Sapphire foods india ltd

Sapphire Foods is one of the largest franchisees of Yum! Brands Inc. in the subcontinent and operates more than 400 KFC, Pizza Hut, and Taco Bell restaurants across India, Sri Lanka and the Maldives.

Sapphire Foods has non-exclusive rights to operate restaurants under three of Yum’s brands: KFC, Pizza Hut, and Taco Bell in India, Sri Lanka, and Maldives. As of Dec. 2022, the company owned and operated 325 KFC restaurants in India and Maldives, 274 Pizza Hut restaurants in India, Sri Lanka, and the Maldives, and 2 Taco Bell restaurants in Sri Lanka.

Yum Brands is an American fast food corporation and is one of the world’s largest fast-food companies in terms of system units. It owns several iconic brands such as KFC, Pizza Hut, Taco Bell, The Habit Burger Grill, and many more. The company operates in 135 nations and territories worldwide.

Revenue Mix:
**KFC (64% of 9M FY23 revenue): KFC is the largest QSR with 488 restaurants in India and out of the 488 restaurants the company operates 204 restaurants in India

Operations [4]
Avg. size of Restaurants - 1500 sq. ft
Avg. Daily sales per Restaurants - 1,38,000 Rs.

Pizza Hut(23.5% of 9M FY23 revenue): [3] The company operates 171 Pizza hut stores in India

Operations [4]
Avg. size of Restaurants - 1200 sq. ft
Avg. Daily sales per Restaurants - 61,000 Rs.

**Sri Lanka Business (12.5% of 9M FY23 revenue):**Sapphire Foods operates in Sri Lanka through its subsidiary (Gamma Lanka) which is presently the single franchisee for Pizza Hut and Taco Bell in Sri Lanka. Currently, it is operating 2 Taco Bell restaurants in Sri Lanka. The company was Sri Lanka’s largest international quick-service restaurant chain by revenue in FY22.[3]

Sri Lanka Business Operations [5]
Restaurant count - 114
Average daily sales per Restaurant - 74,000

Distribution network [6] The company has in-house supply chain function and works with vendor partners for food ingredients, packaging, warehousing, and logistics. Sapphire Foods operates 5 warehouses in different cities to cater to the requirements of its restaurants. It also uses YUM’s global online and digital channel solutions to enhance the customer experience in both formats:- physical and digital. Adapting YUM’s solutions also assisted in achieving best-in-class financial controls and operating efficiency.

Sales Channel Mix [7]
Dine-in - 40%
Takeaway - 21%
Delivery - 39%

Increasing Online sales [8] Due to Lockdowns, Income from takeaway and delivery services was at 551.88 cr. or 68.8% of its total restaurant sales (vs 409.5 cr. or 43.2% of FY19 sales).

Terms of Franchisee Agreement: [9] Company is required to pay YUM a monthly royalty fee between 6.0-6.3% of its net sales from operation of KFC, Pizza Hut, and Taco Bell restaurants in the Territories. Additionally, they have to spend 5-6.0% of net sales (including 1.0% to be spent on local store marketing). In FY22, the company paid a total royalty of 74 cr.

Rapid Increase in-store Counts [6] It has a dedicated business development and projects team and a well-defined new-restaurant roll-out process that enables it to identify new locations. SFIL’s total number of restaurants in the Territories grew from 376 restaurants in FY19 to 450 on June 30, 2021. Its overall stores tally which was at 437 as of March 31, 2021, stood at 599 as of Dec 2022.

Acquisition [10] Co. is acquiring its step-down subsidiary Gamma Island Food Private Limited for 9.9 Crs for a 24% stake in the company and post the acquisition the shareholding will increase to 75%. The Co. operates KFC and Pizza Hut stores in the Maldives and generated a revenue of 139 Crs

IPO Details [11] The company has successfully raised 2073 Crs through the IPO and the entire sale was an Offer for sale by the promoters. The company got listed on Nov 18, 2021, with a 14.4% listing gain.