Yorkshire-based Endless in talks to take control of Pizza Hut UK

The Leeds-based private equity firm is in exclusive talks with Yum! Brands over a franchise deal for 340 UK restaurants.

The New York-listed food giant put the under-performing fast food business up for sale earlier this year.

Yum! will retain the rights to the Pizza Hut brand and is not including the UK delivery service in the deal.

Endless is the last bidder after rivals dropped out of the process. They are thought to have included former Pizza Express owner Luke Johnson and buyout firm Rutland Partners.

Negotiations continue this week and it is by no means certain that the deal will proceed.

Accountancy firm PwC is managing the sale process.

It is believed to have looked at the possibility of a pre-pack administration to get rid of loss-making outlets in the restaurant portfolio.

The Sunday Times reported that the sale of the business to Endless depends on whether it can come to an agreement with Yum on royalty payments.

Yum’s decision to offload the Pizza Hut restaurants comes nearly six years after it took full control of Pizza Hut UK, when it bought the 50 per cent stake it did not already own from Whitbread for £112m.

Pizza Hut has suffered poor financial performance for years as the wider economic woes have taken their toll on the group, which employs about 16,000 people across the restaurants and delivery service.

But the group said it has begun to turn sales around, with growth of 3 per cent year-on-year over the last six months of 2011 after an overhaul focused on food, customer service and the dining experience.

Yum was created after a spin-off from PepsiCo in 1997.

It is now the world’s largest restaurant company. It also owns KFC and Taco Bell.

Pizza Hut was not immediately available for comment. Endless declined to comment.

The private equity firm has a strong track record in reinvigorating tired brands.

Successful turnarounds in the past include Crown Paints, 
book chain The Works, school uniform manufacturer Trutex and furniture maker Neville Johnson.

It has been a busy year for the turnaround firm, which bought high-street bathroom retailer Bathstore and movie special 
effects business Cinesite in May.

Garry Wilson and Darren Forshaw founded Endless in Leeds 
in 2005. Wetherby-based property investor David Newett provided backing for the first fund, which totalled £110m in equity and 
debt.

Endless won backing from the United States for the second fund of £164m. Endless closed its third fund at £220m a year ago.