Major shake-up in Indian fast-food industry as KFC–Pizza Hut parent companies plan mega merger

New Delhi (The Uttam Hindu): A major transformation is set to take place in the Indian fast-food industry. Companies operating popular brands like KFC and Pizza Hut are coming together, triggering fresh excitement in the quick service restaurant (QSR) sector. Sapphire Foods India Limited has announced its merger with Devyani International Limited, a move that is expected to significantly alter market dynamics and intensify competition for brands such as McDonald’s and Domino’s.

According to company disclosures, Sapphire Foods, which operates KFC and Pizza Hut outlets, will merge into Devyani International, a leading QSR operator in India. Under the proposed deal, Devyani will issue 177 shares for every 100 shares held in Sapphire Foods. After the merger, the combined entity is expected to generate annual synergies of around ₹210 to ₹225 crore from the second full year onward.

The merger has become important at a time when India’s fast-food sector is facing pressure. Rising inflation and higher living costs have led consumers to reduce spending on dining out and online food orders. This has directly affected sales and profitability across restaurant chains. In the September quarter, both Sapphire and Devyani reported higher costs and losses, making scale expansion and cost efficiency crucial for future growth.

Once the merger is completed, Devyani International will emerge as one of the largest QSR operators in the country. It will hold full Indian franchise rights for KFC and Pizza Hut under a single corporate structure and strengthen its presence in international markets such as Sri Lanka. This consolidation is expected to increase competitive pressure on McDonald’s operator Westlife Foodworld and Domino’s operator Jubilant FoodWorks.

However, the merger will not take effect immediately. It will require approvals from stock exchanges, the Competition Commission of India (CCI), the National Company Law Tribunal (NCLT), as well as shareholders and creditors. The approval process may take around 12 to 15 months, after which the merger can be formally implemented.