Devyani International Cooks Up Cloud Ambitions with Sky Gate Deal

Devyani International, the India owner of KFC, Pizza Hut, and Costa Coffee, has officially acquired Sky Gate Hospitality in what is its entry into the fast-expanding cloud kitchen space. The acquisition, valued at approximately ₹519 crore, is also with a proposed additional investment of ₹90 crore that will be utilized to turn Sky Gate into profitability within one year.

Key highlights:

Devyani International will acquire up to 80.72% equity in Sky Gate Hospitality, gaining control over popular brands like Biryani by Kilo, Goila Butter Chicken, and The Bhojan.

The acquisition is part of Devyani’s strategy to diversify its portfolio with authentic Indian flavors and tap into the delivery-first dining model that is rapidly gaining traction across the country.

Sky Gate Hospitality boasts more than 100 units, with a robust chain of cloud kitchens and restaurants with dine-in experience across more than 40 Indian cities.

Devyani will introduce Sky Gate's brands into its current food court properties, substituting some third-party brands to maximize efficiency and profitability per square foot.

The transaction involves a mix of equity shares issued to Sky Gate’s sellers and cash payments, pending shareholder approval in a scheduled extraordinary general meeting.

This move aligns with Devyani’s broader ‘House of Brands’ approach, positioning the company to capture a larger share of India’s booming online food delivery and cloud kitchen sector.

Sky Gate has indicated a consolidated turnover of ₹277 crore during FY25 (unaudited) excluding some of its subsidiaries, which indicates the scale and potential of the takeover.

With this strategic acquisition, Devyani International will be in a position to leverage Sky Gate's brand recognition and delivery network to become a market leader in traditional quick-service restaurants as well as in the fast-emerging cloud kitchen space.

Sources: Business Standard, Economic Times, Fortune India, BusinessWorld, The Hindu Business Line, Entrepreneur India, BEAMSTART