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Starbucks India to Shrink Stores, Cut Costs
27 Nov
Summary
- Starbucks India revises business model to smaller, cheaper stores.
- Tata Group demands lower costs and a more profitable format.
- Expansion goal of 1,000 stores by 2028 is now paused.
Starbucks' India joint venture is undergoing a major strategic shift, driven by partner Tata Consumer's demand for a more cost-effective business model. The current high-cost strategy, characterized by large stores and premium pricing, is deemed unsuitable for the Indian market. Consequently, fresh investment from Tata has been slowed until a profitable, leaner format is agreed upon, prompting high-level discussions between Starbucks and Tata leadership.
The proposed overhaul involves a pivot to smaller, India-specific stores with lighter equipment and tighter staffing. Pricing and menu architecture will become more accessible, and store layouts are being redesigned to align with local consumption patterns and real estate realities. This recalibration has led to the pause of the previous goal to reach 1,000 stores by 2028, with the current count at 500 outlets since its 2012 inception.
Revenue in FY25 saw a modest 5% rise to ₹1,277 crore, yet losses widened significantly to ₹135.7 crore. This strategic reset occurs amid intensifying competition from both international brands like Tim Hortons and Pret a Manger, and homegrown rivals such as Third Wave and Blue Tokai. The joint venture, owned equally by Tata Consumer Products and Starbucks Corp., is now focused on locking in a revised format before further capital infusion.
