Losses Fail to Deter Starbucks' Expansion in India as Outlets Surpass 500

Stock News
Feb 20

Despite widening losses, Starbucks' Indian subsidiary continues to open new stores and introduce products such as protein foam coffee to strengthen its presence in the world’s most populous country. Sushant Dash, CEO of the joint venture Tata Starbucks—equally owned by Starbucks and Tata Group—stated in an interview that as investments accelerate, the coffee chain, which already leads India in store count, will prioritize expansion over profitability. Dash remarked, "India’s status as a focus market has not diminished—if anything, it has remained as important as ever." He noted that India ranks among Starbucks' top five global markets. While the subsidiary has achieved positive cash flow, Dash declined to provide a timeline for reaching profitability. Starbucks is doubling down on India despite fierce local competition and slowing consumer demand, as the Seattle-based chain seeks new markets to reignite growth. The company is streamlining operations in the U.S. while navigating consumer boycotts in the Middle East. Last year, it sold a 60% stake in its China business. In India, Tata Starbucks saw its losses nearly double to ₹1.5 billion ($16.5 million) in the year ending last March, according to data platform Tofler, even as revenue grew by 4.8%. The company also faces competition from agile local newcomers attracting coffee drinkers—from no-frills basic coffee provider abCoffee to specialty roasters like Blue Tokai. Same-store sales growth, a key industry metric, remained at 3% for two consecutive quarters after a previous year-on-year decline, as reported by partner Tata Consumer Products Ltd. in last month’s earnings call. The company added 12 new outlets, bringing its total store count in India to 504 across 81 cities. Drawing from its global experience, such as offering egg rolls during Singapore’s Lunar New Year, Tata Starbucks is localizing its menu with regional flavors. It sells Malabar egg roast and keema variants in South India, rolls inspired by Mutton Kosha Mangsho in Kolkata, and Vada Pao-style buns in Mumbai. Dash noted that younger consumers are also driving demand for cold brews and lighter beverages, including plant-based milk. Sugar-free drinks and high-protein food options are among the company’s other initiatives to attract health-conscious customers.

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