Sapphire Foods India reported a 20% year-on-year increase in restaurant sales for Q2 FY27, reaching Rs 8,853 million. The company's performance was led by its KFC business, which saw 21% revenue growth and margin expansion. While consolidated EBITDA rose by 21%, investors are closely monitoring the ongoing Pizza Hut segment margin pressure and the status of the pending merger with Devyani International.
Sapphire Foods Reports 20% Sales Growth in Q2 FY27
Restaurant sales hit Rs 8,853 million, up 20% YoY; Consolidated EBITDA reached Rs 1,286 million, climbing 21% YoY.
Reader Takeaway: Strong KFC revenue and delivery growth provide momentum, but Pizza Hut losses and merger uncertainty remain key hurdles.
What just happened
Sapphire Foods India has posted its Q2 FY27 financial results, highlighting a steady expansion of its restaurant footprint to 1,086 outlets. The company saw restaurant sales grow to Rs 8,853 million, compared to Rs 7,401 million in the same quarter last year. Adjusted EBITDA increased significantly by 39% to Rs 624 million. The core driver for the business remains the KFC segment, which accounted for a robust 21% revenue increase in the first half of the year.
Why this matters
Investors are watching how Sapphire Foods manages its shift toward a delivery-heavy business model, which now accounts for 44% of total revenue. This transition, supported by the 'PACE SETTER' cost-optimization program, is aimed at improving unit economics by reducing restaurant sizes—now averaging 1,500 sq. ft. for KFC and 1,200 sq. ft. for Pizza Hut. This efficiency drive is essential to protecting margins in a competitive QSR landscape.
The backstory
The company remains in the process of a merger with Devyani International, first announced on January 1, 2026. This consolidation remains the most significant corporate development for stakeholders. The deal is currently moving through necessary statutory and regulatory channels, and its completion is expected to reshape the competitive positioning of both entities.
Risks to watch
The primary concern remains the performance of the Pizza Hut segment, where EBITDA margins have contracted by 110 bps, resulting in a negative 3.2% margin. Furthermore, until the merger with Devyani International receives all required regulatory approvals, the timeline and final structure of the combined entity remain subjects of investor caution.
Context metrics
- Total Restaurants: 1,086 (KFC: 606, Pizza Hut: 469, Taco Bell: 11).
- Delivery Revenue Share: 44% (up from 21% in FY19).
- KFC India EBITDA Margin: 15.7% (up 90 bps YoY).