The business has agreed to acquire the Pizza Hut brand in Mainland China from the US-based restaurant company Yum Brands at a cash consideration of US$1.2bn.
Yum Brands owns and franchises restaurant chains, including KFC, Pizza Hut and Taco Bell globally. Yum China acts as a master franchisee for the three brands in Mainland China and has been paying a three per cent royalty fee on its system-wide sales to the US giant. Upon the closing of the deal, Pizza Hut China will no longer be subject to such license fees.
According to Yum China, Pizza Hut is the largest casual dining restaurant brand in the country, with a segment revenue of $2.3bn and an operating profit of $183M last year.
The company aims to expand the Pizza Hut network in Mainland China from 4,375 restaurants across more than 1,100 cities to more than 6,000 stores by 2028. It also aims to double the chain’s operating profit by 2029.
“Moving from the exclusive licensee to the brand owner of Pizza Hut in Mainland China represents a transformative milestone for us, demonstrating our conviction and long-term commitment to the China market,” said Joey Wat, CEO of Yum China. “Becoming the brand owner will give the company greater strategic flexibility to drive innovation across the menu, store formats, new modules and operations.”
