Specialty coffee chain Third Wave Coffee (TWC) has inaugurated its second cafe in the filter coffee capital of India, Chennai. TWC operates 139 outlets across India and the newest outlet has come up at Kilpauk, after the first one which came at the Phoenix Palladium Mall in 2024.
The Bengaluru-based cafe chain has raised over INR 500 Cr (USD 66 Mn) from various Investors over several rounds and is aiming to open 80-100 cafes in FY 25-26, according to Rajat Luthra, CEO of Heisetasse Beverages, which owns the coffee brand.
The company was last valued at INR 1,350 Cr (USD 156 Mn).
Interestingly, the chain runs 46 outlets in Bangalore while the rest of the cafes are spread over a handful of cities.
The company seems to follow a hub-and spoke model for better efficiency, by opening more cafes in a single city before embarking on a nationwide expansion.
The company has also recently entered Mangalore in Karnataka. The chain aims to be operating 150 outlets by end of this fiscal.
“90 per cent of our stores are giving us good (positive) EBIDTA, which has been possible through optimisation,” said Luthra in a media interaction.
The eight-year young brand has been a hit with the young at heart and coffee aficionados, serving high quality coffee, coupled with interesting food pairing.
Luthra said 80 to 100 more cafes would be coming up by next year. Highway outlets would also be a focus area for the company, which has an outlet coming up on the Mumbai-Pune expressway.
Two more highway cafes are scheduled for inauguration next month, he added.
Editor’s Note
According to TWC, it takes 7 months to turn EBITDA positive at the cafe level with over 150-170 transaction every day.
The biggest challenge for cafe chains in India is that customers order a single beverage and layover for over 2-2.5 hours, thereby making the table turnaround extremely slow and inefficient.
Unlike in Western countries where coffee is a staple beverage, India still runs on Tea sold at stalls which are dotted across the country.
At an average of INR 400 per bill, some of the best cafe chains make around INR 50,000-60,000 per day per outlet, boasting annual revenues of INT 1.80 – INR 2 Cr.
However, corporate overheads and brand marketing make the business a cash-burn for a long time and many cafe chains remain unprofitable even after several years of inception.
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