India’s leading operators of KFC and Pizza Hut, Sapphire Foods India and Devyani International, have announced a merger valued at $934 million, setting the stage for the creation of a 3,000-plus outlet quick-service restaurant network across India and select international markets.
The all-stock transaction is aimed at consolidating operations at a time when the food services sector is grappling with rising input costs, margin pressure and intensifying competition. Under the agreed terms, Devyani International will issue 177 shares for every 100 shares held in Sapphire Foods, effectively absorbing Sapphire into the combined entity.
Post-merger, the companies expect to unlock annual synergies in the range of Rs 210–225 crore from the second full year of operations. These gains are expected to come primarily from cost efficiencies, scale benefits and supply chain optimisation. Together, the merged entity will operate more than 3,000 outlets across India and overseas markets.
Both Sapphire Foods and Devyani International are franchise partners of Yum Brands, the US-based parent of KFC and Pizza Hut. Sapphire, which listed in India in 2021, operates close to 700 KFC and Pizza Hut stores across India, Sri Lanka and the Maldives. Devyani, founded in 1991, runs over 1,700 outlets, including KFC, Pizza Hut and Costa Coffee, across India, Nepal and Nigeria.
The deal comes amid a challenging operating environment for the sector. Higher ingredient prices, rentals and labour costs, along with slower same-store sales growth and cautious consumer spending, have weighed on profitability. Both companies reported net losses for the quarter ended September 2025, with Sapphire’s loss widening to Rs 12.77 crore and Devyani posting a Rs 21.9 crore loss after a marginal profit a year earlier.
Despite near-term pressures, the long-term outlook for India’s fast-food market remains strong, with the sector projected to grow at a compound annual rate of around 11% through 2030, driven by urbanisation and a young consumer base. The merger is subject to regulatory approvals and shareholder consent and is expected to be completed by mid-2026.