TATA Starbucks recorded the fastest store expansion in the company’s 45-year history.
MUMBAI: Tata Starbucks, A joint venture between the Tata Group and Starbucks, increases its sales by 30% in FY19, helped by the addition of new outlets as demand for quality beverages increased in Indian metro cities.
However, it added 25 stores in the last financial year. As compared to last year when it mostly focussed on profitability and halted aggressive expansion its growth is nearly Double.
In the latest annual report of TATA global, Tata Starbucks improved sales by 28% in FY 2017-18 with increase in-store performance and new stores added during the year. With the JV posting sales of Rs 272 crore in FY16-17, a back-of-the-envelope calculation shows revenue to be about Rs 348 crore during the last fiscal year.
Starbucks, which started operations in India in October 2012, recorded the fastest store expansion in the company’s 48-year history. Tata Starbucks opened about 30 stores last year and now it has a total count of 146 stores and The Seattle-based coffee chain opened 15 cafes in just last quarter and about a third of its overall store network is in Mumbai.
Tata Starbucks made profits at the store level and all cities were profitable. “Double-digit top-line growth for the full year was driven by new stores and improved store performance, said Tata Global Beverages investor report.
With 1,750 cafes, rival Cafe Coffee Day is still by far the market leader in the cafe market and has posted 10-11% same-store sales growth over the past three quarters. Within the quick-service restaurant space, Burger King outsold Starbucks in FY18, Burger King entered India in 2014.
In India, however, office-goers and students go to cafes to relax and spend hours over coffee and snacks so consumers are attuned to a takeaway culture, which helps them add margins at very little cost. As Real-estate costs in India are high so it is necessary to make it important for retailers that average price realisation per square foot of space is adequate to make sales profitable.
Starbucks has expanded its partnership with only Tata Group beyond over India by launching the latter’s single-origin coffee in the US and Himalayan mineral water in Singapore nearly two years ago.