Sapphire Foods India

Private equity firm L Catterton is in discussions to acquire a stake in Nandhana Palace, which is expanding its restaurant chain across India amidst increasing investor interest in the food services sector.

The development comes at a time when India’s restaurant and QSR chains are seeing renewed investor activity, with several transactions having concluded in this space in recent months.

Sapphire Foods is pivoting to a permanent value-pricing model for KFC to stimulate transaction growth amid a sluggish consumer environment. The strategy precedes a merger with Devyani International, aimed at consolidating India’s QSR market and capturing operational synergy.

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A Bloomberg report pegs the deal size at $933 million. The transaction consolidates KFC and Pizza Hut operations in India under a single operator, backed by Yum! Brands. Prior to this, Devyani and Sapphire ran separate but parallel operations for the KFC and Pizza Hut chains across the country.

Devyani International share price gained as much as 8% on Friday, January 2, meanwhile, Sapphire Foods share price fell over 3%, following the long-awaited announcement of the merger of Yum Brands’ India franchisees.

The deal comes as India's fast-food franchisees grapple with higher costs, slowing same-store sales and margin pressure, while facing stiff competition from McDonald's and Domino's Pizza operators in a market where consumers are cutting back on non-essential spending.

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