Devyani International and Sapphire Foods have announced a merger, creating one of India’s largest F&B platforms. The combined entity will have over 3,000 stores globally and an approximate turnover of INR 8,000 crore annually. The merger aims to capitalize on India’s growing F&B market and create a unified franchise partner for global brands. The leadership anticipates significant long-term benefits and sustained growth.
Merger Overview
Devyani International and Sapphire Foods have announced their merger, effective from January 1, 2026. This strategic move aims to create a leading food and beverage platform in India, leveraging the strengths of both entities.
Financial and Operational Highlights
The merged entity will boast:
- More than 3,000 stores worldwide.
- An annual turnover of approximately INR 8,000 crore.
- A diverse portfolio of brands, including KFC, Pizza Hut, and Costa Coffee.
Strategic Rationale
The merger seeks to capitalize on the expanding Indian food and beverage market, estimated at over $100 billion, with the QSR segment alone exceeding $25 billion. The combined entity aims to:
- Achieve scale and brand strength.
- Offer a unified franchise partnership for global brands.
- Enhance national penetration and bargaining power.
Synergies and Future Growth
The company anticipates synergies of approximately INR 2.1 billion to INR 2.25 billion. These synergies are expected to be realized within two years post-merger approval, with approximately 60% achieved in the first year. These are gross of the INR 320 crore one time payment to Yum. The leadership intends to focus on restructuring and driving same-store sales growth (SSSG) to improve profitability. The projected timeline for the merger approval process is between 9 to 15 months.
Pizza Hut Revitalization Strategy
A key focus will be the revival of Pizza Hut. Strategies include:
- Restructuring the brand.
- Driving top-line growth through SSSG initiatives.
- Enhancing marketing and innovation.
- Improving customer experience.
The company expects to achieve a positive brand contribution margin for Pizza Hut within the first year and aims for low double-digit margins as part of the revival strategy.
Leadership and Integration
The leadership teams from Devyani International and Sapphire Foods will collaborate to integrate operations and leverage their respective expertise. The company is in the process of identifying key leadership roles for the combined entity.
Source: BSE
