End of an era: Pizza Hut’s private equity sale marks the fall of a North Texas empire

The news was so shocking and so unbelievable that I assumed it was internet bait and click, the business story equivalent of nude sunbathing actors. Pizza Hut sold? And to the company that owns 24 Hour Fitness? Impossible.

So I texted Bruce Allar, once the editor of Pizza Today, a magazine that covers the pizza business and for which I wrote for a decade. He was stunned as I was.

“It probably means the end of Pizza Hut after all the profits are extracted,” he texted me. “I can’t help but think that the Pizza Hut concept, in-store sales of mass-market pies, is way past useful.“

And he is almost certainly correct, as difficult as it is to comprehend. Pizza Hut was one of the giants of U.S. fast food, as important in its own way as McDonald’s. In those long-ago days before delivery apps and services like Grubhub and DoorDash, anyone who wanted food delivered usually just had one choice – pizza. And Pizza Hut, with its thousands of stores, billions of dollars in sales, and its red roofs, was the preeminent pizza delivery restaurant in the county. 

In this, it almost didn’t matter what the pizza tasted like. It was cheap and it was available. What more do Americans want from fast food?

So Pizza Hut’s sale last week to a private equity firm likely means not only the beginning of the end for what was once the world’s largest pizza company, but the final chapter in traditional pizza delivery in the U.S.

The importance of the Hut

How important was Pizza Hut — whose headquarters are on the tollway at Belt Line Road and that was once run by former Dallas mayor Mike Rawlings?

• Without Pizza Hut, there probably wouldn’t be Domino’s or Papa John’s; in fact, without the Pizza Hut model, it’s difficult to believe any decent-sized chain could have gotten started in the delivery business. It improved — if not invented — many of the operational systems that everyone else used.
• McDonald’s tried to start its own national chain, Donato’s, in 1999 to expand into the pizza business and diversify away from burgers (about the same time it bought Chipotle). That failed, and McDonald’s dumped Donato’s four years later, which speaks to how difficult it was to do delivery pizza.
• The legendary 1998 Pizza Hut-Papa John’s lawsuit, in which the former sued the latter over the Papa John’s slogan, “Better Ingredients, Better Pizza.” The case went on for two years before melting away, though I had tremendous fun covering it for Pizza Today. As one commentator noted: “In the pizza business, this is an extra large with all the toppings.”

A long time coming

Pizza Hut’s end has been coming for a long time, at least a decade – slowing sales, store closures, and bankruptcies among its biggest U.S. and foreign franchisees. The parent company, Yum Brands (which also owns KFC and Taco Bell) has been looking for a way out for the last couple of years, issuing biz-speak statements like “the Pizza Hut team has been working hard to address business and category challenges. …”; an indication, certainly, that they had little idea about what to do.

Until now. And, regardless of what anyone thought of Pizza Hut or the quality of its product, it is the end of an era.