Tata Starbucks looks to break-even by March 2020

Rutam Vora Ahmedabad | Updated on August 07, 2019

FILE PHOTO   -  The Hindu

Growing coffee culture and rapid expansions to boost business prospects

Coffee store chain, Tata Starbucks Pvt Ltd is looking to aggressively expand its foot-print in Indian market with its eyes on the rapidly picking-up coffee culture among the millennials and upwardly mobile consumers.

Tata Starbucks , a JV between US-based Starbucks Coffee Company and Tata Global Beverages Ltd, looks to set up significantly more number of stores this fiscal than it did in the past.

Starbucks is optimistic about strong business growth in India over the next one year as it aims to come out of red in financial numbers after 2020. "Our continued growth in topline and sensible approach towards expansion will help us achieve break-even by March 2020," Navin Gurnaney, CEO, Tata Starbucks told Business Line after announcing five new stores in Gujarat - three in Ahmedabad and two in Surat.

Gurnaney also added, "First time in India, we are opening five stores in any state in one go. Gujarat is an important market for us. After opening these five stores on Thursday, the total number of stores will go up to 157 in India." Starbucks entered India with its first store opened at Mumbai in 2012.

Of the 157, the company has opened total 11 stores so far in this fiscal, as against total 30 stores opened during 2018-19. It caters to 270,000 customers per week in India. The company had reported turnover of Rs 442 crore for the fiscal 2018-19.

"Coffee business in India is growing substantially. The coffee culture is being spearheaded by millennials, upwardly mobile and people who travel and understand brand. Two years ago, we set up 25 stores (in a year). During last fiscal 2018-19 we added 30 stores. This year we will beat that number substantially and by end of March 2020, we will have added many more stores than we added in the past," Gurnaney said.

With per store investment requirements being estimated at Rs 1.7-2 crore, total capex plan by the company works out in excess of Rs 50 crore during current fiscal if it opens more number of stores than last year. However, Gurnaney refrained from giving investment figures for 2019-20.

The company is also opento other opportunities for growth including inorganic growth through acquisitions. But when quizzed about any likelihood of an investment plan in the coffee chain Cafe Coffe Day (CCD), Gurnaney denied to speculate about any talks for acquisition. "We are extremely optimistic about India. We will be thoughtfully aggressive (to expand). (At present) we are not in conversations with anybody for acquisition. But we are looking to grow all the time," he added.

In an effort to enhance customer experience, Starbucks is introducing new food items, catering to all customer needs including breakfast, lunch. The revenue share from food items is currently about 25 per cent, even as it continues to innovate with new items to meet the customer needs.

Published on August 07, 2019

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