Two leading American pizza chains, Papa John’s International and Pizza Hut, are reportedly advancing toward potential ownership changes amid increasing competition, rising commodity prices, and declining consumer demand that have pressured their financial performance. Both companies are engaged in separate negotiations that could lead to their removal from public stock exchanges, allowing management to focus on restructuring their business models away from quarterly earnings scrutiny.
Papa John’s stock has fallen 28% over the past six months, closing at approximately $34.99 per share on Tuesday. In March, the company received a $47 per share offer from Irth Capital, a Qatari-backed investment fund supported by Brookfield Asset Management. Irth Capital has been conducting due diligence and discussions regarding a possible acquisition over the last month. Some investors remain cautiously optimistic that a deal could be finalized before Papa John’s next quarterly earnings release on May 7. However, these talks remain ongoing with no certainty of a transaction.
Meanwhile, Yum Brands, the owner of Pizza Hut, has set a deadline this week for interested parties to submit formal bids. Private equity firms including Sycamore Partners, Apollo Global Management, and LongRange Capital are among those competing for the chain. Yum Brands may select a preferred bidder for exclusive negotiations following this deadline. However, there is no guarantee that bids will meet expectations, and Yum could opt to retain or spin off Pizza Hut if offers fall short.
Interest in acquiring these pizza chains comes amid a resurgence of large corporate deals in the restaurant sector during the first quarter, despite ongoing challenges such as more cost-conscious consumers and rising food inflation. In recent years, several smaller restaurant chains have exited the public market, including Denny’s, which sold for $620 million, and Potbelly, acquired by RaceTrac for $566 million. Additionally, Canada’s MTY Food Group, owner of Papa Murphy’s, has been exploring a sale since last year, while California Pizza Kitchen was purchased by a private investor group in December.
Will Auchincloss, Americas retail sector leader at EY-Parthenon, noted that public quick-service restaurant stocks are under pressure due to softer consumer demand combined with persistent structural cost challenges. He highlighted that traffic has declined as consumers pull back, while brands face higher labor expenses and increased competition in value offerings.
Both Papa John’s and Pizza Hut have experienced declining same-store sales and revenue, with frequent leadership changes at Papa John’s since founder John Schnatter’s departure in 2018 contributing to its stock price decline from a peak near $130 per share in late 2021. Pizza Hut’s sales have also been weakening, dragging down Yum Brands’ earnings as its other fast-food brands, Taco Bell and KFC, perform more strongly. Potential buyers would need to invest in modernizing many outdated locations, a process that could be facilitated by taking the companies private and avoiding the pressures of public quarterly reporting.
Both chains have indicated plans to close hundreds of locations to improve profitability. Auchincloss emphasized that going private can provide restaurant chains with the flexibility to reset their operations and invest through challenging market cycles without the constant pressure of quarterly earnings results.
The future of these pizza brands has attracted significant attention since Yum Brands announced a strategic review of Pizza Hut in November, and Papa John’s previously rejected offers at substantially higher valuations last year. Papa John’s CEO Todd Penegor, who assumed his role in late 2024, stated last month that his focus remains on managing the business despite the reported offer from Irth Capital. Penegor also referenced earlier bids, including a joint offer from Irth and Apollo and a subsequent solo bid from Apollo that was withdrawn. When questioned about potential bidders at a UBS conference in March, he declined to comment on rumors, noting that speculation has been a constant throughout his 18 months as CEO.
