Devyani International eyes next growth chapter with Sapphire merger, AI push and store expansion

New Delhi: When the going gets tough, the fast food business is betting on staying fast. That appears to be the recipe at Devyani International Limited (DIL), which has emerged from a challenging year with stronger financials, a bigger restaurant network, fresh leadership, deeper technology investments and a transformational merger that could reshape India’s organised quick service restaurant (QSR) market.

Ahead of its 35th Annual General Meeting on 14 August 2026, the company outlined a strategy centred on disciplined expansion rather than growth at any cost. While the broader QSR industry grappled with softer consumer spending for much of FY2025-26, Devyani focused on improving operational efficiency, strengthening unit economics, investing in digital capabilities and laying the groundwork for its next phase of growth.

In his message to shareholders in the company’s FY2025-26 Annual Report, Devyani International Limited chairman Ravi Jaipuria said the year demanded resilience, disciplined execution and thoughtful decision-making as the company navigated a subdued demand environment while preparing for long-term expansion.

“The Indian economy continued to demonstrate resilience despite persistent global uncertainties. Within the food services sector, however, consumer demand remained relatively subdued through much of the first three quarters as discretionary spending moderated,” Jaipuria said.

Instead of chasing aggressive expansion, the company concentrated on protecting store-level profitability, improving operational efficiency and making selective investments in technology, digital platforms and customer engagement.

Those efforts began showing results in the final quarter of the financial year. According to the company, improving consumer confidence, government measures to stimulate demand and value-focused initiatives at KFC contributed to higher average daily sales and gradual stabilisation in same-store sales performance.

“FY2025-26 has been a year of resilience, execution, and strategic progress. We look forward to accelerated growth in the coming years and remain committed to building a stronger, more agile organisation capable of delivering sustainable value,” Jaipuria said.

For the year ended 31 March 2026, Devyani reported revenue from operations of Rs 56,115 million. The company posted a gross profit of Rs 38,396 million and EBITDA of Rs 8,554 million, resulting in an EBITDA margin of 15.2 per cent.

Despite macroeconomic uncertainty and subdued discretionary spending across much of the year, the company said disciplined capital allocation and operational execution helped preserve profitability while continuing to invest for future growth.

One of the year’s biggest milestones was the continued expansion of Devyani’s restaurant footprint. The company’s global network grew from 2,039 outlets to 2,256 stores across India and international markets.

Its domestic network expanded from 1,664 restaurants to 1,857 outlets.

Among its flagship brands, KFC remained the biggest growth driver, increasing its footprint from 696 to 783 stores across India. Pizza Hut also continued its expansion, growing from 630 to 639 outlets.

Licensed international brands including Costa Coffee, New York Fries and Sanook Kitchen together operated 198 stores in India by the end of the financial year.

The company’s House of Brands strategy also gathered pace. Homegrown brands including Vaango, Biryani By Kilo, Goila Butter Chicken and The Food Street expanded rapidly from 96 standalone outlets to 217 stores. The portfolio also included 20 dedicated airport and food court locations.

Jaipuria said these emerging brands provide multiple growth engines while allowing the company to participate across a wider range of consumer occasions beyond traditional QSR formats.

Outside India, Devyani continued strengthening its international presence, increasing its overseas footprint from 375 to 399 restaurants across Thailand, Nepal and Nigeria.

Thailand remained the company’s largest overseas market with 321 KFC restaurants, while Nepal operated 38 KFC and Pizza Hut outlets and Nigeria had 40 KFC restaurants. During the year, Devyani added 24 new stores across Thailand and Nepal.

The company’s workforce now exceeds 22,500 employees across four countries, supporting one of the largest restaurant operations in the region.

The defining announcement of FY2025-26 was Devyani’s proposed merger with Sapphire Foods India Limited.

Jaipuria described the transaction as a transformational milestone rather than merely a scale-driven acquisition. He said the combination brings together two complementary organisations with similar operating philosophies and shared ambitions to build one of the world’s leading QSR platforms.

Once completed, the combined company is expected to operate more than 3,000 restaurants with annual revenues approaching $1 billion, creating one of the largest restaurant companies in the region and one of Yum! Brands’ biggest franchise partners globally.

Beyond scale, the merger is expected to strengthen procurement, improve supply chain efficiencies, optimise capital allocation, accelerate technology investments, deepen leadership capabilities and unlock significant operational synergies.

The company said the merger remains on track for completion during the current financial year, subject to regulatory approvals.

Alongside the proposed merger, Devyani also strengthened its portfolio through the integration of Sky Gate Hospitality, the parent company of Biryani By Kilo and Goila Butter Chicken.

According to the annual report, the business achieved brand contribution break-even ahead of the company’s original expectations after being integrated into Devyani’s operating ecosystem.

The turnaround reflects the company’s ability to improve operational efficiency while leveraging its existing supply chain, procurement network and execution capabilities.

Technology continued to move to the centre of Devyani’s growth strategy.

The company said it is increasingly deploying digital platforms, artificial intelligence, automation and advanced analytics to improve customer engagement, streamline restaurant operations, optimise staffing and strengthen supply chain planning.

Through its DIL Commerce platform, Devyani is building a unified omnichannel ecosystem that provides a comprehensive view of customer ordering behaviour across delivery, takeaway and dine-in channels.

More than 80 per cent of dine-in KFC restaurants in India are now equipped with self-ordering kiosks. The data collected through these systems is being used to personalise marketing campaigns, improve inventory management, forecast demand more accurately and enhance workforce planning.

Jaipuria said technology and automation will play an increasingly central role in building a more agile and future-ready organisation.

FY2025-26 also marked an important leadership transition.

Effective 1 April 2026, Manish Dawar assumed the role of chief executive officer after serving as the company’s chief financial officer. Former chief executive officer Virag Joshi joined the Board of Directors, while Anupam Kumar was appointed chief financial officer.

The company also relocated its registered office from the National Capital Territory of Delhi to Gurugram, Haryana, and adopted a new Corporate Identification Number as part of its governance restructuring.

Alongside commercial expansion, Devyani reiterated its commitment to responsible growth.

The company spent Rs 17.71 million on corporate social responsibility initiatives during FY2025-26, fulfilling its statutory CSR obligations.

Jaipuria said long-term value creation is only possible when business growth is accompanied by responsible corporate citizenship through investments in employees, sustainability initiatives, community development and organisational culture.

Looking ahead, Devyani remains optimistic about the long-term prospects of India’s organised food services industry.

The company believes rising urbanisation, increasing disposable incomes, favourable demographics, expanding digital adoption and the continued shift towards organised dining will drive sustained growth in the QSR segment over the coming years.

As demand gradually recovers, Jaipuria said companies with strong brands, disciplined execution, operational excellence and scale will be best placed to create long-term shareholder value.

With more than 2,250 restaurants, an expanding portfolio of global and homegrown brands, growing international operations, increasing investments in artificial intelligence and digital platforms, a strengthened leadership team and the proposed Sapphire Foods merger set to significantly enhance its scale, Devyani International believes it is entering its next phase from a position of strength. For the company, FY2025-26 was less about chasing rapid expansion and more about perfecting the recipe for sustainable, long-term growth.