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US-based parent of major fast-food brands Yum! Brands Inc is engaged in merger talks between its two largest Indian franchise partners, Devyani International Ltd (DIL) and Sapphire Foods India Ltd, according to a report by The Economic Times.
The company that owns KFC, Pizza Hut, and Taco Bell is looking to streamline operations in India and counter sluggish growth in the country’s fast-food sector through the reported merger.
Devyani to absorb Sapphire’s franchise rights
Under the proposed terms, Sapphire shareholders would receive one Devyani share for every three they own. If finalised, Devyani would acquire Sapphire’s KFC and Pizza Hut franchise rights, consolidating Yum’s India operations under a single entity.
DIL, part of billionaire Ravi Jaipuria’s RJ Corp, currently operates over 2,030 outlets across India, Nepal, Nigeria, and Thailand, and is the larger of the two by scale and valuation. It has a market capitalisation of ₹19,935 crore ($2.48 billion), compared to Sapphire’s ₹10,313 crore ($1.28 billion).
Sapphire, which runs 963 restaurants across India and Sri Lanka, manages KFC, Pizza Hut, and Taco Bell locations.
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Fast-food sales slowdown triggers merger talks
Both companies are facing weak same-store sales. In the March quarter, Sapphire’s KFC sales fell 6 per cent, with Pizza Hut reporting daily sales dropped by 13 per cent. Meanwhile, DIL reported a 6.1 per cent drop in KFC same-store sales while Pizza Hut grew marginally by 1 per cent during the same period. Operational overlaps and disputes, including conflicting advertising strategies in key states, were cited as reasons affecting performance.
The merger aims to improve this by streamlining marketing, reducing duplication, and thereby improving overall efficiency.
The deal will require regulatory and shareholder approvals to be completed. Yum! Brands, which operates 61,000 restaurants globally, is reportedly supporting the merger as part of a broader effort to strengthen its India operations. At the end of 2024, the company reported over $65 billion in system sales 2024 across 155 markets.
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