been committed to creating high - carbohydrate and high - fat foods through precise formulas that can melt in the mouth at a specific temperature, creating an "illusion of calorie disappearance," thereby stimulating the brain to secrete dopamine vigorously and triggering consumers' impulse to overeat. However, drugs like semaglutide can directly cut off this reward mechanism at the neural center level, completely ending this gameplay. After a shot of semaglutide, you will immediately lose your appetite for pizza.

A Gallup survey found that as of September 2025, more than 12% of Americans had used GLP - 1 drugs for weight loss. A study by Cornell University showed that families that received GLP - 1 drug treatment reduced their spending at fast - food chains, cafes, and fast - food restaurants by an average of 8% within six months. And the longer the drug is used, the more obvious the decline in spending.

Pizza, which features high - carbohydrate, high - fat cheese, and heavy - flavored meats as its core selling points, is not suitable for the current trend of healthy eating and has borne the brunt of the weight - loss revolution triggered by semaglutide. In fact, not only Pizza Hut, but other pizza chains are also suffering. Another well - known pizza brand, Papa John's, is also experiencing a decline in same - store sales and a profit crisis for franchisees and is currently also "exploring strategic alternatives" to seek a sale.

In the face of the impact of semaglutide, almost all fast - food brands are making all - out efforts to transform. For example, McDonald's is emphasizing the protein content of its menu, KFC is promoting "high - protein chicken" and extremely small - portion "snack menus," and some restaurants have even specially launched an "Ozempic special menu" for those taking the drug, reducing both the portion size and price by one - third.

Taco Bell, another important fast - food chain under Yum! Brands, has adapted quite well. By significantly reducing the carbohydrates in its Mexican burritos and increasing the protein content, its revenue has grown very rapidly and it has now become the most core growth engine of Yum! Brands.

However, as a naturally high - carbohydrate, high - fat, and large - sized sharing food, it is undoubtedly much more difficult to restructure the pizza menu. Even if Pizza Hut has launched relatively healthy products such as thin - crust pizza with grilled wings, it is difficult to fundamentally reverse the consumer's sense of rejection brought by the category itself. This irreversible change in consumer psychology is probably the most fundamental strategic consideration that prompts Yum! Brands to completely abandon the pizza business.

A Strong Remedy Is Needed

However, we can't blame everything on the times.

Although the pizza market as a whole is under pressure, not all brands are as unsuccessful as Pizza Hut. In fact, Domino's, Pizza Hut's main competitor and currently the world's largest pizza chain brand, has been expanding against the trend.

At the analyst meeting for the 2025 financial report, Domino's CEO Russell Weiner refuted the "theory of pizza decline." He said bluntly that in the past 11 years, Domino's has steadily and continuously eroded the market share of competitors led by Pizza Hut and Papa John's at a rate of about 1 percentage point per year. Therefore, the difficulties faced by these brands do not mean that the entire pizza market is in decline. Although Domino's stock price has fallen by 30% since 2025, its performance has continued to grow. In 2025, Domino's revenue increased by 5%, net profit increased by 3%, and the number of its stores in the US has grown from 6,126 to 7,186.

Domino's ability to grow against the trend is essentially a victory for "Internet pizza." Domino's established a light - asset model focusing entirely on takeout and self - pick - up early on and completely abandoned the cumbersome dine - in business. Then, with the efficiency advantages brought by its digital ordering system and precise delivery algorithms, Domino's has engaged in a price war with traditional pizza brands such as Pizza Hut and Papa John's. According to Russell Weiner himself, the biggest contributor to Domino's sales growth is the "any pizza with any toppings for $9.99 within a limited time" package, which competitors have never been able to learn.

In every aspect, Pizza Hut is almost the opposite of Domino's. Pizza Hut is burdened with a large number of traditional "red - roof" dine - in store assets. These old - fashioned dine - in stores do not meet the mainstream dining habits of modern consumers who pursue ultimate convenience, contactless delivery, and self - pick - up at all.

This makes Pizza Hut seem powerless in the meat - grinder - like price war. For example, Pizza Hut was also forced to follow up and launch a "7 - dollar Deal Lover's" menu. However, due to its low single - store efficiency and franchisees' much higher rent and labor costs than competitors, this defensive and passive price cut directly broke through the store's profit line.

Of course, backed by Yum! Brands, Pizza Hut has not failed to attempt digital transformation.

In 2021, Yum! Brands acquired several companies, including the AI consumer insights company Kvantum, the omni - channel ordering platform Tictuk, and the digital kitchen order management and delivery technology company Dragontail, with high ambitions to build a "global digital strategic foundation." Then, Dragontail's AI delivery management platform was fully rolled out and connected to Pizza Hut stores.

However, the result of this bold technological upgrade was astonishing. Just half a month ago, Chaac Pizza Northeast, a franchisee operating more than 100 Pizza Hut stores in New York, New Jersey, Maryland, Washington D.C., and Pennsylvania, sued Pizza Hut, alleging that Pizza Hut forced it to use Dragontail's AI platform, resulting in the "operational collapse" of the stores, and claimed compensation of more than $100 million.

Chaac Pizza Northeast said that after connecting to the AI system, the year - on - year growth rate of its store sales in New York City changed from 10.19% to - 9.78% because the on - time delivery rate of takeout orders within 30 minutes plummeted from 90% to only 50%, and the cooled - off pizza seriously reduced customer satisfaction.

Why did the AI system have the opposite effect? The details are not elaborated here, but generally speaking, the highly standardized AI technology solutions promoted by Yum! Brands from the top down are seriously out of touch with the reality at the store level.

After this failure, Yum! Brands is basically disheartened about Pizza Hut.

Yum! Brands CEO Chris Turner said in a statement announcing the exploration of selling Pizza Hut at the end of last year that the performance in recent years clearly shows that Pizza Hut needs additional and even radical intervention measures to unlock its full potential value. And this value unlocking "may be better implemented outside the framework of Yum! Brands."

In other words, Pizza Hut now needs a strong remedy, but Yum! Brands can't provide it. In this situation, selling to a PE fund has become the only viable way out for Pizza Hut. As is well - known, PE funds are best at performing major surgeries on target companies. If the transaction is completed, Pizza Hut will almost certainly face a storm in the hands of LongRange Capital.

Of course, this storm won't affect Pizza Hut in China. As early as 2016, Yum! Brands completed the complete spin - off of its Chinese business, and Yum China has become completely independent legally and financially. Currently, Yum China has the permanent right to exclusively operate the Pizza Hut brand in mainland China.

This article is from the WeChat official account "China Venture Capital," written by Tao Huidong and edited by Wang Qingwu. It is published by 36Kr with authorization.