Two of America’s most popular national pizza chains are edging closer to selling to new owners as stiff competition, rising commodity costs, and waning consumer demand are undercutting performance, according to five people familiar with the discussions. Papa John’s International and Pizza Hut, owned by Yum Brands, are negotiating separate deals that could remove each company from public earnings reports and stock exchanges.
Yum Brands has set another deadline for bidders to submit formal offers. Private equity firms Sycamore Partners, Apollo Global Management, and LongRange Capital are among those vying for the chain. There is no guarantee those firms will submit bids, and Yum could keep the chain or spin it off if offers aren’t high enough.
Both pizza chains have indicated they need to close hundreds of locations to improve returns. “For certain restaurant chains, being private offers flexibility to reset the business and invest through this cycle without the pressure of quarterly earnings,” said Will Auchincloss, EY-Parthenon’s Americas retail sector leader.
The fate of both chains has been closely watched after Yum announced plans for a strategic review of Pizza Hut. Papa John’s CEO Todd Penegor stated he is focused on running the business amid reports of potential bidders.
