British coffee chain brand Costa Coffee's store count in India shrunk to 198 outlets in FY26 from 220 a year ago, marking a first decline in over five years in a key market for the company, according to the latest annual report of its exclusive franchise partner Devyani International Ltd (DIL).
Costa Coffee is owned by global beverage major The Coca-Cola Company.
However, Costa Coffee's revenue was up 7 per cent year-on-year to Rs 212.5 crore in FY26. In FY25, sales/revenue from operations increased 30.76 per cent to Rs 198.5 crore, driven by store expansion, with the network growing to 220 outlets from 179.
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FY26 revenue saw growth despite the store count falling, underlining the shift from network-led growth to higher revenue per outlet.
The net reduction of 22 cafes marks a break from Costa Coffee's expansion run since FY21, when it operated just 44 outlets in the country. The store count had risen every year since then -- to 55 in FY22, 112 in FY23, 179 in FY24 and 220 in FY25 -- before contracting in FY26.
Though the annual report did not explain the store reduction, DIL said it pursued "a more disciplined and selective approach to expansion" across its portfolio.
Costa Coffee's Global CEO Philippe Schaillee had in April 2025 said India is among the top 20 markets for Costa Coffee and expected it to be among the top five markets in the coming years.
DIL, in its annual report, said they are "continuing to strengthen Costa Coffee". It further said alongside DIL's other Yum! Brands (Pizza Hut and KFC), Costa Coffee acts as a primary growth anchor for the company.
It is a brand that focuses on capturing the country's premium, out-of-home coffee culture by targeting Gen-Z and millennials.
"With its youth-centric rebranding, it has positioned itself as the preferred choice of coffee lovers seeking an upgraded ambience designed to serve as ‘social spaces' for young professionals and students," said DIL.
Moreover, FY26 also witnessed the launch of several menu innovations aligned with these new trends.
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DIL, which has franchises of Yum! Brands' QSRs (quick service restaurants) as Pizza Hut and KFC, Tealive, New York Fries and Sanook Kitchen besides indigenous brands such as Vaango and the Food Street, is in the process of proposing a merger with Sapphire Foods India.
Costa Coffee in India competes with international chains such as Starbucks, Tim Hortons, McCafe, etc. Besides, local chains such as Cafe Coffee Day, Blue Tokai, Third Wave Coffee and Barista are amplifying their play in the fast-growing cafe market in India.
In India, cafe culture is emerging as a niche growth opportunity, driven by a significant shift from tea to speciality coffee among Gen-Z and millennials.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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