INDIA – The joint venture between Starbucks and Tata Consumer Products Limited (TCPL) has reported a widened loss of Rs 81.8 Crore (US$9.7 million) despite sales growth of 12% to Rs 1,218 Crore (US$146.6 million) for the year ended March 2024.
The revenue increase was due to the joint venture’s expansion strategy. In the reported year, the venture opened 95 stores throughout India, breaking the record of 71 stores set in FY23.
“TSPL now has 421 stores across 61 cities in India. The year witnessed demand softness in the overall QSR space, consequently our same-stores sales growth was subdued. During the year, we ran a number of campaigns to increase footfall and strengthen our leadership position in coffee,” Tata Starbucks Private Limited (TSPL) said in a statement.
However, sluggish demand for quick service restaurants (QSR) has negatively impacted the venture’s profits.
Earlier in the year, Starbucks India announced plans to open 1,000 stores in India by 2028. The joint venture reiterated that the losses would not derail its expansion efforts in India.
The expansion strategy will involve expanding drive-throughs, 24-hour stores, and airport outlets to serve customers in the most traffic-laced locations.
It will also involve doubling its workforce and entering tiers 2 and 3 towns in India.
“We will continue to elevate customer and partner (employee) experiences and invest in infrastructure while executing strategic cost-saving initiatives to improve profitability,” the statement continued.
These expansion efforts are part of the venture’s plan to take advantage of its strong market position to leverage the growing coffee and retail market in India.
According to the data platform Statista, the Indian coffee market was worth US$500 million in 2023 and is predicted to grow at a compounded annual growth rate (CAGR) of 9.2% until 2028.
This growth potential has also attracted other players in the Indian market, such as Tim Hortons, Pret a Manger, and Third Wave Coffee.
Tim Hortons also announced plans to open more than 100 stores in India in the next three years.
Pret a Manger, through its franchise agreement with Reliance Brands, plans to expand its outlets from the current 11 to more than 100 outlets in India within the next five years.
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