Tata
Starbucks, a 50:50 joint venture between Tata Global Beverages and
Starbucks Coffee of the US, has reported a 30 per cent top-line
growth in fiscal 2018-19, driven by new stores openings and improved
performance.
Tata
Starbucks, which is expecting to break-even in the current fiscal,
has opened 146 stores till date.
Tata
Starbucks reported "double digit top-line growth -- 30 per cent
for the full year, driven by new stores and improved store
performance", Tata Global Beverages Ltd (TGBL) said in an
investors' presentation.
Tata
Starbucks revenue for the 2018-19, is expected to be around Rs 450
crore.
TGBL
said Tata Starbucks opened 30 outlets in the previous fiscal, out of
which, 15 new stores were opened during the last quarter of the
financial year.
The
company said, it has reported profits at store level and all cities
were also profitable and it has also witnessed rise in food share in
overall sales.
Starbucks
entered India with the opening of its first store at Horniman Circle
in Mumbai in 2012.
Joint
venture company Tata Starbucks, which runs the Seattle-based cafe
chain in India, is looking to cut losses and improve sales even as it
expands its footprint in the country. Speaking to Business Standard
in his first interaction since taking over as company chief executive
officer (CEO) in January, Navin Gurnaney said the focus for the firm
was on “unit economics” as it sought to widen operating profit.
“It is all about thoughtful aggression,” Gurnaney said. “Our
endeavour is to select our locations carefully where we can derive
maximum mileage and sales throughput. Starbucks is positioned as the
third place globally and that thinking guides us locally too,” he
said.
In 2017-18
financial year (FY18), Tata Starbucks had reported its first
operating profit at Rs 1.26 crore on a total revenue of Rs 345 crore.
But at the bottom line level, the company remained in the red,
reporting a net loss of Rs 30.5 crore (in FY18). While lower than the
previous year (net loss of Rs 32.3 crore in FY17), analysts expect
Tata Starbucks to break-even in the next few years as competitive
intensity from the likes of Cafe Coffee Day, McCafe (from McDonald’s)
and Barista apart from fast-food joints such as Domino’s, KFC and
Pizza Hut (all of whom serve beverages) remains high.
Cafe
Coffee Day, for the uninitiated, has over 1,700 stores, while McCafe
has over 180 stores and Barista has over 200 outlets in India. In
August last year, Coca-Cola globally acquired Costa Coffee in a
$5.1-billion transaction, with plans to rejuvenate the brand here.
Gurnaney
said the JV company would close FY19 with a total store count of 144
in eight cities, adding nearly 30 stores in the current financial
year. “We have steadily increased the number of stores we add per
year. In 2017-18, we added 25 stores. The year before that (2016-17),
we added 16 stores (per year) and before that (2015-16) we added 10
stores a year,” Gurnaney, who took over from Sumitro Ghosh, the
erstwhile Tata Starbucks CEO, said. Ghosh returned to the US after a
three-year stint with the JV company. He has picked up a role within
the Starbucks organisation, Tata Starbucks said when announcing his
exit in October.
