Starbucks India plans to resume an aggressive store expansion strategy after spending nearly two years reviewing its business model. This announcement was made by Sunil D'Souza, Managing Director and CEO of Tata Consumer Products. The corporation began this restructuring period amid a general slowdown in consumer spending.
Starbucks, which operates in India through a joint venture with Tata Consumer Products Ltd (TCPL), used the last 18–24 months to 'adjust' its entire operational model. This adjustment covered aspects such as store size, capital expenditure per location, and beverage pricing, he told PTI agency.
According to D'Souza, the situation is starting to improve as Tata Starbucks has demonstrated sales growth in existing stores for four consecutive quarters. He noted: 'We now have four consecutive quarters of sales growth in existing stores, and we are seeing acceleration. We will now start aggressively expanding the number of stores again.'
TCPL has a 50:50 joint venture with the American Starbucks Corporation, named Tata Starbucks, which manages about 500 Starbucks cafes in India. Previously, the company aimed to open around 100 new stores annually and maintained this pace for several years, but slowed expansion over the last 18–24 months due to declining demand in the Quick Service Restaurant (QSR) and discretionary spending segments.
Nevertheless, D'Souza emphasized that they utilized this time to review the entire business model, as they believe Starbucks in India has a 'significantly longer development horizon.' He specified that the updated expansion will combine opening new locations with increasing density in already established markets.
Starbucks is present in approximately 80 cities, which D'Souza considers a 'good number' to operate in, with further city expansion being limited. However, he added that store density within cities will increase significantly, as operating more than five stores in one city provides economies of scale, allowing for efficient delivery and kitchen operations.
He also mentioned that N. Chandrasekaran, Chairman of TCPL, stated a long-term goal at the June shareholders meeting—to match the scale of Starbucks in China, where there are about 8,000 stores.
In the June quarter, Tata Starbucks reported an 11 percent revenue increase, opening four new stores, including two Reserve locations in Kolkata and New Delhi, which strengthened the premium portfolio. As of the end of June, the joint venture operated 498 Starbucks stores in India. According to TCPL's latest annual report, the joint venture showed a 7 percent revenue growth to INR 136.7 billion in fiscal year 26, while net loss decreased to INR 98.95 billion due to store expansion and positive sales growth in existing locations.