Specialty coffee chain Third Wave Coffee, which is rapidly expanding, has achieved store-level earnings before interest, taxes, depreciation, and amortisation (Ebitda) positivity in 90% of the outlets, according to a senior company official. “We worked hard last year to get our unit economics right. Currently, 90% of our stores generate positive Ebitda at the store level,” Rajat Luthra, CEO of Third Wave Coffee said, adding that once store-level profitability is in place, overall profitability comes along with scale.
The WestBridge Capital-backed specialty coffee chain opened its 140th outlet—and second in Chennai—on Saturday. The company had earlier announced plans to reach 150 stores by March 2025. Third Wave’s revenue from operations reportedly grew 67% year-on-year to `241 crore in FY24.
However, its losses more than doubled to `110 crore during the previous fiscal. Without commenting on specific numbers, Luthra said the losses were on account of store expansions. He added that the company is in a much healthier position than last year, which was challenging for the overall food and beverage industry.
“It’s different when you’re expanding from 120 to 150 stores versus going from 20 to 100 stores,” he said, explaining that new outlets take 6-7 months to mature and break even. “When you scale from 20 to 100 stores, you don’t have returns for the first 7-8 months—that’s where the losses come from.” To improve unit economics, the company has undertaken various cost-optimisation measures, including better input sourcing and logistics management, which will be applied across all new stores.
For instance, Luthra said Third Wave is following a cluster-based expansion strategy to keep logistics costs under control. The company plans to add another 80-100 stores in FY26, with most of its growth coming from existing markets. The specialty coffee chain recently entered retail sales with packaged products, supported by its newly opened roastery and innovation lab in Bengaluru. Currently, merchandise accounts for 3-5% of the business, with plans to scale it to 10-12% by next year.
Luthra said the company will push aggressively into merchandise, including easy coffee bags and blends, through quick commerce and partnerships with horeca (hotel, restaurant, café). “The vision is to become an omnichannel brand, but cafés will remain our core business,” he added. Third Wave Coffee expects to close the current fiscal with `300 crore in revenue and aims to achieve profitability in the coming years.
» Read More
