Pizza Hut to Close 500 Stores Over Next 24 Months
LOUISVILLE, KY. — Pizza Hut will close as many as 500 dine-in stores over the next 24 months as part of a broader strategy to bolster its delivery and carryout services, company executives said during the second-quarter earnings call.
Food Business News first reported the announcement.
Pizza Hut, which is owned by Louisville, Ky.-based YUM! Brands (NYSE: YUM), operates about 7,500 locations across the United States and 18,000 worldwide. In the United States, roughly 6,100 of the company’s locations are dine-in restaurants. The remaining locations are express units, which feature limited menus and minimal to no in-store seating to prioritize delivery and takeout services. All shuttered stores will be dine-in locations.
“We plan to accelerate the transition of our Pizza Hut assets to a more modern delivery carryout and delivery asset base,” YUM! Brands CEO Greg Creed said on the call. “We are excited about collaborating with franchisees who have a growth mindset to accelerate the closure of underperforming dining stores and replacement with new delivery or fast-casual delivery assets.”
YUM! Brands owns Pizza Hut and several other restaurant chains, including Kentucky Fried Chicken, Taco Bell and Wingstreet. Pizza Hut express units sometimes share building space with these concepts. All told, the restaurant group owns and operates about 43,500 restaurants across 135 countries and territories.
Company executives noted that lower sales volumes at affected stores lay at the root of the decision. In addition, the closing of Pizza Hut dine-in restaurants in select markets could eventually lead to the opening of express units in those areas.
“We have a lot of stores that were built in the right spots 30 to 40 years ago in a trade area, but those aren’t the right spots today to have a modern delivery asset,” said COO David Gibbs. “If we can get those stores closed and then put in the right spot in the trade area for delivery there will be an upside to sales for those units.”
Executives also expressed optimism for growth in the chain’s international store count. A list of impacted stores in the United States has not yet been furnished.
Pizza Hut joins Subway and Burger King as fast food chains that have experienced triple-digit store closures over the past couple years. Subway closed more than 1,200 stores in 2017 and 2018 and is expected to add to that total this year, while Burger King announced in May its plans to shutter between 200 and 250 restaurants in the coming years.
Retail and restaurant analysts typically cite growing demand for healthy, fast-casual food and concepts, as well as oversaturation of stores, as the key drivers behind closures of large restaurant chains.
The stock price of YUM! Brands opened at $117.50 per share on Friday, August 9, up from $82.12 per share a year ago.
— Alex Patton