Devyani International - On A Strong Footing: HDFC Securities Initiates Coverage

The company has been riding on the strong business momentum in core brand business.

<div class="paragraphs"><p>KFC franchise operated by Devyani International Ltd. (Photo: Company website)</p></div>
KFC franchise operated by Devyani International Ltd. (Photo: Company website)

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HDFC Securities Retail Research

Devyani International Ltd. is the largest franchisee of Yum Brands in India.

The company has been riding on the strong business momentum in core brand business. KFC is on strong footing in terms of operating metrics and store economics, whereas Pizza Hut performance is seeing some green shoots from various turnaround measures. Leveraging on their core brands, increasing brand recognition of other business, innovative product offerings, improving digital and delivery capabilities and robust supply chain management system; Devyani International is poised to improve its positioning.

Yum Brand franchisees have reduced the store size of all new stores for both KFC and Pizza by 30-40% thereby reducing capex and related operational cost.

The shift to smaller stores has not hurt average daily sales per store for either brands. Lower capex with improving store-level economics aided in quicker payback for new stores.

Continuous food innovation and value proposition (Pizza Hut) would enhance its unit-level performance by driving order frequency and order ticket size, thereby improving same-store sales growth and profitability of existing stores.

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HDFC Securities Retail Researh Devyani International Ltd - Initiating Coverage.pdf


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