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Costa Coffee looks at snapping franchise pact with Devyani International

British coffee retail chain Costa Coffee may part ways with Ravi Jaipuria-promoted Devyani International, which has exclusive franchise agreement for Costa Coffee in India. Two senior executives of the venture have put in their papers and the discord is with respect to the franchise partner’s reluctance to bring in more money to expand the operations, according to a report in The Economic Times citing sources.

Santhosh Unni, CEO at Costa Coffee India, is said to have resigned. However, his resignation has not been accepted, the paper said.

The two partners are expected to meet shortly to discuss the matter, Devyani International president and group CFO RP Gandhi told the paper.

The British coffee retail chain operator is also said to be exploring opportunities to appoint other franchises to grow the business in the country.

Costa Coffee, which runs around 100 outlets in the country, clocked revenue of nearly Rs 100 crore with positive EBITDA levels in the year ended December 31, 2013.

On the other hand, the largest coffee chain in the country – Cafe Coffee Day – has a network of around 1,400 outlets and posted retail revenue of Rs 810 crore for the year ended on March 31, 2013.

Costa Coffee also competes with Starbucks which launched in India sometime back in a joint venture with Tatas.

ICICI Venture-backed Devyani International also holds the master franchisee for global food and beverage brands like KFC and Pizza Hut, apart from Costa Coffee. It also runs South Indian chain Vaango and ice-cream brand Swensen's in the country.

(Edited by Joby Puthuparampil Johnson)

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