Sapphire Foods IPO: Information analysis

Sapphire Foods is another franchisee of the globally reputed fast-food company Yum! Brands that has come up for listing. Earlier in the year, we had Devyani International, also a franchisee of Yum! Brands. The company is among the largest operators of quick-service restaurants (QSR) in India and is also Sri Lanka's largest international QSR chain operator in terms of revenue and number of restaurants, as of March 31, 2021. It also has a small presence in the Maldives. The company primarily operates three international brands: KFC: A global restaurant brand focussed on selling fried chicken with over 25,000 outlets in over 140 countries. Sapphire Foods operates 209 KFC stores in India and the Maldives, as of June 30, 2021. Pizza Hut: One of the largest pizza chains in the world with over 17,000 restaurants. Sapphire Foods operates 239 Pizza Hut stores in India, Sri Lanka and the Maldives. Taco Bell: It is the world's largest Mexican-inspired restaurant chain in terms of store count. The company operates 2 stores in Sri Lanka, as of June 30, 2021. All combined, the company operates 482 stores in India, Sri Lanka and the Maldives, as of September 30, 2021. Strengths The company operates in an industry that has witnessed rapid growth and is expected to maintain momentum in the future as well. As per the report commissioned by Technopak, the QSR chain segment will continue to lead the foodservice sector, and the sales value of the QSR channel is expected to grow at a CAGR of 23 per cent from FY20 to FY25. Yum! Brands provides the company with the flexibility to operate and manage its in-house supply chain and have direct relationships with vendor partners. Sapphire Foods also benefits from its 'One System' commercial negotiations where it negotiates with its suppliers, jointly with Yum! Brands and its other franchisees in India. The company adopts an omnichannel strategy of utilising its brick-and-mortar restaurants and digital stores across various revenue channels of dine-in, take-away, own delivery and aggregator delivery services. In FY21, the company derived 31.2 per cent, 26.9 per cent and 41.9 per cent of its restaurant sales