RBD Restaurant Brands New Zealand Limited

Restaurant Brands New Zealand Ltd. (RBD.NZ) said Wednesday it has renewed its franchise agreement for Pizza Hut stores.

Under the new agreement, Yum! Restaurants International will re-grant the franchise agreement for an initial 10-year period with a further 10-year right of renewal, Restaurant Brands said in a release. The agreement also provides a framework for the progressive sell down of stores to individual owner operators.

According to Restaurant Brands, which operates the KFC, Pizza Hut and Starbucks chains in New Zealand, up to 10 stores could be sold in the first year.

"Substantial increases in the number of competitors have made certain stores better suited to hands-on management by owner operators rather than the corporate model under which Restaurant Brands currently operates its Pizza Hut stores," it said in a release.

Restaurant Brands will continue to run the marketing and operations for New Zealand even as it looks to progressively sell selected outlets.

Itwill represent Yum!'s interests with the new franchisees and will receive a management fee in return.

The agreement also allows Restaurant Brands to close a small number of loss-making delivery stores.

Pizza Hut has been the weakest area of its business for some time but has begun to show signs of improvement. In the 12-weeks ending May 25, sales at Pizza Hut moved into positive territory for the first time in nearly four years.

According to Restaurant Brands, the opportunity to renew the Pizza Hut franchise, together with the flexibility to sell stores to owner operators and close loss-making outlets, places it in a much "stronger position to grow the Pizza Hut brand in the New Zealand market."

-By Rebecca Howard, Dow Jones Newswires; 64-4-471-5990; rebecca.howard@dowjones.com

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