Starbucks shifts to smaller stores and drive-thru in India

Tata Starbucks currently operates 233 outlets across 19 Indian cities | Photo credit: Starbucks

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Starbucks will open smaller store and drive-thru locations in a bid to accelerate sluggish outlet growth in India. 

In a recent interview, Tata Starbucks CEO Sunil D'Souza said both partners are “driving Tata Starbucks to be far more aggressive in store openings, new formats, and in entering new cities," adding that the joint venture plans to open 40-50 outlets this year.
 
Formed in 2012, Tata Starbucks is a joint venture between Starbucks and India's Tata Consumer Products, currently operating 233 outlets across 19 Indian cities. 
 
Tata Starbucks has typically opened larger stores with premium interior design across India. However, D'Souza alluded that these stores were slow to scale and that smaller coffee shops and drive-thru locations could enable the chain to grow faster. 
 
Despite the company reporting 128% second quarter revenue growth, the company opened just 14 stores during the period, "Am I happy with 14? Absolutely not. The target's much more," D'Souza told reporters. "All we've got to figure out is how quickly we can scale," he added. 
 
Starbucks lags behind Indian coffee chain market leader Café Coffee Day, which operates around 570 stores across the country. However, the domestic chain has shrunk from more than 1,700 stores in 2018 amid spiralling debt and Covid-19 trading pressures. 
 
Tata Starbucks’ growth ambitions come as India recovers from the severe economic shock of the pandemic. A number of coffee brands have announced their intention to grow in India, indicating the country’s hospitality segment remains attractive to investors. 
 
In August 2021, New Delhi-based franchise operator Devyani International Limited announced a five-year extension of its partnership with Coca-Cola owned Costa Coffee in India. 
 
Meanwhile, in June 2021, Lavazza’s Fresh and Honest subsidiary has sought to expand its Suprabha coffee concession brand in India, targeting 100 locations in the south of the country within the next two years.