Devyani International, the largest franchisee for KFC and Pizza Hut in India, and the sole franchisee for Costa Coffee in the country, has had a dream run leading to its listing in August 2021, and the company is gearing up for more
You can’t be in the QSR (quick service restaurant) business if you don’t realise that the name—QSR—itself is a misnomer! Ravi Jaipuria says there is nothing quick about QSR. “It’s a patience game, and a long-term play,” reckons the non-executive chairman of Devyani International, the largest franchisee for KFC and Pizza Hut in India and the sole franchisee for Costa Coffee in the country.
In 1995, KFC’s first outlet in India had a controversial debut in Bengaluru. The store was ransacked multiple times, the brand was forced to exit the market, and it came back after four years in 1999. “It jolted us. Eventually, it got settled but the episode was shocking. You might call it growth pangs,” says Jaipuria, who realised that it takes time for a foreign brand to get rooted in the country. “QSR takes time; takes years, and needs lots of patience,” he reiterates.
The veteran industrialist dishes out an example to explain why one must not associate quick gains from the QSR industry. In 2016, RJ Corp-owned Varun Beverages, the second-largest franchisee of PepsiCo outside the US, listed at a 3 percent discount over an issue price of ₹445. Over seven years later, the stock was trading at ₹1,444.75 (on March 18).
Now, contrast it with Devyani International, which was listed at ₹141 against the offer price of ₹90 in August 2021. The stock was trading at ₹157 on March 18. “Look at how the market price of Varun Beverages has panned out. It’s not the case with QSR,” he says.
Jaipuria, though, is delighted with the warm reception by the public market to the second listing after Varun Beverages. “The initial public offering (IPO) was as good as it could be,” he beams, adding that the issue was subscribed 117 times.
From ₹1,310.6 crore in operating revenue in FY19, Devyani International leapfrogged to ₹2,997.7 crore in FY23. The bottom line too has scripted a similar tale: From a loss of ₹59.3 crore to a PAT (profit after tax) of ₹262.5 crore during the same period. The growth momentum continues in the nine months of FY24. Burgers, chicken, pizza, coffee—KFC, Pizza Hut and Costa—as well as idli, dosa and food courts—Vaango and The Food Street—and the international business have been clocking a furious pace of growth over the last few years.
The biggest growth driver, however, has been an aggressive store expansion strategy weaved by Jaipuria. Despite the first wave of the pandemic, the net new units (NNUs) almost doubled from 44 in FY20 to 82 in FY21. The numbers were 246 in FY22, 305 in FY23, and 209 in YTD (year-to-date) FY24. From 1,177 stores (KFC, Pizza Hut, Costa, Vaango, others) in 2022, the number of stores increased to 1,452 in 2023. During the same period, the India count increased from 1,120 to 1,387.
