Grabbing Another Slice

Continued Pizza Hut restructuring spells opportunity for hungry entrepreneurs

Pizza Hut is making news again with another blockbuster sale of its franchise units to a minority group. This time around PacPizza L.L.C., a company formed by Provender Capital Group L.L.C., purchased 148 restaurants, the largest single Pizza Hut transaction to date. PacPizza now becomes the second largest franchisee in the Pizza Hut system. The restaurants, located in northern California, southern Oregon, and western Nevada, employ more than 4,000 people.

Although the sales price of this purchase was not disclosed, a report in the Los Angeles Times placed the deal at $30-$40 million. In January, Purchase, New York-based PepsiCo Inc., Pizza Hut’s parent company, sold 122 restaurants for $53.5 million.

Provender was co-founded by Pilar M. Esperon and Fred O. Terrell (see “Top 25 Blacks on Wall Street,” October 1996). Terrell was formerly a managing director with CS First Boston, where he was responsible for principal investments and merchant banking activities within consumer and specialty finance.

In 1996, after 13 years with the international banking firm, Terrell left to form New York-based Provender with Esperon, another former director at CS First Boston. While the pair have teamed up for over 200 securitization transactions raising more than $52 billion, this is their first deal since the formation of Provender. “We’re excited because this opportunity allows proven management to be paired with strategic capital,” says Terrell. “With PacPizza we’ve formed an organization prepared for the challenges of this marketplace.”

Pizza Hut is the largest pizza restaurant company in the world, dominating the $25 billion industry with more than 7,700 restaurants and delivery units in the United States and over 3,000 units in the world. But for much of the year the pizza maker has been busy selling off a great number of its outlets. The move is believed to stem from the decision of PepsiCo to spin off Pizza Hut and its other two franchised restaurant units, Kentucky Fried Chicken and Taco Bell, to create Tricon Global Restaurants Inc. In mid-July, Milwaukee-based V and J Foods Inc. (No. 58 on the BE INDUSTRIAL/SERVICE 100 list) acquired 61 franchises in Rochester and Syracuse, New York.

“Pizza Hut is going through a refranchising stage,” says Jay Allison, a Pizza Hut spokesperson. “And we’re looking for people with strong financial packages. This is a great opportunity.”

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