India’s Cafe Coffee Day shuts 280 stores
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Indian coffee chain Cafe Coffee Day shuttered 280 outlets between April and June due to low profitability and potentially rising costs.
The firm, which now operates 1480 outlets, has also reported a decline in average daily sales from 15,739 cups to 15,445 cups during the period. This was counterbalanced by an uptick in Coffee Day’s vending machine count from 49,397 to 59,115 units year on year.
“Export operations have been temporarily stopped due to lower margins and higher working capital requirement and around 280 outlets are closed during the quarter based on various factors including the profitability, future increase in major expenses,” said a spokesperson for the firm.
The firm has struggled since the apparent suicide of founder VG Siddhartha a year ago. Siddhartha founded Coffee Day Enterprises in the late 1990s, years before Starbucks made its Indian debut, building a network of 1700 outlets – 10 times the size of Starbucks.
Questions & Answers
Q.What was the primary reason given for Cafe Coffee Day closing 280 stores?
What was the primary reason given for Cafe Coffee Day closing 280 stores?
The firm stated that the closures were due to low profitability and other factors, including the potential for future increases in major expenses. This decision was made during the quarter between April and June.
Q.How has the firm's sales performance changed alongside the store closures?
How has the firm's sales performance changed alongside the store closures?
Cafe Coffee Day reported a decline in average daily sales per store, falling from 15,739 cups to 15,445 cups during the same period. This indicates a challenging sales environment for the remaining outlets.
Q.Has Cafe Coffee Day stopped any other business operations recently?
Has Cafe Coffee Day stopped any other business operations recently?
Yes, the company has temporarily halted its export operations. This decision was made due to lower margins and the high working capital required for those activities.
Q.How does Cafe Coffee Day's current store count compare to its past size or a major competitor?
How does Cafe Coffee Day's current store count compare to its past size or a major competitor?
The firm now operates 1480 outlets, having previously built a network of 1700. This past peak was significantly larger than Starbucks' presence in India, being ten times its size.