Yum Brands $YUM is in exclusive talks to sell its Pizza Hut chain to private equity firm LongRange Capital, according to Reuters.
A deal between the two companies could potentially close within a matter of weeks. Sycamore Partners and other competing suitors were edged out after LongRange secured an exclusivity agreement with Yum in recent days, according to Bloomberg. Representatives for Yum, LongRange, and Sycamore declined to comment in published reports.
Yum Brands, which also owns KFC and Taco Bell and is based in Louisville, Kentucky, said last year that it was reviewing strategic options for Pizza Hut, including a possible sale, as the chain struggled to keep pace with the company's other brands. Pizza Hut had drawn interest from multiple suitors, including Sycamore Partners, Apollo Global Management, and LongRange, according to Reuters.
As a portion of Yum's overall revenue, Pizza Hut has steadily lost ground each year going back to 2019, dropping from over 18% to roughly 12% by 2025. Over the same stretch, Yum's total revenue expanded by approximately 47% to reach $8.2 billion last year, even as Pizza Hut's own sales barely budged from the $1 billion mark, Bloomberg reported.
Yum Brands stock was up about 3% in extended trading following the news.
LongRange was founded in 2019. Its founder, Bob Berlin, previously worked at The Baupost Group, where he spearheaded an investment in Arby's that gave him a foothold in the restaurant industry, according to Bloomberg. The firm also owns 24 Hour Fitness and ski resort company Alpin Unlimited, which holds an investment in the KitzSki ski area in Kitzbühel, Austria.
The fast-food sector has faced sustained pressure from weakening consumer demand, rising inflation, and growing adoption of GLP-1 weight-loss drugs, which have encouraged consumers to shift toward healthier food options. A wave of restaurant chains — among them Denny's, Potbelly, and California Pizza Kitchen — have retreated from public markets in recent years as input costs climb and customers pull back on eating out, according to Reuters.