#Didyouknow
Sapphire Foods and Devyani International are two
franchisees for Yum Brands in India?
Yum Brands follows a dual franchisee system in India, similar to McDonaldโs.
Sapphire Foods Vs. Devyani International
Sapphire Foods and Devyani International are two
franchisees for Yum Brands in India?
Yum Brands follows a dual franchisee system in India, similar to McDonaldโs.
Sapphire Foods Vs. Devyani International
1)Unlike McDonalds, where there is a very clear cut
division of North and South India to Westlife Development and North and East India to another company, division of regions between both the franchisees of Yum Brands is not very consolidated in a particular region.
division of North and South India to Westlife Development and North and East India to another company, division of regions between both the franchisees of Yum Brands is not very consolidated in a particular region.
2)The division of states within both the franchisees
is not concentrated in a particular region and are not necessarily adjacent to each other unlike McDonalds.
is not concentrated in a particular region and are not necessarily adjacent to each other unlike McDonalds.
3)Though Devyani International has got the rights to open Pizza Hut Delivery stores in some of the states where Sapphire operates
with Pizza Hut stores, it does not restrict Sapphire to open a Pizza Hut store and deliver to consumers from those stores.
with Pizza Hut stores, it does not restrict Sapphire to open a Pizza Hut store and deliver to consumers from those stores.
4)Further, there is a trading area restriction of ~2km in
these regions implying that both the players cannot open and operate a new store within ~2km range of an existing store of the other franchisee.
these regions implying that both the players cannot open and operate a new store within ~2km range of an existing store of the other franchisee.
5)Mgmt of Sapphire has been very clear about their strategy that even though they have the rights for Pizza Hut Delivery stores in Goa and Tamil Nadu, they'd still be preferring to open a Pizza Hut store with dinein facility as that provides a better ADS due to omni-channel.
6)Sapphire can undertake delivery through food aggregators (which are counted as takeaway as per the contract).
7)One of the consensusโ narratives about Devyani and Sapphire has been that Devyani has a larger share of non-veg population in its regions and Sapphire has the larger share of GDP in its regions.
8)Margins of Sapphire foods are lower by ~140bps and ~ 170bps for KFC and Pizza Hut resp. as compared to Devyani in 9MFY22.
9)Devyani has a higher concentration of operation for both the brands in eastern region. Minimum wages of eastern states are comparatively lower as compared to rest of India leading to overall higher employee cost for Sapphire.
10)Rental deals of eastern states are also comparatively better (similar to minimum wages) as compared to rest of India also leading to higher rental costs for Sapphire.
11)Sapphire Foods being a private equity-driven company has a fairly democratic ESOPs plan in its company leading to higher cost for Devyani.
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