Devyani International IPO: Information analysis

Devyani International is the largest franchisee of Yum Brands in India and is among the largest operators of quick-service restaurants (QSR) in India. The company primarily operates three international brands: KFC: A global chicken restaurant brand with over 25,000 outlets in over 140 countries. The company operated 284 KFC stores as of June 30, 2021. Pizza Hut: One of the largest pizza chains in the world with over 17,000 restaurants. Devyani International operates 317 Pizza Hut stores in India. Costa Coffee: A global coffee chain under which the company operated 44 stores in India as of June 30, 2021. The company also operates KFC and Pizza Hut stores in Nepal and Nigeria. It refers to these brands (KFC, Pizza Hut, and Costa) as its 'core brands,' which contributed to more than 94 per cent of its revenues in FY21. Apart from these, the company also owns and operates brands such as 'Vaango' and 'Food Street.' All combined, the company operates 696 stores across 166 cities in India as of June 30, 2021. Strengths The company collaborates with its international franchisor Yum! Brands for product innovation and development, brand strategy, and technology initiatives. The company operates in an industry that has witnessed growth and is expected to grow in the future as well. As per the GlobalData report, the QSR segment will continue to lead the foodservice sector, and the sales value of the QSR channel is expected to grow at a CAGR of 12.4 per cent from 2020 to 2025. The company follows a cluster-based approach and has a strong presence in key metro regions of Delhi-NCR, Bengaluru, Kolkata, Mumbai, and Hyderabad, with close to 50 per cent of its stores in these five regions. The company operates stores in strategic locations such as airports, high street locations, malls, food courts, business hubs, and transit areas. It also looks to open new stores for KFC and Pizza Hut in close proximity, allowing it to reduce capital costs related to store construction and logistics costs towards the supply of raw materials to both stores. Risks Many of the company's core brand outlets h