The author is a Reuters Breakingviews columnist. The opinions expressed are her own. Refiles to add graphic.

By Katrina Hamlin

HONG KONG, June 18 (Reuters Breakingviews) - Yum Brands YUM.N is making a dish of deglobalisation. The U.S. fast-food operator on Wednesday said it’s slicing up its Pizza Hut empire. Separately listed offshoot Yum China 9987.HK is taking the pie-making business in the People’s Republic for $1.2 billion, while buyout shop LongRange Capital is scarfing down the rest for $1.5 billion.

The deals add the newest ingredients to a long recipe. It has been 10 years since Yum China spun off from Yum Brands, which was itself carved out of PepsiCo PEP.O in 1997. The company known for its eponymous soda paid about $300 million for Pizza Hut in 1977 - roughly $1.7 billion in today’s dollars. So the $2.7 billion valuation five decades later might not seem like a lot of dough.

But Yum China, at least, is forking over a full price. It already operates the mainland restaurants so is essentially just buying the brand, paying 19.5 times the share of last year’s earnings it delivered as a licensing fee to Yum Brands. That’s richer than the roughly 15 times trailing earnings other domestic eateries such as Mixue 2097.HK and Guming 1364.HK trade on, per its filings; it is, though, lower than the 30 times multiple commanded by global giant McDonald's MCD.N.

Like the Golden Arches, Pizza Hut is a global household name. Yet familiarity brings risks. Yum China and LongRange will each own a version of the Pizza Hut brand, but consumers may not see the distinction. If one suffers a setback, say a food hygiene crisis or a boycott, the other’s reputation could also take a hit even though the underlying businesses are completely separate.

Still, the deal bakes in a growing shift to appealing to local appetites. Having every burger, coffee or pizza look and taste the same doesn’t go down well in every country. That can lead to underperformance, as Starbucks SBUX.O and General Mills’ GIS.N Häagen-Dazs discovered in China – both recently sold control of their operations in the country. Geopolitical tensions between Beijing and Washington don’t help, either.

Yum China, though, is already a separate company and has ensured the outposts of KFC and Taco Bell – both still ultimately owned by Yum Brands - as well as Pizza Hut cater to local tastebuds and budgets. Menus at the latter include rice dishes and pizzas topped with deep fried bullfrog.

As Chinese consumers tightened their purse strings, Yum China also repositioned Pizza Hut as an affordable meal rather than a treat for special occasions; the chain’s operating profit grew 20% to $183 million last year, with revenue up nearly 3%.

For multinational companies mulling how to deal with globalisation, Pizza Hut offers ample food for thought.

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CONTEXT NEWS

Yum Brands plans to sell its Pizza Hut business for $2.7 billion, the company said on June 16.

Yum China will buy the Pizza Hut chains in mainland China for $1.2 billion, while the rest of the business will go to private equity firm LongRange Capital for $1.5 billion.

Yum Brands' shares rose 1.9% to close at $157.67 on June 16, while Yum China's shares, which are also New York-listed, fell 1.4% to $43.65.