Starbucks reported a 5% growth in sales to ₹1,277 crore, but losses widened 65% to ₹135.7 crore for its operations in India in FY25. The U.S.-headquartered coffee chain operates in India via a 50:50 joint venture with Tata Consumer Products under 'Tata Starbucks Pvt Ltd'. Of the total loss, ₹67.6 crore-about half-was borne by Tata Consumer Products, according to its latest annual report.
"The year witnessed demand softness in the overall QSR (Quick Service Restaurant) space, consequently the sales growth was subdued. However, demand has started to rebound in the second half of the year. Profitability remained muted due to demand softness in the overall QSR space," it said in the report.
In FY24, the company had posted a loss of ₹82 crore on revenue of ₹1,218 crore. In FY25, 58 new Starbucks outlets were launched-lower than the 95 opened the year prior. The company also expanded into 19 new cities, including tier-2 markets. Starbucks now operates 479 stores across 80 Indian cities.
"We remain committed to increasing our store base in India and get to 1,000 outlets by FY28, despite a more moderate number of store openings in the short term," it said.
Tata Consumer Products chairman N Chandrasekaran told shareholders that 2025 began on a positive note, with hopes of stable global growth, easing inflation, and lower interest rates. However, the global outlook shifted due to renewed concerns over growth and inflation amid rising policy uncertainty and major shifts in trade policy.
"Amidst a volatile global economic environment, India remains one of the bright spots of economic growth. India's long-term growth is underpinned by strong demographic and economic fundamentals and ongoing structural reforms. India's near term macro-outlook remains strong with stable growth expectation in 2025, falling inflation, and ongoing monetary easing. India's direct exposure to the US is limited as its goods exports to the US are just over 2% of its GDP, one of lowest among emerging markets," he said.
The past two years also saw a surge of domestic and international coffee brands entering India with aggressive expansion plans. For instance, Tim Hortons, a Canadian coffee chain, which opened its first outlet in India in 2022, plans to have over 100 stores in the next three years. British coffee and sandwich chain Pret A Manger too launched its first shop in Mumbai as part of a franchise agreement with Reliance Brands to open up to 100 stores over the next five years. Third Wave and Blue Tokai are already running more than 250 stores combined.
Consumers of global coffee chains such as Starbucks are also attuned to a takeaway culture which helps cafes add margins at very little cost.
"Starbucks' revenue per square foot is about 35% lower compared to metros. Also, city stores seem to be cannibalising heavily after it opened stores at a record pace in cities such as Mumbai and Delhi. So store profitability is a huge challenge in a situation where they have a few locations which do exceedingly well in terms of business and profits, while others completely drag the bottom line with lower sales, both in absolute terms and revenue per square feet," said a senior official in a leading quick service restaurant chain.
"The year witnessed demand softness in the overall QSR (Quick Service Restaurant) space, consequently the sales growth was subdued. However, demand has started to rebound in the second half of the year. Profitability remained muted due to demand softness in the overall QSR space," it said in the report.
In FY24, the company had posted a loss of ₹82 crore on revenue of ₹1,218 crore. In FY25, 58 new Starbucks outlets were launched-lower than the 95 opened the year prior. The company also expanded into 19 new cities, including tier-2 markets. Starbucks now operates 479 stores across 80 Indian cities.
"We remain committed to increasing our store base in India and get to 1,000 outlets by FY28, despite a more moderate number of store openings in the short term," it said.
Tata Consumer Products chairman N Chandrasekaran told shareholders that 2025 began on a positive note, with hopes of stable global growth, easing inflation, and lower interest rates. However, the global outlook shifted due to renewed concerns over growth and inflation amid rising policy uncertainty and major shifts in trade policy.
"Amidst a volatile global economic environment, India remains one of the bright spots of economic growth. India's long-term growth is underpinned by strong demographic and economic fundamentals and ongoing structural reforms. India's near term macro-outlook remains strong with stable growth expectation in 2025, falling inflation, and ongoing monetary easing. India's direct exposure to the US is limited as its goods exports to the US are just over 2% of its GDP, one of lowest among emerging markets," he said.
The past two years also saw a surge of domestic and international coffee brands entering India with aggressive expansion plans. For instance, Tim Hortons, a Canadian coffee chain, which opened its first outlet in India in 2022, plans to have over 100 stores in the next three years. British coffee and sandwich chain Pret A Manger too launched its first shop in Mumbai as part of a franchise agreement with Reliance Brands to open up to 100 stores over the next five years. Third Wave and Blue Tokai are already running more than 250 stores combined.
Consumers of global coffee chains such as Starbucks are also attuned to a takeaway culture which helps cafes add margins at very little cost.
"Starbucks' revenue per square foot is about 35% lower compared to metros. Also, city stores seem to be cannibalising heavily after it opened stores at a record pace in cities such as Mumbai and Delhi. So store profitability is a huge challenge in a situation where they have a few locations which do exceedingly well in terms of business and profits, while others completely drag the bottom line with lower sales, both in absolute terms and revenue per square feet," said a senior official in a leading quick service restaurant chain.
