Denny's Acquisition is Complete. Is Pizza Hut Next?

Two major restaurant chains—Pizza Hut and Denny’s—are facing structural problems that go well beyond temporary performance issues. Pizza Hut’s parent, Yum! Brands, has launched a formal review of “strategic alternatives” for the brand, including a potential sale. Meanwhile, Denny’s is exiting the public markets entirely, having agreed to be taken private by TriArtisan Capital Advisors and franchisee Yadav Enterprises.

In both cases, the moves are not just about ownership structure. They reflect operational declines, customer attrition, and unit-level economics that have broken from industry norms. The numbers are clear, and the implications for shopping center owners, leasing teams, and asset managers are material.

Pizza Hut: Market Share Loss, Operational Lag, and Strategic Review

Pizza Hut U.S. same-store sales dropped 6% in the most recent quarter, according to Yum! Brands’ Q3 earnings report. That followed a multi-quarter trend of negative comps, making it the worst-performing concept in Yum’s portfolio. In comparison, Taco Bell grew U.S. same-store sales 7%, and KFC posted a 2% increase.

In the company’s earnings call, Yum! CEO Chris Turner was blunt: “The Pizza Hut team has been working hard to address business and category challenges; however, Pizza Hut’s performance indicates the need to take additional action to help the brand realize its full value, which may be better executed outside of Yum! Brands.” That assessment, paired with the official review of strategic alternatives, suggests a potential sale is not only on the table—it may be the likely outcome.

Pizza Hut’s struggles are rooted in its inability to keep pace with market leaders like Domino’s in the two most important performance levers in the pizza category: digital ordering and delivery execution. Domino’s processes over 80% of its U.S. orders through digital channels and has invested aggressively in technology to streamline pickup and delivery. Pizza Hut, by contrast, has lagged in app functionality, delivery speed, and loyalty program engagement.

Pizza Hut also suffers from a legacy real estate footprint that no longer matches consumer preferences. While Domino’s operates efficient ~1,000–1,500 square foot carryout/delivery units, many Pizza Hut locations still sit in dine-in-oriented 2,500–3,000 square foot boxes. These formats carry higher occupancy costs and require more labor per ticket. As dining room demand continues to fall, franchisees are under pressure to convert to carryout/delivery-only prototypes, but those conversions are expensive and have rolled out slowly.

Franchisee pressure is building. Earlier this year, NPC International—one of the largest Pizza Hut operators—closed more than 300 units as part of its bankruptcy exit. Additional closures were reported in regional franchisee networks, including a cluster of 15 abrupt shutdowns and dozens more reportedly “at risk,” according to coverage from the New York Post.

From a consumer standpoint, Pizza Hut is losing relevance on both value and convenience. Its pricing is inconsistent across franchises, and customers are choosing faster, cheaper alternatives. Yum! has attempted to address this through product innovation like $6 melts and value boxes, but those efforts have failed to reverse the sales trend. The 6% U.S. same-store decline stands in contrast not only to Domino’s and Papa John’s, but to other fast food brands that have retained value positioning during a period of sustained inflation.

Denny’s: Comp Declines, Store Closures, and Diminishing Differentiation

Denny’s has reported five consecutive quarters of same-store sales decline, most recently posting a 2.9% drop, according to reporting from KXL. This consistent decline reflects deeper category pressure, operational challenges, and fading competitive differentiation.

The company has already announced plans to close approximately 150 locations by the end of 2025, representing around 10% of its U.S. footprint. AP News confirmed these closures are part of a broader streamlining strategy. Most of the units targeted are older, underperforming stores with low average unit volumes and high maintenance costs.

Franchisee economics are increasingly fragile. Reporting from AInvest notes that in California—a state with elevated labor and occupancy costs—company-owned units outperformed franchisee-operated ones, suggesting that financial strain is hitting operators hardest in high-cost markets. AInvest also reported a 3.2% decline in same-store sales among franchise units in Q1 2025.

The family-dining segment as a whole is losing share. Denny’s management acknowledged to Restaurant Business Online that family dining “has lost more traffic than any major restaurant segment since the pandemic.” Consumers have shifted to either fast-casual formats that offer more customization and speed or to QSR chains that deliver more consistent value. Denny’s sits in an in-between category: not fast enough to compete on convenience, not modern enough to compete on experience.

In an attempt to defend traffic, Denny’s has leaned into promotions such as “Buy One Slam, Get One for $1.” But as AInvest points out, these deep discounts raise concerns about margin compression and brand dilution. If customers only come for the promotion, check averages fall and overall profitability declines. Promotions also appear to have diminishing returns, with no clear evidence that they have reversed traffic declines.

Many of the closures involve units with annual unit volumes below $1.1 million, according to Restaurant Business Online. At that level, occupancy, labor, and food costs leave little room for margin. These underperforming stores also tend to be older—average age approaching 30 years—and more costly to maintain or remodel.

Remodels, when completed, do show performance upside. Restaurant Dive reports that Denny’s remodels typically result in a 6.4% sales lift and 6.5% traffic increase. However, the average remodel cost is approximately $250,000 per unit, a heavy lift for franchisees already under strain. As a result, remodel pace remains slow, and the brand’s overall footprint remains visibly uneven. Just 10 remodels were completed last quarter, despite widespread need for investment across the system.

Denny’s also walked away from one of its defining operational differentiators: 24/7 service. Following the pandemic, roughly one-quarter of the system has not returned to around-the-clock hours. That matters. Denny’s built its value as the only late-night option in many markets, driving foot traffic during off-peak hours that QSR competitors don’t address. Without that edge, its draw as a traffic generator within centers has diminished.

Like Pizza Hut, Denny’s has been acquired by a buyer with turnaround experience—TriArtisan Capital Advisors, which also owns P.F. Chang’s. Alongside Yadav Enterprises, a major Denny’s franchisee, the group is taking the company private in a $322 million deal. The buyers inherit a brand with national recognition but persistent declines, aging stores, and a customer base that has not returned at pre-pandemic frequency. The public markets had lost patience. The stock had declined 33% year-to-date before the buyout was announced.

What About KFC?

With Pizza Hut’s strategic review ongoing and Denny’s preparing to delist, the near-term outlook for both chains remains fluid. But the underlying direction is clear: both concepts are pulling back, and their performance is diverging from that of higher-growth chains in similar categories.

KFC, however—another Yum! brand—has stabilized in the U.S. by simplifying its menu, focusing on value bundles, and investing in kitchen efficiency. KFC’s average ticket is higher than Pizza Hut’s, yet its operational throughput and international growth potential have made it a safer bet for Yum. Unlike Pizza Hut, which still relies on a large dine-in footprint, KFC has moved aggressively into smaller formats and off-premise platforms. These shifts are not cosmetic—they materially reduce occupancy costs and support stronger four-wall margins.