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Costa Coffee's retail footprint in India declined for the first time in more than five years, with its café network shrinking to 198 outlets at the end of FY26 from 220 a year earlier, according to the latest annual report of its exclusive India franchise partner, Devyani International Limited (DIL).
The closure of 22 net stores marks a break from the British coffee chain's uninterrupted expansion trajectory that began in FY21.
Even as the store count declined, the brand continued to post revenue growth. 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 the previous fiscal.
The pace of revenue growth, however, moderated from the previous year. In FY25, revenue had surged 30.76 per cent, aided by the rapid expansion of the café network from 179 stores to 220.
The latest numbers indicate a strategic shift towards improving productivity rather than adding new locations. Higher revenue despite a smaller store base suggests stronger sales per outlet.
Costa Coffee had witnessed sustained expansion over the past five years. Its network grew from 44 stores in FY21 to 55 in FY22, 112 in FY23, 179 in FY24 and 220 in FY25, before retreating to 198 outlets in FY26.
While DIL did not disclose specific reasons behind the reduction in stores, the company said it adopted "a more disciplined and selective approach to expansion" across its portfolio during the year.
Despite the rationalisation, Devyani International reiterated that Costa Coffee remains a key pillar of its long-term growth strategy, alongside Yum! Brands-operated quick-service restaurant chains KFC and Pizza Hut.
The company said Costa Coffee continues to strengthen its position in India's premium out-of-home coffee segment by focusing on Gen Z consumers and millennials. According to DIL, the brand's youth-centric positioning has enhanced its appeal among young professionals and students seeking social gathering spaces. During FY26, Costa Coffee also introduced new menu offerings aligned with evolving consumer preferences.
The company remains optimistic about Costa Coffee's long-term prospects in India. In April 2025, Costa Coffee Global CEO Philippe Schaillee described India as one of the brand's top 20 markets globally and said it is expected to emerge among Costa Coffee's top five markets worldwide in the years ahead.
