Despite achieving profitability at the store level, Tata Starbucks—the 50:50 joint venture between Tata Consumer Products Ltd (TCPL) and Starbucks—is grappling with rising losses driven by rapid expansion, said a top executive from Tata Group.
While addressing shareholders at the company’s 62nd Annual General Meeting, PB Balaji, Group CFO of Tata Motors and non-executive director at TCPL, acknowledged that while individual Starbucks stores in India are profitable, the overall financial performance is being impacted by the aggressive pace of expansion.
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“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,” Balaji said.
Expansion strategy
The company added 58 new outlets and entered 19 new cities, including tier-2 markets, in FY25. Tata Starbucks now operates 479 stores across 80 cities. In terms of cities, Mumbai and Bengaluru alone now account for 100 and 50 stores respectively.
“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 added.
Financial impact
However, the cost of this growth is steep with Tata Starbucks posting a net loss of Rs 135.7 crore in FY25, posting a 65 per cent jump from Rs 82 crore in FY24, even as revenues went up by 5 per cent to Rs 1,277 crore. TCPL absorbed Rs 67 crore of the loss in line with its ownership.
Meanwhile, Sunil D’Souza, MD and CEO of TCPL, pointed to improving performance trends, with revenue growth accelerating to 7 per cent in the second half from 3 per cent in the first.
Furthermore, the company remained 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,” the company said in its annual filing.
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