Devyani International Limited (DIL), one of India's largest quick-service restaurant (QSR) operators, has announced ambitious expansion plans for its KFC franchise alongside its Q1 financial results. The company aims to open approximately 100-110 new KFC stores, signaling a strong commitment to growth in the fast-food sector.

Expansion Plans

Devyani International, the largest franchisee of Yum Brands in India, is set to significantly expand its KFC footprint across the country. The planned addition of 100-110 new KFC outlets underscores the company's confidence in the brand's potential and the growing appetite for quick-service restaurants in India.

Financial Performance

For the quarter ended June 30, Devyani International reported consolidated revenues of ₹1,357.00 crore, marking an 11.1% year-on-year growth. This performance was driven by several factors:

Profitability and Margins

Despite the revenue growth, the company faced some challenges in maintaining profit margins:

• Reported EBITDA stood at ₹205.00 crore, with EBITDA margins at 15.1%.
• The company noted a slight dip in margins, attributing it to deleverage from lower Average Daily Sales (ADS) year-on-year and increased investments in marketing and promotional activities during the quarter.

Strategic Acquisitions

Devyani International has also made strategic moves to diversify its portfolio:

• The company completed the acquisition of Sky Gate Hospitality, which operates the "Biryani by Kilo" and "Goila Butter Chicken" brands.
• DIL increased its stake in Sky Gate to 86.13%, providing access to leading brands in the biryani and Indian cuisine segment.
• Sky Gate Hospitality currently has 105 outlets, which are expected to contribute significantly to Devyani's expansion plans.

Management Commentary

Ravi Jaipuria, Non-Executive Chairman of Devyani International, commented on the results and outlook: "India's QSR industry is on a structural growth trajectory – underpinned by rising urbanization, growing income levels, increasing digital adoption, increase in female work participation rate and a growing appetite for convenience especially among younger consumers."

He added, "While near-term macro factors have led to a phase of soft consumer demand, we see a better outlook for the industry in coming times. Our multi-cuisine, multi-format strategy caters to a broad spectrum of consumer tastes, occasions, and price points, while diversifying away from any category or geography specific risks."

Future Outlook

Devyani International remains optimistic about its growth prospects:

• The company plans to focus on scaling profitably and strengthening both core and emerging brands.
• Management expressed confidence in the company's ability to deliver consistent growth, leveraging its brand strength and execution capabilities.
• The expansion of KFC stores is expected to capitalize on the rebound in consumer spending and evolving consumer trends.

As Devyani International continues its expansion drive, particularly with KFC, the company aims to solidify its position in the competitive QSR market while creating long-term value for all stakeholders. The planned store openings and strategic acquisitions reflect a robust growth strategy in response to the dynamic Indian food service industry.

Devyani International Limited (DIL), one of India's largest multi-dimensional Quick Service Restaurant (QSR) operators, has reported significant expansion and acquisition activities. The company has expanded its footprint to 2,145 stores and completed the acquisition of Sky Gate Hospitality, marking a strategic move into the biryani and Indian cuisine segment.

Store Expansion and Acquisition

DIL added 106 new stores, bringing its total store count to 2,145. This expansion includes the integration of 105 stores from Sky Gate Hospitality, which DIL acquired. The acquisition of Sky Gate Hospitality, which operates the "Biryani by Kilo" and "Goila Butter Chicken" brands, gives DIL access to market-leading brands in the biryani and Indian cuisine segment, one of the largest food categories in the country.

Financial Performance

DIL reported consolidated revenues of ₹1,357.00 crore, representing an 11.1% year-over-year growth. This growth was driven by strong performance from KFC, Costa Coffee, and the Food Court business in India, supported by an 11.2% year-over-year growth in the international business.

The company's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) stood at ₹205.00 crore, with EBITDA margins at 15.1%. The slight dip in margins was attributed to deleverage from lower Average Daily Sales (ADS) year-over-year and investments in marketing and promotions.

Brand-wise Performance

Sky Gate Acquisition Details

DIL has increased its stake in Sky Gate Hospitality to approximately 86.13% through additional investments. The company invested about ₹103.00 crore in Sky Gate, executing the acquisition through a preferential issue of equity shares. As of June 30, DIL's equity stake in Sky Gate stood at approximately 84.34% on a fully diluted basis.

Management Commentary

Ravi Jaipuria, Non-Executive Chairman of Devyani International Limited, commented on the company's performance: "India's QSR industry is on a structural growth trajectory – underpinned by rising urbanization, growing income levels, increasing digital adoption, increase in female work participation rate and a growing appetite for convenience especially among younger consumers."

He added, "As one of the leading QSR players, we are well positioned to benefit from the rebound in consumer spending. Our multi-cuisine, multi-format strategy caters to a broad spectrum of consumer tastes, occasions, and price points, while diversifying away from any category or geography specific risks."

Future Outlook

Despite near-term macro factors leading to soft consumer demand, DIL remains optimistic about the industry's outlook. The company plans to continue executing its long-term growth agenda, focusing on scaling profitably, strengthening both core and emerging brands, and creating long-term value for all stakeholders.

Devyani International Limited operates more than 2,000 stores across over 280 cities in India, Nigeria, Nepal, and Thailand. As the largest franchisee of Yum Brands in India, DIL manages popular brands such as KFC, Pizza Hut, Costa Coffee, and now adds "Biryani by Kilo" and "Goila Butter Chicken" to its portfolio through the Sky Gate acquisition.