Localized menus, entry-price items set stage for Tata Starbucks’ expansion
Mumbai: Tata Starbucks Pvt. Ltd, a 50:50 joint venture between Tata Consumer Products Ltd and Starbucks Corp., plans to accelerate store openings as its store recalibration efforts start paying off in India, according to its chief executive Sushant Dash and TCPL CEO Sunil D'Souza.
“Essentially, we've agreed as a partnership with Tata and Starbucks that now we're in a good spot to start accelerating,” D'Souza told Mint.
“Having successfully completed the milestone of 500 stores last year (2025), we see the potential to add 50-100 stores annually as we continue to thoughtfully expand our footprint across the country,” Dash added.
The leaders’ confidence stems from early signs of traction in the newer initiatives. “Starbucks had probably one of their strongest quarters ever. Revenue growing 15% and with strong same-store sales growth (SSSG)," said D ‘Souza in the post-earnings call on 26 October.
Tata Starbucks, the largest cafe chain in the country with 505 stores, reported a net loss of ₹98.94 crore in fiscal year 2025-26 (FY26), down 27% from its ₹135.7 crore in FY25.
Strategy shift
It slowed store openings in late 2024 amid a broader slowdown in the quick-service restaurant sector and the rise of younger Indian brands. In response, it recalibrated its strategy, shifting towards localized marketing campaigns and state-specific food and beverage offerings linked to festivals such as Onam and Durga Puja.
“We have recalibrated pricing. We've launched products at an entry price point to attract consumers,” D’Souza said. “The beauty is the consumer comes in with the entry price point, then looks at the offering and then automatically upgrades,” D'Souza said.
This change was made without taking a hit on the product quality. “While we have lowered the entry price point, this is aligned with the smaller cup size, offering customers a more accessible way to experience Starbucks,” Dash said.
“We have also seen double-digit volume growth, which is extremely encouraging,” said Dash.
To attract Gen Z and younger consumers, Starbucks introduced trending items such as ube and matcha, with plans for upcoming launches like hojicha. The food menu is also getting a similar upgrade.
“We're looking at smaller stores. We're looking at the food menu,” D’Souza said. “Indians don't eat as much bread, and Indians love spice. So we are now recalibrating our food menu to be appealing to consumers,” he said.
In terms of real estate, the company is betting on differentiated formats such as transit and highway stores, drive-throughs, pet-friendly stores and Starbucks Reserve coffeehouses, Dash said.
Positive outlook
As Starbucks has reported stronger SSSG over the last few quarters, analysts are also confident in the brand. “Improving profitability in the international business, easing coffee cost pressures and a recovery in Tata Starbucks further support the earnings outlook," analysts at Mirae Asset Sharekhan said in a 26 October report on TCPL.
Competition in India’s café market is intensifying. Redseer Strategy Consultants estimates that the out-of-home coffee market will grow at a compound annual growth rate of 15-20% through 2028, reaching $2.6-3.2 billion. The market is attracting both Indian and international brands.
Café Coffee Day operated 424 stores (cafés) at the end of FY26, down from 435 stores a year ago, and reported a profit after tax (PAT) of ₹14 crore in the period. At its peak, the company operated over 1,750 stores.
Blue Tokai operates over 240 stores in the country. It reported ₹333 crore in revenue in FY25, according to the market intelligence platform Tracxn. Third Wave Coffee reported a revenue of ₹285 crore in FY25, with about 280 stores.
Canadian brand Tim Hortons operates more than 40 stores, and Reliance Industries-backed Pret-A-Manger operates more than a dozen stores in India. Both had plans to open hundreds of stores in India, which have not yet come to fruition.