Pizza Hut’s parent company is considering selling the chain

Pizza Hut could soon be for sale.

Yum Brands, Pizza Hut’s parent company, said Tuesday it is conducting a formal review of options for the brand, which has struggled to compete in a crowded pizza market.

Yum CEO Chris Turner said Pizza Hut has many strengths, including a global presence and strong growth in many markets. Pizza Hut has nearly 20,000 stores in more than 100 countries and international sales rose 2% in the first nine months of this year. China is the second largest market outside the US

But Pizza Hut gets almost half of its sales from the U.S., where it has about 6,500 stores, and U.S. sales fell 7% over the same period. Pizza Hut was long saddled with large, outdated dine-in restaurants at a time when consumers wanted quick pickup and delivery.

In 2020, one of Pizza Hut’s largest franchisees filed for bankruptcy protection and closed 300 stores. Pizza Hut now commands 15.5% of the U.S. pizza chain’s revenue, up from 19.4% in 2019, according to Technomic, a foodservice consultancy.

“The Pizza Hut team has worked hard to address the business and category challenges, but 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,” Turner said in a statement. “To truly capitalize on the brand we have built and the opportunities ahead, we have made the decision to initiate a thorough review of strategic options.”

Yum has not set a deadline for completing the review. The company said it will not comment further on the assessment.

Shares of Yum Brands rose nearly 7% in early afternoon trading on Tuesday. The company also owns KFC, Taco Bell and Habit Burger & Grill. Yum said Tuesday that third-quarter revenue rose 8% thanks to strong sales at both KFC and Taco Bell.

Pizza Hut was founded in Wichita, Kansas, in 1958 by two brothers who borrowed $600 from their mother to open the store. They chose the name because their sign could only accommodate eight letters.

Pizza Hut’s famous red roof debuted in 1969 and by 1971 it was the top pizza chain in the world in terms of sales. PepsiCo acquired Pizza Hut in 1977, but spun off the restaurant division in 1997, which later became Yum Brands.

Domino’s, with its focus on delivery and takeaway pizzas, has since become the largest pizza chain in the world, with 21,750 stores.

News of Pizza Hut’s uncertain future comes the day after another 1950s restaurant icon, Denny’s, announced it would be sold to an investor group and taken private. Like Pizza Hut, Denny’s has also struggled with customers’ shift to delivery and growing competition in casual dining.