Rutland Partners is delighted to announce that on 20 April 2018 it agreed and completed the sale of Pizza Hut Restaurants UK to its existing management team led by Jens Hofma (CEO). The disposal concludes an extremely successful investment for Rutland Fund II.
Rutland acquired Pizza Hut Restaurants UK (excluding the Delivery Business) in November 2012 from the global franchisor, Yum! Brands. Following a long period of decline, Pizza Hut Restaurants UK had become loss making and the acquisition represented a complicated carve-out from the US franchisor and its UK parent, which required significant effort and creativity to negotiate a franchise relationship that worked for a Private Equity structure and a platform for investing in a fundamental reinvigoration of the business including a transition from a sales to profit focus.
Since acquisition there has been a complete overhaul of the offering. The 260-site restaurant estate has undergone a dramatic £60m American inspired re-imaging with industry leading returns. Almost all of the estate has been reimaged and the menu has been broadened to achieve a significant uplift in guest satisfaction and a reappraisal by the market. In addition, site training and operating programmes have been established to embed a continuous improvement culture and growth mindset in the restaurants. This radical transformation has resulted in a reversal of customer spending back into consistent sales growth and increased EBITDA by in excess of £17m since acquisition.
Post-completion of the sale, Pizza Hut Restaurants will be owned and run by its current management team with financial support from Pricoa Capital Group. As part of the financing, management will become majority shareholders and Rutland will retain an investment.
The investment was led on behalf of Rutland by Nick Morrill, Tristan Craddock and Jason Birt.
Nick Morrill, Managing Partner at Rutland, said:
“Our investment in Pizza Hut Restaurants, in support of Jens Hofma and his team, has been exciting and highly rewarding in an extremely competitive sector. They have been an outstanding team to work with and we are delighted to share this successful transition with them. The investment has been typical of a Rutland deal and strong evidence to our investors of our ability to deploy a weight of capital in complex circumstances and drive attractive returns. We wish Jens and his team every success going forward.”
Jens Hofma, CEO of Pizza Hut, said:
"Five years ago, we began an incredible journey and we’re now experiencing the true extent of the positive impact Rutland’s Partners’ investment and guidance has made to the business. Our focus has been on our three most important assets: our people, our Huts and our menu. Our investment and strategy in those areas has helped us to revitalise our estate and cement our status in the UK’s fast-casual dining market.”
Jens continues: “As we take control of the next stage, our mission remains unchanged: to be the most loved place to eat and work, and I’m delighted with the funding and backing Pricoa Capital Group is providing to allow that to be possible and for the partnership we continue to enjoy with the wider Yum! business. We have only got to where we are today because of the great team of people that work for us and with us. Across our estate the passion and dedication of our team members is phenomenal and they will continue to remain at the heart of our business strategy as we move forwards."
This transaction is a solid start to the year for Rutland following a strong 2017 when the company gained four industry awards; for its value creation and transformation of Pizza Hut, for its successful Fund II exits of Attends Healthcare and Millbrook and for the Omar Group acquisition. There has also been further development of the Fund II portfolio through the acquisition of Kimberly Rentals by AFI Group plus three further investments in Fund III; Omar Group, Aston Barclay and Armitage Pet Care.