Tata Starbucks, the equal joint venture between the Tata Group and global coffee chain Starbucks, aims to break even in FY20, a top company official said on Wednesday.
The break even is expected for FY 19-20.
“India, while it presents a tremendous amount of opportunity, there are also challenges,” Tata Starbucks chief executive officer Navin Gurnaney said at the India Food Forum here.
As per analysts reports, the company was expected to break even in FY19 but Gurnaney clarified that it will only happen in the next fiscal. He added that the occupancy costs are not that easy in the country but was proud of what the company could accomplish since it began its journey in 2012.
We are very proud of having broken even (target of FY19-20) in a very short period of time, he said while noting that QSR players like McDonald’s and Domino’s had to wait for a decade to break even.
In the context of the Asia-Pacific region, he said it is hard to make comparisons because of different formats and the relationship that Starbucks has. “In China and Japan outlets are company owned. There are several countries that are joint ventures and there are others that are licensing arrangements. So, it is hard to talk about true profitability. But as far as store profitability is concerned, we are getting in line exactly ahead of the other Asian markets,” he said.
The company reportedly had posted a net loss of Rs 30.5 crore in FY18 in India.
Tata Global Beverages in its annual report for FY 17-18 had said Tata Starbucks improved sales by 28 per cent with robust in-store performance and new stores added during the year. It had posted Rs 272 crore in sales during FY17. It had added that for the first time since inception, the company recorded a positive Ebitda.
Expansion mode
“Starbucks has 136 stores in the country and will finish this year at 144 stores, with additional outlets in the future,” Gurnaney, who took charge from last month, said. “Growth is always on our mind...What we will not do is grow just for the sake of growing. It is extremely critical for us to grow profitably. That is one thing we don’t want to do is grow indiscriminately,” he said.
Gurnaney said it was heartening to see the market in total growing. While noting that Indian per capita income is reaching USD 2000, he said, We have seen that in other Asia-Pacific markets, once the market approaches the USD 2000 per capita income point, then it is almost a recognised point of inflection. That’s where the consumption really takes off. It’s a big pie and there is room for everybody to grow.”