Tata Starbucks profitable at store level, but rapid expansion deepens losses
Tata Starbucks posted a ₹135.7 crore net loss in FY25, up 65% from ₹82 crore in FY24. Revenue rose by just 5% to ₹1,277 crore, weighed down by weakness in the quick service restaurant sector during the first half of the year.
Coffee chain Starbucks, which operates in India via a 50:50 joint venture with Tata Consumer Products Ltd (TCPL), is seeing store-level profitability, but rapid expansion is hurting its profitability, a top Tata Group executive said.
“While the individual Starbucks stores are indeed profitable, we're currently in an investment phase. This explains the discrepancies you're observing in our financial outcomes," said P.B. Balaji, group chief financial officer of Tata Motors and non-executive director of Tata Consumer Products, while addressing shareholders at the company’s 62nd Annual General Meeting on Wednesday.
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The joint venture, Tata Starbucks Pvt. Ltd, now operates 479 stores across 80 cities, having opened 58 new outlets and entered 19 new cities, including tier-2 markets, in FY25. The company marked a major milestone this year by reaching 100 stores in Mumbai and 50 in Bengaluru.
“We are focused on market expansion at this point, and therefore, there are a lot of store additions happening. Same-store profitability is under control, and most of the losses that you see are because of the expansion we are undertaking," Balaji said.
“The individual stores are profitable, but of course, we are in the investment phase, and therefore, that is the reason why you are seeing the difference."
Sunil D’Souza, the managing director and chief executive officer of Tata Consumer Products, also commented on Starbucks' performance, highlighting sequential growth throughout the year.
“The revenue for the year grew by 5%. Growth has improved sequentially, growing 7% in the second half versus 3% in the first half," D’Souza said.
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Despite positive unit-level performance, Tata Starbucks posted a ₹135.7 crore net loss in FY25, up 65% from ₹82 crore in FY24. Revenue rose by just 5% to ₹1,277 crore, weighed down by weakness in the quick service restaurant (QSR) sector during the first half of the year.
“The newer stores are still in their gestation phase and haven’t turned profitable yet. As a result, they’re dragging down overall margins in the short term," said an equity research analyst based in Mumbai, requesting anonymity.
TCPL absorbed over ₹67 crore of the total loss, in line with its 50% stake in the venture.
The company remains optimistic about the long-term potential of the Starbucks brand in India. “We remain committed to increasing our store base in India and reaching 1,000 outlets by FY28," it said in its annual filing.
“Coffee demand is clearly growing in India, especially among young consumers, and Starbucks is well-positioned to benefit from this shift," said the analyst cited earlier.
India’s coffee retail market is intensifying, with Cafe Coffee Day operating over 430 outlets and Barista Coffee running over 400 stores. Emerging players like Third Wave Coffee and Blue Tokai Coffee Roasters are rapidly expanding their presence across the country.
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