India has an estimated 4,000 coffee shops across the country. From entrepreneur driven single store cafes to city-wide, regional and national chains, coffee shops are brewing all over India over the last decade.
TATA Starbucks, the JV between India’s eponymous business house and the world’s largest coffee chain began amidst much fanfare in 2012.
With its first outlet in Mumbai, the coffee chain with over 40,000 cafes worldwide expanded to top metro cities in India in no time. However, around 2018-19, when there was an over all slowdown in the country, Starbucks India also slowed down its pace of growth.
Covid-19 lockdown was a reckoner.
However, right after the lockdowns began opening up, the company decided to grow its number of cafes in the country.
TATA Starbucks started opening a cafe every 3-4 days all through 2022 and 2023, reaching over 400 cafes in no time.
During Jan. ‘24, Laxman Narasimhan, the former CEO of Starbucks worldwide was in India for an orientation and announced that the comany would reach 1,000 cafes by 2028. This was a very aggressive growth projection.
The company had reported an annual revenue of INR 1,000 Cr for FY 2022-23, which was big news for the cafe Industry.
Earlier this week, Sunil D’Souza, CEO of Tata Consumer had told Reuters that the company could possibly slow down its growth for the time being.
This was due to high inflation and that consumers were being weary to spend on everything from cookies to coffee to fast food, Sunil said.
“Instead of opening 100 cafes, we will open 80 and next year, we will open 120 instead of 100”, he remarked.
Editor’s Note
TATA Starbucks is said to have made INR 1,200 Cr during FY 2023-24 with over 450 outlets in operation.
On an adjusted basis, this works out to a median range of daily sales of INR 82,191 per cafe per day for those which are already in operation for a while.
Note, that these are median numbers, which means there could also be cafes which are operating at over INR 2 lakhs a day, such as those at the top malls in India or at Airports. And then there could be those outlets which are overtly underperforming with a daily turnover of sub INR 50,000.
It is common to see large swathes of people occupy tables at coffee shops and discuss on topics ranging from Multi-level marketing to distribution businesses of various products, from politics to pitching startup ideas and so on.
With a lean menu, such as the one offered at TATA Starbucks, which include no more than a dozen food items to munch on- mostly ready to eat, heated and served, there is lesser room for making significant margins.
On the other hand, standalone cafes have an extensive menu, including pastas, pizzas, sandwiches and a lot more, that satiate the needs of discerning customers.
Sunil D’Souza had also mentioned the unavailability of good quality real estate, unlike in countries such as China.
This is a very important area of struggle for most retail and f&b brands in India. Attracting footfalls to the stores, after all, be it a mall or a high street store is one of the biggest challenges in retail.
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