- Homegrown coffee chain Cafe Coffee Day (CCD) shuts down 280 stores in the first quarter of the current fiscal year citing profitability issues.
- Cafe Coffee Day is a brand owned by the step-down company Coffee Day Enterprises Ltd (CDEL), Coffee Day Global.
Homegrown coffee chain Cafe Coffee Day (CCD) shuts down 280 stores in the first quarter of the current fiscal year citing profitability issues, and likely future spending increases, a company statement said.
Despite these closures, the overall number of its outlets as of June 30, 2.020 stood at 1.480.
Cafe Coffee Day is a brand owned by the step-down company Coffee Day Enterprises Ltd (CDEL), Coffee Day Global.
The coffee chain also posted a decline in average sales per day (ASPD) from 15,739 in the corresponding period of the last fiscal year to 15,445 during the April-June quarter.
However, from 49,397 in the same quarter a year ago, the count of its vending machines rose to 59,115 units in Q1 FY20.
“Owing to lower margins and higher working capital requirements, export operations have been temporarily halted and about 280 outlets are closed during the quarter based on various factors like profitability, a potential rise in major expenses,” the company said.
It further mentioned that the decision “must result in the continued profitability of the remaining cafes and add value to the business as a whole to continue as a concern.”
After the death of its founder V G Siddhartha, CDEL was paring its debt by selling non-core properties.
CDEL had previously announced in March this year that it will repay 1,644 crores to its 13 lenders following a deal with Blackstone Group to sell its technology business park
CDEL announced last September the sale of its Global Village Tech Park in Bengaluru to the multinational investment company Blackstone and Salarpuria Sattva at an enterprise value of 2,700 crores.
CDEL owns Coffee Day Global Ltd (Coffee Business), Sical Logistics Ltd (integrated logistics), Tanglin Developments Ltd (realty), Way2Wealth (financial services), and Coffee Day Hotels and Resorts Ltd (hospitality) and had debt obligations of at least Rs. 7,653 crore as of 31st March.
The debt was diluted after Siddhartha and two other subsidiaries of CDEL sold their entire stake in Mindtree Ltd to Larsen and Toubro Ltd for Rs. 3,200 crore and used a part of the money to repay debt.