Yum! Brands is reportedly considering a potential sale of its Pizza Hut chain due to ongoing challenges in competing within the pizza market. The brand has experienced several quarters of declining same-store sales in the U.S., which is significant since this market constitutes 42% of its global revenue. Despite some sales growth in international markets, U.S. performance has negatively impacted the overall business.
Yum! Brands’ CEO Chris Turner stated that Pizza Hut’s current performance may necessitate actions that could help maximize its value, possibly outside of the Yum! Brands structure. He indicated that “strategic options” for the pizza division are being evaluated. In the latest quarter, Pizza Hut reported a 1% decline in sales across its existing restaurants, contrasting sharply with the performance of other Yum! brands. Taco Bell saw a 7% increase in same-store sales, while KFC experienced a 3% rise, even amidst its challenges in the U.S.
Pizza Hut contributes approximately 11% to Yum! Brands’ operating profits, operating around 20,000 stores globally, including about 6,500 in the U.S. The brand faces increased competition from other pizza chains like Papa Johns and Domino’s Pizza, which recently reported a 6% rise in quarterly sales, partially attributed to effective promotions.
Turner noted the efforts made by Pizza Hut employees to address various business challenges. Yum! Brands has not disclosed a timeline for a decision regarding Pizza Hut’s future direction.
In addition to competitive pressures, Yum! Brands is contending with decreased consumer spending, driven by inflation and a slowing labor market. This cautious consumer behavior has impacted the broader fast-food industry. Turner mentioned that while consumers are careful, spending at Taco Bell has remained stable despite these economic pressures. In the UK, Pizza Hut is set to close half of its restaurants as it faces similar challenges in attracting customers.
Source: https://www.bbc.com/news/articles/c751xrz6wq7o?at_medium=RSS&at_campaign=rss