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Costa Coffee achieves growth in India amid inflationary headwinds

Hospitality brand outlet growth drove Devyani International Limited’s (DIL) second quarter revenue growth, but higher raw materials costs continue to impact profit

India is one of Costa Coffee’s key international growth markets | Photo credit: Costa Coffee 

Costa Coffee continues to achieve steady growth in India, but expansion remains below the 40-50 stores annually mooted by CEO Philippe Schaillee earlier this year as inflationary pressures drove up costs for Devyani International Ltd (DIL).
Announcing its second quarter results ended 30 September 2023, Costa Coffee’s Indian franchisee, said it opened 23 Costa Coffee outlets during the period. The coffee chain achieved 6.8% quarter-over-quarter revenue growth to reach RS 346m ($4.15m).
DIL posted total revenues of Rs 8.2bn ($98.5m), 9.6% higher than a year ago and now operates a total of 1,358 outlets across the three brands. However, rising raw materials costs for its KFC and Pizza businesses saw consolidated net profit fall 43.2% to Rs 333.5m ($4.01m) compared to the same period in 2022.
Costa Coffee remains the smallest of DIL’s core foodservice brands, with the franchise group now operating 594 KFC stores, 539 Pizza Hut restaurants, which achieved revenues of RS 5.09bn ($61.13m) and RS 1.84bn ($22.09m) respectively.
“High inflation across industries and categories from a macro-economic perspective has led to a short-term impact on consumer sentiment and spending in the last few quarters. Despite this, our performance remains resilient, and we continue to invest in the business for long-term growth. We are hopeful that a rebound in consumer spending will take place in the next few quarters, positioning us for success in the dynamic and evolving QSR landscape,” said Ravi Jaipurias, Non-Executive Chairman, DIL.
Nevertheless, Jaipuria said DIL had maintained outlrt growth ‘pace’ to open 115 net new locations across its brands within six months.
UK-based Costa Coffee made its debut in India via local franchisee Devyani International Ltd (DIL) in 2005, with an outlet in New Delhi. In October 2023 Costa Coffee CEO Philippe Schaillee said India was among the coffee chain’s ‘priority markets’ globally and that it could ramp up expansion to 40-50 stores per year.

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