Sapphire Foods India on Thursday announced plans to merge with Devyani International, a move that will consolidate the Indian franchisee operations of Yum! Brands-owned quick-service chains KFC and Pizza Hut under a single, scaled platform.
The proposed merger comes at a challenging time for India’s fast-food industry, which has been grappling with slowing same-store sales and margin pressure as consumers rein in discretionary spending amid rising living costs.
Key merger details
Under the merger scheme outlined by the two companies, Devyani International Limited (DIL) will issue 177 shares for every 100 shares held in Sapphire Foods India Limited (SFIL). The companies said full integration and the realisation of identified synergies are expected to be completed within 15–18 months from the effective date.
Ahead of the merger, Arctic International, a group company, will acquire about 18.5% stake in Sapphire Foods from existing promoters, with an option to later assign this holding to a mutually agreed financial investor.
Strategic priorities post-merger
The combined entity will focus on three key areas:
- Accelerating the expansion of KFC across India
- Revitalising Pizza Hut to drive sustainable long-term growth
- Scaling up Devyani’s emerging and homegrown brands portfolio
The transaction has received approval from Yum! Brands, which also agreed to certain long-term commercial concessions, including extensions of specific waivers for KFC and Pizza Hut to support store expansion and operational sustainability.
As part of the arrangement, Devyani International will acquire 19 KFC outlets in Hyderabad currently operated by Yum! India and will pay a one-time charge towards merger approval and additional licensing for the expanded territory.
Rationale behind consolidation
The merger is expected to create a larger, more efficient QSR platform, enabling cost efficiencies, stronger supply-chain integration, unified technology systems, and improved access to capital. It also positions the combined entity for faster domestic and international expansion, while strengthening alignment with Yum! Brands’ long-term growth strategy in India and overseas markets.
Following the merger, Devyani International will hold pan-India franchise rights for KFC and Pizza Hut, along with an expanded international presence, including Sri Lanka, complementing its existing overseas operations.
Company profiles
Devyani International is among India’s largest QSR operators, with a network of over 2,000 outlets across more than 280 cities in India, Thailand, Nigeria and Nepal. It is Yum! Brands’ largest franchisee in India and Nepal and also operates brands such as Costa Coffee, Vaango, Biryani By Kilo and Goila Butter Chicken.
Sapphire Foods India, established in 2015, operates over 1,000 restaurants across India and Sri Lanka, with franchise rights for KFC, Pizza Hut and Taco Bell across multiple states and international markets.
The consolidation is expected to strengthen the combined entity’s competitive position at a time when the QSR sector is navigating slower demand growth and rising cost pressures, while laying the foundation for long-term scale-led growth.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Readers should consult their financial advisors before making any investment decisions.
