Cafe Coffee Day shuts down nearly 280 outlets, cites these reasons behind slowing operations

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Published: July 20, 2020 3:53 PM

CCD has closed around 280 outlets in the first quarter of the current fiscal year due to profitability issues and expected increase in future expenses.

ccd, cafe coffee day to shut shops, ccd coffee cafeCCD reported a decline in average sales per day (ASPD) to 15,445 during the first quarter this fiscal from 15,739 in the corresponding period of the last fiscal. (Bloomberg image)

If you are waiting for the world to heal so that you can have a sip of your favourite coffee at Cafe Coffee Day (CCD) outlet, you may be disappointed to know that the coffee chain has closed around 280 outlets in the first quarter of the current fiscal year. The company has cited profitability issues and expected increase in future expenses behind the closure, PTI reported. Last year, the company closed about 500 cafes due to the same reasons during April-November 2019. With these closures, the total count of CCD’s outlets is 1,480 as on June 30, 2020.

The coffee chain reported a decline in average sales per day (ASPD) to 15,445 during the first quarter this fiscal from 15,739 in the corresponding period of the last fiscal. Due to lower margins and higher working capital requirements, the company has also temporarily stopped its export operations, while it shut down nearly 280 outlets based on various factors including the profitability, future increase in major expenses. CCD said that the decision is poised to result in continuing the remaining cafes profitable and adding value to the company as a whole to continue. 

However, while a number of outlets have been closed, the count of its vending machines increased to 59,115 units in Q1 FY20 from 49,397 in the same period last year. Meanwhile, after the untimely demise of founder VG Siddhartha, Coffee Day Enterprises clarified about the firm’s debt position in August last year and said that all obligations will be honoured. The total debt of the Coffee Day Group stood at Rs 4,970 crore at that time.

Now, Cafe Coffee Day, which is a brand owned by Coffee Day Global, a step-down company of Coffee Day Enterprises Ltd (CDEL), has been paring its debt through the sale of non-core assets after the death of its promoter V G Siddhartha. In March 2020, CDEL had also announced to repay Rs 1,644 crore to its 13 lenders after concluding a deal with Blackstone Group to sell its technology business park. 

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