Yum Brands agreed on Tuesday to sell Pizza Hut for $2.7 billion in a split transaction to LongRange Capital and Yum China Holdings, as the fast-food group exits a struggling chain facing weak demand, rising competition and shifting consumer preferences.

The deal divides Pizza Hut into two parts, with private equity firm LongRange Capital acquiring the business outside mainland China for $1.5 billion and Yum China Holdings taking the China operations for $1.2 billion. Yum Brands, which also owns KFC and Taco Bell, said it would retain those chains and expects the transactions to close in the third quarter of 2026, subject to regulatory approvals and customary closing conditions.

Yum Brands chief executive Chris Turner said the sale follows a strategic review of the chain’s performance and would allow the group to focus on stronger brands. “These transactions enable Yum! to be a more focused company that continues to leverage scale, technology and talent to accelerate our priorities and deliver sustained value for our stakeholders,” he said.

Pizza Hut has faced prolonged pressure in core markets as competitors such as Domino’s Pizza gained share and delivery platforms increased competitive intensity across the sector, according to CNBC reporting. The company had already been reviewing strategic options after several quarters of declining comparable sales and had begun closing underperforming US restaurants as part of a wider restructuring effort.

Shares in Yum Brands rose about two per cent following the announcement as investors responded to the divestment alongside a separately announced $4 billion share buyback programme. The company said the capital return plan would sit alongside continued investment in its remaining portfolio, with KFC and Taco Bell positioned as its primary growth engines after the sale completes.

The separation of Pizza Hut’s China operations reflects a broader shift among US consumer groups towards local ownership structures in the country, where competition has intensified and consumer preferences have continued to evolve. Yum China already operates thousands of restaurants across the market and is expected to integrate Pizza Hut into its expansion plans, further localising control of one of the group’s largest international businesses.

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