Devyani International acquires controlling stake in Biryani by Kilo

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Devyani acquires Biryani by Kilo in a move that signals the next phase of consolidation and growth in India’s Quick Service Restaurant (QSR) sector. Devyani International Ltd (DIL), India’s largest franchisee of KFC, Pizza Hut, and Costa Coffee, is preparing to take a controlling stake in Sky Gate Hospitality, the parent company of ‘Biryani by Kilo’. With this acquisition, DIL aims to expand its presence in the fast-growing biryani and kebab delivery segment. The announcement came through a regulatory filing ahead of the board’s scheduled meeting on April 24, 2025.

Founded in 2015, Sky Gate Hospitality has scaled its operations to over 70 dine-in outlets and cloud kitchens across the country. The company’s flagship brand, Biryani by Kilo, has carved a niche by offering regionally inspired biryanis and kebabs through a delivery-first model. Devyani’s move to acquire this brand fits its long-term diversification plan and ambition to dominate regional Indian cuisines.

Though the deal’s exact financials have not been disclosed, DIL plans to issue equity shares on a preferential basis as part of the consideration. The Jaipuria family-promoted firm views this acquisition as a gateway into the homegrown food delivery segment, further enhancing its non-Western offerings.

This strategic acquisition underscores a growing trend in India’s food tech space where major players are moving beyond international franchises to build local food portfolios. DIL’s robust presence with over 900 KFCs, 580 Pizza Huts, and 190 Costa Coffee outlets adds more firepower to this expansion. The acquisition of a delivery-driven, Indian-flavor brand like Biryani by Kilo strengthens Devyani’s position as a leader in the evolving QSR landscape.

As the board prepares for final approval, the industry is watching closely. The transaction could open doors to more such homegrown partnerships in the near future, especially in the thriving cloud kitchen and food delivery markets.

1. Introduction to the Startup: Sky Gate Hospitality and Its Business Model

1.1 What Sky Gate Hospitality Does

Sky Gate Hospitality, the company behind ‘Biryani by Kilo’, operates in India’s thriving biryani and kebab delivery market. Founded in 2015, the brand leverages a hybrid model combining dine-in restaurants and cloud kitchens. It caters to both direct consumers via online orders and food aggregators. The company’s mainstay, Biryani by Kilo (BBK), delivers freshly prepared biryani in earthen pots, enhancing both flavor and authenticity.

1.2 Revenue Model and Expansion

BBK runs a delivery-first model with dine-in options, targeting metro and tier-1 cities. Its revenue streams include:

• Online deliveries via its platform and food delivery apps
• Dine-in sales from more than 70 outlets
• Franchise partnerships in newer markets

The brand’s strategic use of cloud kitchens has allowed rapid expansion with lower overhead costs, tapping into India’s food delivery boom.

2. Background of Devyani International Ltd

2.1 Founders and Leadership

Devyani International Ltd is promoted by the Jaipuria family, a notable name in Indian business. The company is India’s largest operator of KFC and Pizza Hut and the exclusive franchisee of Costa Coffee.

2.2 Market Presence and Portfolio

As of December 31, 2024, DIL managed:

• 900+ KFC outlets
• 580+ Pizza Huts
• 190 Costa Coffee cafés
• 70+ Vaango outlets (its in-house South Indian vegetarian chain)

Its QSR dominance spans India, Nepal, and Nigeria.

3. Devyani Acquires Biryani by Kilo: Strategic Goals

3.1 Expansion into Indian Cuisine

Devyani acquires Biryani by Kilo to diversify its offerings beyond global chains. The move aligns with its strategy to tap into the growing demand for regional Indian foods.

3.2 Entry into the Cloud Kitchen Model

BBK’s delivery-first approach via cloud kitchens gives DIL a strong entry point into the digital food delivery ecosystem. This complements its brick-and-mortar strengths.

4. Regulatory and Financial Developments

4.1 Board Approval and Share Issuance

The acquisition deal will be finalized post the board’s April 24 meeting. DIL plans to issue equity shares on a preferential basis to fund the deal. While specific financial figures haven’t been disclosed, the move hints at a share-swap model.

5. Industry Insights and Competitive Landscape

5.1 Rising Demand for Biryani and Kebabs

Biryani ranks among the most ordered foods on Indian delivery platforms. By acquiring BBK, Devyani is tapping into a massive demand trend, capitalizing on consumer preferences shifting towards Indian cuisines.

5.2 Growth of Cloud Kitchens in India

India’s cloud kitchen market is projected to grow at over 25% CAGR in the next five years. This acquisition allows DIL to benefit from this shift without needing to invest heavily in real estate.

6. Learning for Startups and Entrepreneurs

6.1 Embrace Local Consumer Trends

Startups must recognize regional consumption trends. DIL’s pivot to Indian cuisine reflects a broader strategy that values cultural relevance.

6.2 Diversify Business Models

Combining dine-in and cloud kitchen models ensures flexibility and scalability. BBK’s structure is a prime example of hybrid success.

6.3 Strategic Acquisitions Drive Growth

Acquiring well-positioned startups can be a faster path to growth than organic expansion. DIL’s move shows how larger firms can benefit from nimble, focused players.

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