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After piloting the initiative across nearly 150 outlets in November and December and later extending it to around 200 stores earlier this year, Sapphire Foods has now implemented the strategy across most KFC restaurants in India.
Amid subdued consumer demand, Sapphire Foods India is repositioning KFC India around an everyday value-pricing model instead of relying on temporary discount-led campaigns.
The KFC and Pizza Hut franchise operator is rolling out affordable burger meals, budget-friendly combo offerings and recurring buy-one-get-one deals on chicken buckets. The company is positioning these offers as a long-term pricing framework rather than seasonal or short-duration promotions.
Sapphire Foods CEO Sanjay Purohit said during the March quarter earnings call that the company is building a “permanent value layer” into the KFC offering to attract more customers into stores.
Having initially piloted the initiative across nearly 150 outlets during November and December and later scaling it to around 200 stores earlier this year, Sapphire Foods has now rolled out the strategy across most KFC restaurants in India. Tamil Nadu has been excluded from the expansion, as the market continues to witness relatively stronger demand and follows a different pricing strategy.
The company said its immediate priority is to improve customer footfalls and transaction volumes instead of safeguarding near-term margins. Management indicated that boosting same-store sales growth currently outweighs concerns around temporary pressure on gross margins.
A majority of the value-focused offers are being driven through dine in and takeaway channels, which account for nearly 57 percent of sales. Supplier support is also helping cushion some of the profitability impact.
In contrast, Pizza Hut continues to face softer demand, with revenue growth and same-store sales remaining under pressure amid ongoing challenges in the casual dining segment.
The pricing realignment comes as Sapphire Foods prepares for a significant structural transition. Earlier this year, the company announced an all-share merger with Devyani International that will create a combined quick service restaurant network of nearly 3,000 outlets.
Expected to close within the next 15 months, the merger is intended to strengthen scale and operational efficiencies. Analysts estimate the combined entity could generate cost synergies of around ₹260–350 crore, equivalent to roughly 5–7 percent of base revenue, through improved sourcing and supply chain efficiencies.
Kotak Securities noted that the expanded store network is likely to enhance the combined company’s negotiating leverage with suppliers while also improving operational efficiencies across its brand portfolio.
As part of the proposed merger structure, Devyani International will allot 177 shares for every 100 shares held by Sapphire Foods shareholders. Following the transaction, the merged entity is expected to emerge as the largest franchise operator for both KFC and Pizza Hut in India.
In the immediate term, the company’s strategy remains centred on driving customer traffic through sharper value pricing initiatives. Over the longer run, however, the focus will be on whether the scale benefits arising from the merger can help ease margin pressures and deliver sustained growth across brands.
