The UK-based coffee chain saw slowest quarterly outlet growth in three years as franchisee Devyani International focused on its larger KFC and Pizza Hut fast-food brands
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Costa Coffee now operates 209 stores across India | Photo credit: Devyani International
Costa Coffee opened fewer stores in India during the third quarter as franchisee Devyani International Limited (DIL) focused on its larger KFC and Pizza Hut fast-food brands.
Gurugram-based DIL opened just two net new Costa Coffee stores in the three months ended 31 December 2024 to reach 209 coffee shops across India.
However, the franchise group opened 54 net new KFC stores and 51 new Pizza Hut restaurants during the same period to reach 1,063 and 644 stores respectively – expansion which saw DIL surpass 2,000 stores across its portfolio of licensed food and beverage brands.
DIL’s total revenues grew 53% year-on-year to Rs 12.9bn ($149m). However, outlet expansion negatively impacted group profitability with pre-tax profits falling 12% year-on-year to Rs 85.2m ($981,276).
“I am delighted to say that DIL has successfully met its store expansion guidance, crossing an impressive milestone of 2,000 stores in the recent quarter, across all brands and geographies – ahead of the original target. This achievement further enhances our market presence and reinforces our strategic position in the QSR industry,” said Ravi Jaipuria, Non-Executive Chairman, DIL.
DIL became Costa Coffee’s exclusive Indian licensee in 2005 and opened the coffee chain’s first store in the country in New Delhi’s Connaught Place in the same year. The partnership reached 100 stores in January 2023 and 200 sites in September 2024.
The third quarter represents Costa Coffee’s slowest three-month outlet growth since DIL’s second quarter of 2021. However, with 30 net new stores opened across the first nine months of its financial year, Costa Coffee could still add 40-50 new sites for the full-year – a target outlined by Costa Coffee CEO Philippe Schaillee in October 2023.
Costa Coffee’s third quarter revenues in India increased 30% year-on-year to reach Rs 517m ($5.9m) despite a quarter-on-quarter decline in like-for-like sales growth from 8.7% to 5.1%.
The coffee chain will be seeking to turn a corner on successive leadership changes in the year ahead. In January 2025, Kamaljit Singh Bedi succeeded Sreejit Madhavan Nair as CEO of Costa Coffee India – the franchisee’s third CEO in just over 18 months.
In November 2024, DIL announced a new master franchise agreement to operate Malaysian bubble tea chain Tealive in India. DIL has now expanded the agreement to cover Thailand – where it operates over 300 licensed KFC stores.