As Yum! Brands shared Tuesday morning, the future of Pizza Hut is undeniably in flux. The company revealed it was initiating a formal review of strategic options for one of the category’s true classic brands, a process, CEO Chris Turner told investors, that could include, but was not limited to, a sale of the business that “would allow Pizza Hut to realize its full potential.”
On Yum!’s Q3 earnings call, Turner, who started as CEO in October, succeeding 37-year company veteran David Gibbs, noted the company’s objective was to maximize value for Yum! and position Pizza Hut and its franchise system for greater success.
“Pizza Hut holds key structural advantages, strong brand equity, experienced franchise partners, and meaningful scale,” Turner said, “which give it a unique opportunity to reclaim the leading position in the highly fragmented pizza market.”
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Pizza Hut built 289 gross units in Q3 and opened stores across 31 countries. CFO Ranjith Roy, who assumed the role following Turner’s promotion (he was previously CFO of Goldbelly and spent 15-plus years with Goldman Sachs before joining Yum! as chief strategy officer and treasurer in 2024), said Pizza Hut was the leader in new builds within the global pizza category in all but one quarter over the last four years. However, these openings have been partially offset by elevated closures through Q3, “largely isolated to a reduction in footprint in a small number of markets, like Turkey. The U.K. was also recently hit with some volatility.
The brand ended Q3 with 19,872 locations, down from 19,927 this time a year ago. Going into the middle of the year, Pizza Hut had 6,474 U.S. restaurants and 13,312 international units for a total of 19,786—19,763 of which were franchised. It’s closed 948 U.S. restaurants since 2019, when it began an asset transformation plan toward more carryout/delivery models from dine-in “Red Roof” stores.
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Roy said Yum! remains focused on strengthening business performance at the 1958-founded brand. That said, as it prepares for a potential transaction, he explained, Q4 results could feel some impact from “actions involving isolated franchisee situations.”
Roy added Yum! would not provide further comments on the status of Pizza Hut’s review given it’s an active process. The company retained Goldman Sachs and Barclays as financial advisers.
Turner was asked Tuesday how he might envision Yum!’s growth profile if Pizza Hut did, in fact, get moved.
He said the company will remain focused on its global vehicles—KFC and Taco Bell represent nearly 90 percent of Yum! global divisional operating profit. “They are the ones that drive the bulk of our growth,” he said, “and they will continue on the trajectory that they’re on now.”
KFC, which has faced its share of U.S. softness, posted system sales growth of 6 percent, year-over-year, in Q3 and same-store sales of 3 percent. Taco Bell was at 9 and 7 percent, respectively. Habit Burger & Grill’s system sales lifted 3 percent and comps inched 1 percent.
Pizza Hut, meanwhile, recorded system and same-store sales of negative 1 percent. Struggles were more pronounced in the U.S., where figures declined 7 and 6 percent, respectively.
Growth wise, KFC opened 760 gross new locations across 60 countries in the period. Taco Bell opened 74. Habit tacked on eight gross restaurants.
KFC exited Q3 at 32,951 total units versus 31,143 in the year-ago quarter. Taco Bell had 8,816 locations compared to 8,594. Turner said KFC believes it can reach at least 75,000 locations around the world. “Honestly,” he said, “there’s whitespace opportunity in just about every market for KFC.”
Turner reiterated a few points on Pizza Hut, however, ahead of whatever might happen.
“It’s an iconic global brand that has incredible strength,” he said. “It’s got the best-tasting pizza in QSR. It’s got a global footprint well north of 100 countries. It has an amazing set of franchise partners in markets around the globe. It’s got meaningful scale. And that’s translating to strong performance in a number of our Pizza Hut markets.”
Still, he added, Yum! is focused “on what is best for the brand and what is best for our franchise partners.”
“And in that spirit,” Turner said, “we do think the business can be positioned for even greater success in the future. And in some markets, there may be a multi-year effort that is required to reposition it as the leading pizza brand in those markets. And it’s possible that those efforts may best be done under a different structure, potentially under outside ownership.”
“And so,” he tacked on, “that’s what we’ll be testing as we go through the review of strategic options. That’s why we’re initiating that now.”
Turner said it’s been a “very thoughtful” process to arrive at this moment. Yum! can’t speculate on the timing of how things play out. He noted they’ll evaluate all options and paths and share more once there’s something definitive to present.
“But at this time, we just can’t provide further comments,” he said.
