Devyani to focus on consolidating

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Devyani International (DIL), master franchise for KFC, Pizza Hut and Costa Coffee in this country, says it is on a drive to consolidate and financially strengthen its position.

According to Virag Joshi, president and chief executive, the company will not be able to meet its revenue target this year, due to declining per-store sales. It became profitable in 2015-16 with better management of operations and closing of unprofitable outlets.

"Our focus now is on opening outlets in locations where we can make money. We don't want to expand at the cost of profit," he said. DIL will be opening about 100 outlets, including all its franchises, in the next one year.

To cut losses, the firm shut 20-odd loss making Costa Coffee stores in the past two years. It will be opening no more than five to seven a year, with an eye on profitability.

"We have learnt from past mistakes. DIL will be ready for an IPO (initial public offer of equity) in two years as we streamline operations," said Joshi.

Cost cuts paid dividends in recent months. DIL's Costa Coffee operates some 100 outlets and has touched Rs 100 crore in revenue in the current financial year. Ashish Chanana, chief operating officer at Costa Coffee, said the chain was targeting locations such as airports, office buildings and hospitals which have higher footfall across the year. Costa Coffee has registered 10 per cent growth in sales in the past year and its bottom line is also improving. "Currently, nearly 60 per cent of our stores are making money," he said.

The entity is also considering options to start online delivery, which account for 30 to 40 per cent of delivery sales for major quick service restaurant chains in this country.