Devyani posts wider loss, names new CEO as Pizza Hut grapples with pressure

Devyani International, the Indian operator of KFC and Pizza Hut outlets, reported a sharp widening of its quarterly loss on Wednesday, weighed down by a one-time charge linked to India’s new labour laws, even as it announced a key leadership transition ahead of its planned merger with Sapphire Foods.

The Yum Brands franchisee posted a consolidated net loss of ₹103.9 million for the quarter ended December 31, compared with a loss of ₹4.9 million a year earlier. Excluding the one-time charge, Devyani reported a profit of ₹659.8 million during the quarter, underscoring the impact of regulatory adjustments on its reported performance.

Revenue rose 11% year-on-year to ₹14.41 billion, driven by a 12% increase in India sales. Shares of the company closed about 6% higher following the results.

Alongside its earnings, Devyani announced changes at the top. Chief Financial Officer Manish Dawar will take over as Chief Executive Officer from April 1, replacing Viraj Joshi, who will continue with the company as a non-executive director. Executive Vice President–Finance Anupam Kumar will step into the CFO role.

Dawar, who has been with Devyani since 2021, is expected to play a central role in steering the company through its upcoming merger with Sapphire Foods. In January, the two companies announced a $934 million merger that would create one of India’s largest quick-service restaurant franchisees, operating more than 3,000 outlets in India and overseas.

“Appointing a finance-focused CEO at this stage allows the company to take some much-needed and bolder financial decisions ahead of the merger,” said Akshay D’Souza, an independent consumer goods consultant.

Operationally, Devyani continues to face mixed demand trends. Same-store sales at Pizza Hut outlets fell 9.1% from a year earlier, a sharper decline than the 4.1% drop seen in the previous quarter. KFC outlets showed relative improvement, with same-store sales declining 2.9%, compared with a 4.2% dip in the prior quarter.

“The improvement for KFC is definitely a step in the right direction, but we will have to wait three to four months to see if growth is sustained,” D’Souza said.

The challenges at Pizza Hut in India mirror pressures being felt by the brand globally. Yum Brands, which also owns KFC and Taco Bell, said this week it plans to close approximately 250 underperforming Pizza Hut locations in the first half of 2026 as part of efforts to improve the chain’s performance.

Pizza Hut recorded a 1% global same-store sales decline in the latest quarter, although Yum Brands said sales were growing in regions such as the Middle East, Latin America and parts of Asia. The company did not specify which U.S. locations would be shut, but the closures are expected to account for roughly 3% of Pizza Hut’s U.S. footprint.

In late 2025, Yum Brands said it was considering selling the pizza chain amid weakening U.S. sales and challenges linked to large, outdated dine-in formats, as consumer preferences increasingly shift toward delivery and quick pickup.

Pizza Hut has faced structural pressures before. In 2020, one of its largest franchisees filed for bankruptcy protection, leading to the closure of about 300 stores. While the brand remains one of the world’s largest pizza chains with nearly 20,000 locations globally, it trails Domino’s, which has expanded rapidly by focusing on delivery and carryout.