• by Tanya Gazdik , Yesterday

Pizza Hut, a 68-year-old chain, which has struggled with outdated restaurants and delivery culture, is being sold in a combined $2.7 billion deal.

“Yum Brands, which also owns KFC and Taco Bell, began to explore its options for Pizza Hut in November,” according to The Associated Press. “Last year, Yum Brands’ global sales rose 5% but Pizza Hut’s sales fell 2%. In February, Yum Brands announced plans to close 250 U.S. Pizza Hut locations. Pizza Hut had 19,974 restaurants worldwide at the end of last year.”

Yum Brands said Tuesday that the private equity firm LongRange Capital will buy the QSR brand, excluding the mainland China business, for about $1.5 billion. "In mainland China, Pizza Hut will be purchased by Yum China Holdings Inc. for approximately $1.2 billion, the company said," according to the Associated Press.

“The sale will split the chain's global footprint, excluding mainland China, and officially shift the iconic 68-year-old brand away from its long-time parent company,” according to The New York Times. “Yum Brands also owns Taco Bell and KFC. Those chains have been performing well even as many consumers cut back on eating out, yet Pizza Hut has been a drag on the parent company’s overall performance.”

Rival Domino’s Pizza has gobbled up market share from Pizza Hut for years, notes CNBC. 

Pizza Hut has long been the weak link in Yum’s portfolio, according to Neil Saunders, managing director of GlobalData.

“Despite efforts to revitalize the brand and shut underperforming locations, it has become increasingly clear that pushing the division back into growth will require a level of investment and patience that Yum is just not prepared to commit to,” Saunders says. “This is especially so as the poor performance of Pizza Hut has dragged on the otherwise solid results from the group. In essence, the good numbers from KFC and Taco Bell have been clouded by the ongoing sales slides and profit slips at Pizza Hut.”

Meanwhile, another Yum brand is going full throttle. 

“KFC is planning a global brand evolution in the coming months that spans menu innovation, restaurant design and a visual refresh,” per details shared with Marketing Dive. “The move comes as the fried chicken chain, which faces increased competition around its signature menu item, sees an opportunity to reassert itself both in the U.S. and in international markets, the latter of which continue to drive much of the brand’s growth.”

The new strategy revolves around several pillars. 

“KFC created the fried chicken category, and we really want to write the next chapter for the category, not just for our brand,” said Valerie Kubizniak, global chief marketing officer at KFC. “Our ambition internally is to set that standard for what a modern fried chicken QSR looks like.”

Shares of Yum were up nearly 2% in morning trading Tuesday.