The Business
Pizza Hut Restaurants is a leading UK casual dining chain, operating at acquisition 330 dine-in restaurants. The business was the UK master franchisee of Yum! Brands but was underinvested, with a dated estate, declining customer metrics and limited operational independence. The focus was on dine-in, with separation required from the Delivery business and an overhaul of both supply chain and brand positioning.
Investment Thesis
Pizza Hut represented a unique opportunity to back an ambitious management team with a well-defined turnaround plan. The plan aimed to transform the business with significant investment into the brand and the store estate in particular rolling out a new format of restaurants using an American-inspired theme to deliver an improved customer experience. The large-scale capex plan was supported by £20m of equity investment and cash generation of the business. In addition, the plan was to execute a full brand and menu repositioning, professionalise the operational structure and instil a performance-driven culture. Over 60 non-performing sites were to be exited.
Exit
Under Rutland’s ownership, Pizza Hut saw over £60m of investment across the full estate. Sales and profitability recovered significantly, and the store base was reduced to c.260 as planned. The business returned to EBITDA of over £20m and was sold in 2018 to the existing management team. The deal delivered MM return of 3.6x and IRR of 29%.
