Costa Coffee India master franchisee Devyani International Limited (DIL) has described the coffee brand as a “key anchor” to its growth strategy, even as Costa reduced its store count for the first time in more than five years.

According to DIL’s 2025-2026 Annual Report, Costa’s Indian network shrank by 22 outlets in FY26. Even so, revenue increased 7% year on year.

Net revenues in FY26 were Rs 212.5 crore (US$22.2 million), up from Rs 198.5 crore (US$20.74 million) in FY25.

DIL said it operated 198 cafés at the end of FY26, compared with 220 outlets at the end of FY25.

The company said Costa is focusing on non-traditional, high-traffic locations as it looks for new expansion opportunities, with the brand targeting annual openings of between 40 and 50 outlets.

“Having identified India as a high-potential market for sustained growth, Costa Coffee continues to expand its geographic footprint in the country,” the report reads.

“The brand’s approach remains centred around spreading its aroma beyond traditional high-street models in metro cities by targeting travel hubs, airports, railway stations, and corporate campuses.”

Costa is also seeking to appeal to Gen Z and Millennial consumers, citing a shift from tea to specialty coffee in the region as a significant opportunity.

To support that strategy, it introduced a range of permanent and limited-edition menu items, including Iced Matcha Lattes and Goji Berry Matcha.

“The coffee culture in India has emerged as a niche opportunity,” the report continues.

“Costa Coffee’s brand proposition is focused on capturing this niche, created by the massive shift from tea to specialty coffee among Gen Z and Millennials.

“Deepening our [connection] with these segments, we have developed our cafés as creative hubs, with localised special events engaging with the younger consumers.”

DIL said it adopted a “more disciplined and selective approach” to expansion across its portfolio during FY26.

That shift helps explain why Costa’s store count fell even as the brand remained a priority for the franchisee: the annual report points to a focus on location quality, customer segments, and format mix rather than simple outlet growth. For India’s coffee market, where specialty coffee is still developing alongside a larger tea-drinking base, the company is positioning Costa in places with steady footfall and younger audiences, including travel infrastructure and workplaces, rather than relying only on metro high streets.