Should Yum Brands divest Pizza Hut? At least one analyst thinks so.
Mark Kalinowski, an analyst with Nomura-Instinet, wrote in a research note that the company should "examine its corporate structure" and think about spinning off the pizza chain.
Citing Technomic, Kalinowski said Pizza Hut's share in the U.S. limited-service pizza category has declined from 25 percent in 1995 to just 14.5 percent in 2015.
"Perhaps it could be divested in such a way that Yum Brands would be able to retain a minority stake," Kalinowski wrote. "Similar to how Wendy's has retained, in recent years, a meaningful (18.5%) minority stake in privately-held Arby's. Pizza Hut likely would be better off under this type of arrangement, just as Arby's has done very well once it was not tied so closely to Wendy's."
Following the 2011 sale, Arby's saw same-store sales growth rise. In 2013, its same-store sales were up 2.8 percent, and in 2014, they rose 5.7 percent. By 2015, they jumped 8.1 percent and in 2016 same-store sales rose 3.8 percent.
For Yum, Pizza Hut has been a drag on its performance. In fourth-quarter, Yum delivered earnings that beat Wall Street expectations but were just shy on revenue, as fewer customers ate at its Pizza Hut chains.
Same-store sales were weaker than expected for the company in the quarter, rising 1 percent compared to an expected 1.7 percent, according to FactSet.
Taco Bell and KFC each saw same-store sales growth of 3 percent. But Pizza Hut, suffered, with same-store sales down 2 percent.
"We have a lot of work to do," Greg Creed, CEO of Yum Brands, said on CNBC's "Squawk on the Street" Thursday, regarding Pizza Hut. "We have to work on assets and technology. We've got to work on all the things that will make this a more relevant brand. And we're doing that with the franchisees right now. We've got to get ourselves a long-term strategy. I believe...there's growth in the category. Our competitors are demonstrating that and we need to work harder to get our fair share."
In previous quarters, Pizza Hut has lagged behind as well. Analysts have blamed menu fatigue in the past for these soft sales.