EG Group has sold its 218 KFC franchise restaurants in the UK to KFC owner Yum Brands to continue to pay down debt.

The deal, announced today for undisclosed terms, will see the KFC franchise in the UK & Ireland sold to the brand’s US ownership group.

The sale is expected to complete in the first half of 2024, with EG Group saying the proceeds will be used to repay debt. EG Group sold the majority of its UK and Ireland forecourts business to sister company Asda earlier this year as part of its effort to reduce its debt.

Yum Brands’ KFC division said the acquisition represented a “significant opportunity to accelerate KFC’s growth strategy in the large and growing UK and Ireland chicken market”.

Its KFC UK management team currently operates a set of 50 company-owned restaurants across the UK and Ireland. It said it would focus on delivering an enhanced customer experience and driving higher unit volumes and market share growth across the expanded estate.

EG Group continues to operate franchise business with the Starbucks, Subway, Greggs, Sbarro, Chaiiwala and Cinnabon brands, as well as its wholly-owned bakery business, Cooplands.

Zuber Issa and Mohsin Issa, co-founders and co-CEOs of EG Group, said: “We are proud to have been a strategic partner of KFC in the UK and Ireland, playing an important role in helping the brand expand its footprint.

“Now is the right time to hand the baton to the KFC leadership team to continue to grow the brand in the UK and Ireland. This is the latest transaction in our significant deleveraging this year to put in place a sustainable capital structure for the group.

“We would like to thank all the colleagues who have helped deliver such exceptional brand standards and customer service over recent years, including during the Covid-19 period.

“We continue to make good progress against our key strategic priorities – delivering a world-class grocery and merchandise, foodservice and fuel proposition across nine markets globally.”

KFC UK & Ireland said it had a strong track record of consistent growth that had continued this year, with system sales up 7% and same-store sales up 5% across its 1,040 restaurants.

Since 2018, KFC has opened 200 new restaurants across the UK and Ireland, with the market “demonstrating renewed potential” since the start of 2023. KFC has previously announced plans to open a further 500 restaurants across the market by 2030.

Once completed, all of EG’s KFC UK and Ireland business – over half of which is made up of drive-thrus – and 7,800 team members will come under KFC UK & Ireland management.

Sabir Sami, KFC Division CEO, said: “The KFC business is a powerhouse for Yum globally and the UK and Ireland is one of our strongest markets. Over the past five years, we’ve secured our leadership position within the UK and Ireland chicken market, opening 200 new restaurants, and we’re now close to being a £2bn business in the UK, thanks to our extremely talented local management team.

“We’re pleased to add these restaurants to our equity portfolio, in a market where we are well placed to drive strong growth while also making further digital and strategic progress.”

Meg Farren, MD of KFC UK & Ireland, added: “EG has played an important role in helping KFC expand its footprint across the UK and Ireland, and the KFC brand has been a big part of EG’s own growth in recent decades. With the market for high-quality, great-tasting chicken growing all the time, we see a big opportunity to capitalise on our leadership position and to unlock new value for all our stakeholders in the UK and Ireland, especially our customers and the communities we’re so proud to serve.”

The transaction will be funded from Yum’s cash flows and is not expected to have a material impact on its 2024 financial results.