The proposed merger of Sapphire Foods India with Devyani International (DIL) has received approval from the Competition Commission of India, marking a key step towards the consolidation of two major quick-service restaurant (QSR) operators in India.
The merger will bring the operations of the two companies under one entity, creating a larger platform for brands including KFC, Pizza Hut, Costa Coffee, Vaango and Biryani By Kilo. The combined business is expected to operate more than 3,000 stores globally and generate an annualised turnover of approximately Rs 8,000 crore, according to the companies.
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The transaction is aimed at strengthening the combined entity's presence in India's competitive food services market, improving operational efficiencies and accelerating growth across its restaurant brands.
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Share-Swap Structure And Promoter Stake Transaction
Sapphire Foods and Devyani International had announced the merger on January 1, 2026, through a share-swap arrangement. Under the proposed scheme of arrangement, Devyani International will issue 177 equity shares for every 100 equity shares held in Sapphire Foods.
Separately, Arctic International, a group company of Devyani International, will acquire approximately 18.5% of Sapphire Foods' paid-up equity share capital from its existing promoters. The transaction also provides an option to assign the stake to a mutually agreed financial investor.
The companies had earlier indicated that the process of securing regulatory approvals would take approximately 12 to 15 months, after which the merger would become effective.
KFC, Pizza Hut Operations To Be Consolidated
A key focus of the merger will be to revive the Pizza Hut business in India while accelerating growth at KFC. The merged entity will take over marketing, innovation, technology and supply chain management functions for Pizza Hut.
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Devyani International is already one of the largest franchise operators of Yum Brands' KFC and Pizza Hut chains in India. It is also the sole franchisee for Costa Coffee, Tea Live, New York Fries and Sanook Kitchen in the country, besides operating its own South Indian vegetarian QSR brand, Vaango.
The consolidation is expected to create a larger operating platform, allowing the combined company to leverage its scale across procurement, supply chains, technology and marketing.
Addressing analysts during a conference call on the merger, DIL Non-Executive Chairman Ravi Jaipuria said India's food and beverage market was large, expanding rapidly and becoming increasingly formalised. He cited independent estimates that put the broader Indian food services market at more than $100 billion, with the QSR segment alone estimated at over $25 billion.
Jaipuria said the merged entity would have more than 3,000 stores globally and an annualised turnover of around Rs 8,000 crore.
Combined Revenue Base Of Nearly Rs 8,000 Crore
The merger will combine two sizeable restaurant businesses. Devyani International reported consolidated revenue of Rs 4,951.1 crore in fiscal 2025, while Sapphire Foods recorded revenue from operations of Rs 2,881.87 crore during the same financial year, according to their respective annual reports. The combined platform will operate across India and international markets, with Devyani International having a presence in more than 280 cities across India, Nigeria, Nepal and Thailand as of September 30, 2025.
The consolidation is expected to give the group greater scale across its restaurant portfolio, while allowing it to focus on brand-specific priorities. For Pizza Hut, the emphasis will be on improving performance through greater control over marketing, innovation, technology and supply chain functions. For KFC, the focus will be on accelerating business growth.
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