Allegro Funds sells Pizza Hut Australia to US operator behind Taco Bell, Wendy’s

Allegro Funds sells Pizza Hut Australia to US operator behind Taco Bell, Wendy’s

For the first time, major US food operator Flynn Restaurant Group has expanded beyond its home base to acquire the Australian operations of Pizza Hut from Sydney-based private equity firm Allegro Funds.

Based in Ohio, Flynn has a portfolio of more than 2,350 restaurants, including 926 Pizza Huts, 441 Applebee’s, 379 Arby’s, 282 Taco Bells, 192 Wendy’s and 130 Panera Bakery Cafes.

The group will acquire nearly 260 Pizza Hut stores across Australia, which collectively employ about 4,000 people. As of May 2023, the business has achieved 51 consecutive months of same-store sales growth, generating about $288 million in network sales.

The deal comes seven years after Allegro acquired the master franchisee licence for Pizza Hut in Australia from US-based parent company Yum! Brands as the fourth investment in Allegro Fund II.

Over the last five years, Pizza Hut Australia has been run by Phil Reed, who will continue to manage day-to-day operations post-acquisition.

“Flynn is the premier franchise group in the restaurant industry, with reputation for excellence and empowering their franchise owners,” Reed said.

“We are excited to bolster our growth trajectory supported by Flynn’s investment backing and unmatched franchisee expertise so that we can continue to deliver world-class Pizza Hut experiences for our customers Down Under.”

Founded in 1999, Flynn Restaurant Group started as the owner and operator of eight Applebee’s in Seattle.

Since then, the company has grown by 30 per cent each year and added five brands to its portfolio, starting with the acquisition of 138 Taco Bell stores in 2013, followed by Panera (2015), Arby’s (2018) and Pizza Hut and Wendy’s (2021).

Collectively, the stores employ almost 73,000 people across 44 states, generating around US$3.5 billion ($5.2 billion) in sales.

The deal represents Flynn’s first international expansion beyond its US network of franchisee operations.

Flynn Restaurant Group co-chief operating officer Ron Bellamy said Pizza Hut Australia represents the ideal opportunity for Flynn to expand internationally, while at the same time growing in a brand that the Group has so much faith in.

“Simply put, the more we’ve learned about this business, the more excited we’ve become about it,” Bellamy added.

“Our immediate focus will be to work with the team to determine how we can best leverage our broader scale and capabilities to support the continued success trajectory of Pizza Hut in Australia. Over time, Flynn looks forward to expanding its global reach further with new concepts and markets.”

Pizza Hut global CEO Aaron Powell has also welcomed the deal.  

“We are thrilled to see a highly valued, capable, and committed U.S. franchise partner, Flynn Restaurant Group, expanding their relationship with Pizza Hut through the acquisition of the master franchisee license in Australia,” Powell said.

“With the opportunity to build on an already strong foundation, I am confident that the Flynn team will bring fresh ideas and capital that extend momentum and forge deeper connections with customers in this important Pizza Hut market.

"The move is an exciting step forward for Pizza Hut in Australia.”

The acquisition is subject to approval from Yum! Brands, and is expected to complete by the end of June 2023.

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