The Bengaluru-based coffee chain is seeking to rebound from years of outlet closures and losses after agreeing to clear its substantial debts
Café Coffee Day has struggled with debts and store closures in recent years | Photo credit: via Shutterstock
Coffee Day Enterprises Ltd (CDEL) has reached a settlement agreement to clear Rs 205 Cr ($23.9m) of outstanding debt from its Café Coffee Day (CCD) coffee chain.
Founded in Bengaluru in 1996, CCD grew to more than 1,750 outlets across 243 Indian cities by 2019 before it began closing hundreds of stores in the wake of spiralling debt and the apparent suicide of its founder V.G. Siddhartha.
According to a regulatory filing, CDEL will repay outstanding sums owed to two debenture holders across three tranches, including an initial Rs 55 Cr ($6.4m) from the sale of 12.41% of CCD shares to an unnamed third party.
A second payment of Rs 75 Cr ($8.7m) will be paid in 12 months’ time, with the third installment dependent on CDEL achieving certain financial parameters relating to higher EBITDA and share price. The group’s shares jumped 5% in the 24 hours after the debt settlement agreement announcement.
“This settlement ensures the debt reduction commitment of the company and its subsidiaries in the interest of all stakeholders. The company remains committed to fulfilling its obligations and ensuring long-term value creation for stakeholders,” CDEL said.
CDEL has been paring its debts through asset resolutions and has significantly scaled down its operations in a bid to maintain cost control. The group closed 11 net outlets during the first nine months of its fiscal year ended 31 December 2024 and currently operates 439 stores – making it the third largest branded coffee chain in India behind Tata Starbucks and Barista.
Net revenues over the nine-month period rose 7% year-on-year at Rs 775 Cr ($90.3m), with third quarter revenues 9% higher year-on-year at Rs 268 Cr ($31.2m) – representing a third consecutive quarter of revenue growth.
However, third quarter EBITDA fell 62% to Rs 39 Cr ($4.5m), while CDEL’s net loss for the period stood at Rs 11 Cr ($1.3m) compared to a Rs 61 Cr ($7.1m) profit in the same quarter of the previous year.