Rutland Partners, the private equity backers of Pizza Hut Restaurants, has appointed advisors to oversee the sale of the c280-strong group, M&C has learnt.

The London-based turnaround specialist and restructuring investor, which acquired Pizza Hut UK’s then c340-strong restaurant business from US owner Yum! Brands for an undisclosed sum back in November 2012, is understood to have appointed PwC to advise on its options for the business.

M&C understands that the Jens Hofma-led group’s current run rate EBITDA stands at just over £20m, up from c£17m the previous year, which at current sector multiples would value the group at c£150m. It is currently in its fourth year of consecutive growth.

The process is at an early stage and it is thought that the group and its advisor will approach a list of targeted investment groups before commencing a wider process. It is thought that the current management would look to stay with the business to build on the foundations that they have put in place over the last three years.

Rutland was understood to have paid Yum! a token £1 to acquire the 330 restaurants together with a 20-year franchise deal to continue using the Pizza Hut brand.

Under Hofma, the business has shorn itself of over 50 loss making units, refurbished over half of its c280 estate and returned to growth. Last July, it announced profits of £3.34m for the year to 30 November 2014 - up from £1.69m in 2013.

Following the sale to Rutland, Pizza Hut began a £60m programme to re-establish the company’s position as a leading casual dining chain with customers who had become disconnected with the brand.

Last September, the company announced it had rebranded half of its UK restaurants and planned to complete another 23 in the next eight months.

The new look sites were intended to reinvigorate the brand which had lost momentum in the casual dining sector in recent years. As well as a redesign, Pizza Hut has undertaken a menu overhaul and introduced cocktails as well as a wider range of alcoholic drinks to broaden its appeal to couples and groups of adults in the evenings.

The new look Huts, the first of which was unveiled in Crawley in 2013, feature Americana theming with new seating and lighting effects while keeping aspects integral to the brand such as the salad and buffet bars.

Comment by M&C Allegra editor Mark Wingett

As a regular traveller up and down the A303 to my home city of Plymouth over the last five years or more, the Pizza Hut at the Solstice Services has been my own weather gage of how the brand has been performing. Rewind a few years, and the site was indicative of the entire business at the time, struggling to compete against new, more invested in competition, in this instance a new Harvester, Costa drive-thru and McDonald’s drive-thru. Indeed after one unspiring visit, the Wingett family decamped to and alternated between said Harvester and Costa for following visits.

That was until last month when we decided to give the refurbished Hut another try. The contrast to the previous visit was stark - the redesign and new menu backed up by good service underlined why the restaurant was fit to burst with the very demographic the group’s management team had said it would target on the back of its reinvestment programme.

Speaking last year, at the launch of the group’s re-opened London flagship restaurant on The Strand, Henry Birts, deputy managing director, said the company wanted to strengthen its position with young families and regain the millennial generation who have “had their heads” turned by strong competition throughout the 2000s.

The results of the refurbishment programme have been reflected in year on year sales growth - which was up 5% based on 82 sites that had been refurbished by the end of the group’s financial year last April. At the same, chief finance officer Adrian Walker said he expected the sales growth to gain momentum as more refurbishments were completed over the next two years.

At individual sites the sales growth has ranged from between 15% and 40% dependent upon the location and extend of rebranding with investment ranging from £50k to £600k for sites that required a total overhaul.

To achieve this uplift the brand redesigned its restaurants with a “modern retro feel” that retained the core brand red but with a more booth seating and a greater selection of smaller and larger tables for greater space utilisation and to speed up table turnaround during peak times. Greater attention has been paid to creating a welcoming atmosphere including music and lighting, which changes throughout the day to allowing restaurants to feel welcoming in the evening as well as at lunch time.

Incremental spend on food has been increased with sharing dishes and sides being added to meals; fries, have featured on the menu for the first time, and are now ordered by 20% of diners. There are also lighter pizza options with thinner bases and meals under 500 calories.

A key change to the new design has also been the attempt to attract more young adults by enhancing the alcoholic drink selection to include cocktails, craft beers and wine. A cocktail bar has been added to a number of sites, which the brand views as the first step in playing a more relevant role in the evening day part. Cocktail sales are exceeding expectations but the group believes there is potential for more growth in the longer term.

The next challenge, aside from refurbishing the rest of its estate, will be returning to the expansion trail and Birts has said that the group is looking at “some interesting acquisition opportunities”. He said the group would consider returning to towns and cities it has exited if a more suitable location became available or a new development that would suit the Pizza Hut model. Going forward the company wants to continue to develop a mix of sites but admits the restaurants which suffered the most were high street locations, whilst the brand remained relatively strong in big shopping centres and on leisure or retail parks.

All of the company’s management team has stressed at different points over the last year that there is still a way to go to complete the full turnaround of the brand, but the results of their plans so far have made them positive about the long-term furture of the business and the fact that the consumers that who may have been disconnected previously have begun to return.

In December, it reported like-for-like sales up 6.2% for the period from 1 December 2014 to 29 November 2015. The group said it marked nine quarters of consecutive growth and saw it outstrip the market in like-for like-sales growth in 45 out of 52 weeks.

Hofma said at the time, that he believed the next 12 months, this year, would be “hugely important”. He said: “I believe there has never been a more exciting time in the business. We are already in a good place but we have a huge remaining growth opportunity – particularly as we continue to unlock the potential of our people, new technologies, new audiences such as millennials and further innovations in the menu.” A new investor couldn’t fail to be impressed by what continues to be a compelling turnaround story.