Café Coffee Day is showing signs of recovery after posting a fourth quarter profit and reducing store closures, indicating that the Indian coffee chain is turning a corner following previous debt challenges and the devastating impact of Covid-19
Indicating that trading conditions have improved in India, Café Coffee Day’s average daily sales rose nearly 12% in its fourth quarter | Photo credit: ALensAndSomeLuck via Shutterstock
India’s largest coffee chain appears to be on a steadier financial footing following a sustained period of store closures and challenging levels of debt.
The Indian café chain, which is owned by Coffee Day Enterprises posted a net profit of Rs 66 Crs ($8.5m) for the fourth quarter ended on 31 March 2022 compared to a Rs 95 Crs ($12.3m) loss in the final quarter of 2021.
Revenue from coffee increased 5% to Rs 149 Crs ($19.3m), helping to offset a 4% fall in revenue from hospitality services.
Indicating that trading conditions have improved in India, which was rocked by several waves of Covid-19, CDEL said Café Coffee Day’s average sales per day had risen nearly 12% during the quarter against the same period in the last fiscal year.
For the full fiscal year, average daily sales increased 33%.
The apparent improvement is also evident in Café Coffee Day’s store count, which appears to have stabilised following a sustained period of mass store closures.
Founded in 1996, Café Coffee Day operated more than 1,752 outlets across some 243 cities in the India at the start of 2019, before heavily shrinking its footprint in the wake of spiralling debt and the apparent suicide of the chain’s founder V. G. Siddhartha.
Café Coffee Day now operates 495 stores in India, 77 fewer than during the same period in 2021. However, only six stores were closed in the most recent quarter.
Additionally, the number of vending machines operated by the company increased by more than 1,000 to 45,217 between Q3 and Q4. However, this figure remains below the 45,959 a year ago and substantially lower than the 56,799 machines it operated in 2018.
The appetite for coffee and café culture in India is gathering pace with the coffee shop market becoming increasingly competitive.
International brands are targeting India for expansion, with Tata Consumer Products Starbucks licensed stores closing in on Café Coffee Day’s previous market dominance. Tata Starbucks operates around 270 stores across India, while UK-based competitor Costa Coffee opened 18 net new stores in 2021 to reach 50 stores across the country.
Elsewhere in the market, Reliance Retail, the retail venture of Indian conglomerate Reliance Industries, is reportedly negotiating with UK food-to-go and coffee chain Pret a Manger for a new franchise partnership in India, whilst Canadian coffee chain Tim Hortons signed an agreement with a joint venture in March to open its first Indian store as part of a plan to target more than 250 stores within five years.