Yum! Brands, home to popular fast-food restaurant chains like Taco Bell and KFC, said on Tuesday that it was exploring “strategic options” for its struggling Pizza Hut division.
While global sales at Taco Bell and KFC have been booming, Pizza Hut has been a drag on Yum’s performance for some time, as it has lost market share in the competitive pizza market.
“The Pizza Hut team has been working hard to address business and category challenges,” Chris Turner, chief executive of Yum, said in a news release. “However, Pizza Hut’s performance indicates the need to take additional action to help the brand realize its full value, which may be better executed outside of Yum! Brands.”
The group’s global revenues in the third quarter grew 8 percent from a year earlier, to about $2 billion.
Global sales for stores opened at least a year rose 7 percent at Taco Bell and 3 percent at KFC, but Pizza Hut’s sales in the quarter dipped 1 percent.
In premarket trading, Yum’s stock gained nearly 2 percent.
The fast-food conglomerate’s stock is up 5 percent this year, outperforming McDonald’s, which is little changed, and Chipotle, which has plunged 44 percent.
The restaurant industry has struggled for much of the past year as consumers have reined in spending as inflation remained stubbornly high and the job market showed signs of strain. This week, the burrito chain Chipotle told investors it had seen a pullback from consumers earning less than $100,000, who make up 40 percent of its business.
While Yum has not been immune to the spending slowdown, Taco Bell has been a bright spot in large part because of its inexpensive meal offerings.
The group has spent years trying to reinvent and reinvigorate sales at Pizza Hut, increasingly moving away from its sit-down, dine-in model to focus on takeout and delivery.
With more than 19,000 restaurants around the world, about 40 percent of which are in the United States, Pizza Hut has more than double the footprint of Taco Bell’s. But in the latest quarter, Pizza Hut reported $240 million in revenue to Taco Bell’s $730 million.
Deal activity has been heating up in the restaurant industry. On Monday, Denny’s was sold to a group of private equity buyers for $620 million. Shares of Papa John’s, a pizza chain that competes with Pizza Hut, recently jumped on reports of bids to take the company private.
Julie Creswell is a business reporter covering the food industry for The Times, writing about all aspects of food, including farming, food inflation, supply-chain disruptions and climate change.
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