Costa Coffee's retail footprint in India contracted for the first time in over five years, with the British coffee chain operating 198 cafes at the close of FY26, down from 220 outlets a year earlier, according to the latest annual report of its exclusive India franchise partner, Devyani International Limited (DIL). The net closure of 22 stores marks a clear break from the brand's uninterrupted expansion since FY21.

A Decade of Growth Reversed in One Year

Costa Coffee's India network had grown steadily from just 44 stores in FY21 to 55 in FY22, 112 in FY23, 179 in FY24, and a peak of 220 in FY25 — before pulling back to 198 in FY26. The reversal is the first recorded decline in the chain's India store count in more than half a decade, signalling a strategic recalibration rather than a market retreat.

Revenue Still Grows Despite Fewer Outlets

Despite the shrinking store network, Costa Coffee's revenue from operations rose 7 per cent year-on-year to ₹212.5 crore in FY26, compared with ₹198.5 crore in FY25. Notably, that growth came on a narrower base of outlets, implying stronger per-store productivity. This contrasts with the previous fiscal, when revenue surged 30.76 per cent — growth that was largely driven by rapid network expansion from 179 to 220 stores. The latest numbers suggest a deliberate pivot from volume-led expansion to quality-driven revenue generation.

What Devyani International Said

The annual report did not explicitly state the reasons behind the store closures. However, Devyani International said it adopted 'a more disciplined and selective approach to expansion' across its portfolio during the year. The company reaffirmed its commitment to the Costa Coffee brand, describing it as one of its key growth drivers alongside Yum! Brands-operated quick service restaurant chains Pizza Hut and KFC.

Target Audience and Repositioning

DIL said Costa Coffee continues to focus on India's premium out-of-home coffee market, targeting Gen-Z consumers and millennials. The brand's youth-centric repositioning has reportedly strengthened its appeal as a preferred social destination for young professionals and students. FY26 also saw the introduction of several new menu offerings aligned with evolving consumer preferences.

Long-Term Ambitions Intact

Despite the near-term pullback, the brand's long-term India outlook remains bullish. In April 2025, Costa Coffee Global CEO Philippe Schaillee described India as one of the company's top 20 markets globally and indicated it is expected to become one of Costa Coffee's top five markets in the coming years. Whether the FY26 consolidation phase accelerates that trajectory — or delays it — will depend on how aggressively DIL resumes expansion in the next fiscal cycle.