Tata Starbucks, a joint venture between Starbucks and Tata Consumer Products, said on Tuesday it plans to operate 1,000 cafes in India and double its workforce by 2028, amid fierce competition from local chains.
Since opening its first cafe in October 2012, Tata Starbucks' store count has grown to 390. It has opened 57 stores so far this fiscal year and had added 71 in the previous fiscal.
The coffee chain said it plans to enter Tier-2 and Tier-3 cities in India and increase the number of its drive-through, airport-based and 24-hour cafes. It aims to double its headcount to 8,600.
The US giant competes with Bengaluru-based Cafe Coffee Day and foreign entrant Barista, among others. It also faces growing competition from private equity-backed Third Wave and Blue Tokai which have opened about 150 stores between them in the last three years.
Tata Starbucks' 14% on-year revenue growth in the three months to September 30, 2023, was the slowest since the March quarter of 2020 when it had to close all its stores due to the COVID-19 pandemic.
Among the first foreign coffee brands to enter India, Starbucks has been revamping its strategy in India since last year, launching a six-ounce drink starting at $2.24 and milkshakes in an attempt to woo customers in the tea-loving country.
Global Store Count
In November, company executives said at a conference that Starbucks expects to save $3 billion (€2.8 billion) in costs over the next three years through store efficiencies and improved manufacturing and sourcing.
It also unveiled plans to grow its global store count to 55,000 by 2030 - from more than 38,000 currently - and expects to double the hourly income of baristas from 2020 levels over the next two years through increased working hours and higher pay.
Starbucks forecast fiscal 2024 per-share profit growth of 15% to 20%, above analysts' estimates of 15.1%, according to LSEG data.
It expects fiscal 2024 global comparable sales to grow between 5% and 7%, with China sales also projected to rise 4% to 6% in the last three quarters. Sales in China would be higher than that range in the first quarter, it said.
"The consumer is stressed, but they're going to go to ... those affordable luxuries ... and Starbucks does a great job with that," Stephens analyst Joshua Long said in November.
Global comparable sales at Starbucks climbed a better-than-expected 8% in the quarter ended October. 1. Adjusted per-share profit of $1.06 surpassed estimates of 97 cents.
Article by Reuters, additional reporting by Hospitality Ireland.