NEW DELHI: Tata Starbucks, a joint venture between Starbucks Coffee Company and Tata Consumer Products Limited, is facing the pinch of sluggish consumer spending in urban areas as revenue growth remained underwhelming in the current financial year.
Starbucks revenue in the September quarter grew at a subdued rate of 2%, which the company attributes to the overall slowness in the QSR segment. The revenue growth was 4% in the previous quarter. In the previous financial year (2023-24), Starbucks had posted a revenue growth of 12% at R1,218 crore. Starbucks accounts for around 8% of Tata Consumer Products’ consolidated revenue.
Sunil A D’Souza, the CEO of Tata Consumer Products, says that the revenue growth from Starbucks is in line with what “we are hearing of across the overall QSR space.” He says traffic has been an issue but not the ticket size.
“Once the consumer enters, we do see spending,” D’Souza said in an analysts’ call. He added that the team has put together a range of initiatives to drive traffic including launching a new classic range across both food and coffee segments with key focus on the pricing. Further elaborating the sluggish revenue growth in Starbucks, D’Souza calls it an overall consumer spending issue, especially in urban areas.
“My hypothesis is probably food inflation is higher than what we think it is, and the impact is far higher. And, therefore, there is a tightening of the belt. We also have to remember there is a shift in festival dates,” he explains. Meanwhile, the company has claimed that Starbucks has become the largest café operator in India based on store count. Tata Starbucks now has 457 stores across 70 cities in the country. In the September quarter, the company opened 19 new stores and entered five new cities. The company has set a target of opening 1,000 Starbucks stores in India by 2028.
In the first half of the current financial year, the company has added 36 new stores and entered nine new cities. In the last financial year, Starbucks had opened 95 new stores. Starbucks compete with cafés like Café Coffee Day, Costa Coffee, Barista and Blue Tokai Coffee. Starbucks’ nearest competitor Coffee Day Global Limited’s flagship café chain brand Café Coffee Day (CCD) owns 450 cafes in 141 cities.