INDIA – KFC India, fast food restaurant chain owned by American Yum! Brands, is re-strategizing and has sold an additional 13 restaurants to Devyani International, its largest franchise partner, which is promoted by Ravi Jaipuria’s RJ Corp, reports ET Retail.
Devyani has acquired KFC restaurants in Kerala and Goa, as part of KFC’s strategy to unlock growth for the brand.
KFC is said to be seeking to reduce ownership of restaurants and become a brand custodian as it looks to push growth in the Indian market with a billion-plus potential consumers.
Devyani, which operates both KFC and Pizza Hut for Yum! in India has already had a presence in the two states and the decision to consolidate was a ‘logical commercial step’.
“We continue to have a play in the market through a mix of both equity-owned and franchise-owned stores,” said KFC managing director, Samir Menon.
“We share a common vision for long-term and sustainable growth for KFC in the country.”
RJ Corp chairman said: “We will be happy to acquire more KFC stores if and when Yum! decides to franchise them.”
KFC India operates 380 stores, of which 20% are company owned while the rest are split between Devyani and Sapphire Foods.
Yum Brands sold more than 300 outlets including Pizza Hut and KFC, operated by several of its franchisees in 2015 to Sapphire Foods, an entity formed by four PE firms.
Sapphire Foods acquired part of Yum! Brands’ franchise business for US$106.18 million in 2016.
Devyani runs franchises for Pizza Hut and KFC and UK chain Costa Coffee, which was bought by Coca-Cola in August, besides in-house businesses including dairy brand Cream Bell.
In the quarter period ended September 30, Yum Brands reported 8.6% rise in net income to US$454 million from $418 million in the comparable period last year.
It then said franchising reinforces the distinctiveness of its brands as it selects the highest potential franchisees which will be critical as we evolve into a highly franchised company.
Yum! Brands president David Gibbs said: “We continue to make progress toward becoming more franchised, selling 134 restaurants this quarter.
We are nearly 98% franchised and are on track to have less than 1,000 equity units by the end of the year.”