British coffee chain Costa Coffee saw its store network in India shrink for the first time in more than five years.
According to the latest annual report of its exclusive India franchise partner, Devyani International Limited (DIL), Costa Coffee operated 198 cafes at the end of FY26, down from 220 outlets a year earlier.
The net closure of 22 stores marks a departure from the brand's steady expansion since FY21.
Despite the decline in store count, Costa Coffee's revenue from operations increased 7 per cent year-on-year to Rs 212.5 crore in FY26, compared with Rs 198.5 crore in FY25.
In the previous fiscal, revenue had grown 30.76 per cent, supported by rapid network expansion from 179 stores to 220 outlets.
The latest performance suggests a shift from expansion-led growth to improved revenue generation per outlet.
Costa Coffee's network had expanded consistently over the past five years, rising from 44 stores in FY21 to 55 in FY22, 112 in FY23, 179 in FY24 and 220 in FY25, before contracting in FY26.
While the annual report did not specify reasons for the reduction in stores, Devyani International said it adopted "a more disciplined and selective approach to expansion" across its portfolio during the year.
The company, however, reaffirmed its commitment to growing the coffee chain, describing Costa Coffee as one of its key growth drivers alongside Yum! Brands-operated quick service restaurant chains Pizza Hut and KFC.
DIL said Costa Coffee continues to focus on India's premium out-of-home coffee market by targeting Gen-Z consumers and millennials.
It added that the brand's youth-centric repositioning has helped strengthen its appeal as a preferred destination for young professionals and students looking for social spaces, while FY26 also saw the introduction of several new menu offerings aligned with changing consumer preferences.
Costa Coffee's long-term growth prospects in India remain significant. In April 2025, Costa Coffee Global CEO Philippe Schaillee had described India as one of the company's top 20 markets globally and said it is expected to become one of Costa Coffee's top five markets in the coming years.
--IANS
