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Devyani to miss revenue target, but says Costa Coffee is hot again


DIL plans 100 stores, Costa Coffee achieved INR 100 core in FY ’15-’16. Overall restructuring seems to be paying off.

Devyani International (DIL), master franchise for KFC, Pizza Hut and Costa Coffee in this country, says it is on a drive to consolidate and financially strengthen its position.

The company will not be able to meet its revenue target this year, due to declining per-store sales. It says became profitable in 2015-16 with better management of operations and closing of unprofitable outlets. “Our focus now is on opening outlets in locations where we can make money. We don’t want to expand at the cost of profit,” said Virag Joshi, president and CEO, DIL.

It expects to open 100 outlets, across all franchises, by next year. This is in contrast to its performance since 2014, when to cut losses, DIL shut 20+ loss making Costa Coffee stores. Now, it will be opening upto seven a year, with an eye on profitability. “We have learnt from past mistakes. DIL will be ready for an IPO (initial public offer of equity) in two years as we streamline operations,” said Joshi.

Cost cuts paid dividends in recent months. Costa Coffee operates some 100 outlets and has touched INR 100 crore revenue this financial year. It prefers year-round high footfall locations such as airports, office buildings and hospitals.

The coffee chain has registered 10% growth in sales in the past year and its bottomline is also improving. “Currently, nearly 60% of our stores are making money. Also, we’re looking at the option of online delivery,” said Ashish Chanana, COO, Costa Coffee.

Source: Business Standard

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