CCI Clears Sapphire Foods-Devyani International Merger as KFC and Pizza Hut Operations Move Towards Consolidation

The Competition Commission of India (CCI) has approved the proposed merger of Sapphire Foods India Limited with Devyani International Limited, bringing two major operators of KFC and Pizza Hut restaurants in India under a single corporate entity. The approval also covers certain related transactions, with the detailed order expected to follow.

The combination, registered under case number C-2026/09/1467, involves the merger of Sapphire Foods into Devyani International. Devyani operates KFC and Pizza Hut outlets in India and holds franchise rights for Costa Coffee, New York Fries and Sanook Kitchen, alongside its own brands. Sapphire Foods also operates KFC and Pizza Hut restaurants in India.

The regulatory approval follows Sapphire Foods' Q2 FY27 results, which showed higher revenue, improved operating margins and growth across its restaurant network. For the quarter ended September 30, 2026, the company reported restaurant sales of Rs 885.3 crore, up 20 percent year-on-year from Rs 740.1 crore.

Consolidated adjusted EBITDA increased 39 percent to Rs 62.4 crore from Rs 45 crore in Q2 FY26, while the adjusted EBITDA margin expanded 100 basis points to 7.1 percent. Consolidated EBITDA rose 21 percent to Rs 128.6 crore, with its margin improving to 14.5 percent from 14.3 percent. Adjusted profit before tax, excluding exceptional items, stood at Rs 12 crore, compared with a loss of Rs 4.3 crore in the year-ago quarter.

Sapphire Foods added 15 KFC restaurants during the quarter, along with one Pizza Hut outlet in Sri Lanka. Its total network reached 1,086 restaurants as of September 30, 2026, with net additions of 12 outlets during Q2 FY27, against 23 in the corresponding period last year.

KFC was the key growth contributor, recording 26 percent revenue growth and same-store sales growth of 14 percent. Its restaurant EBITDA margin improved 70 basis points year-on-year to 14.5 percent, despite higher raw material, energy and marketing costs. The company attributed the performance partly to value-led offers, including the Rs 99 Chicken Krisper Burger Meal, the Rs 149 Thalaiva Meal in Tamil Nadu and buy-one-get-one offers on chicken buckets.

Pizza Hut recorded 7 percent revenue growth and 5 percent same-store sales growth, its highest in seven quarters. The business also reported double-digit growth in same-store transactions, supported by dine-in and takeaway. However, its restaurant EBITDA margin remained negative at 2.8 percent, with higher energy costs affecting profitability.

In Sri Lanka, Sapphire Foods reported 9 percent revenue growth in local currency and same-store sales growth of 5 percent. Its restaurant EBITDA margin declined 290 basis points year-on-year to 12.5 percent, amid higher wage and energy costs linked to inflation.

Meanwhile, Devyani International has scheduled a board meeting for November 2, 2026, to consider its unaudited standalone and consolidated financial results for the quarter and half-year ended September 30, 2026.