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MC Interview | Inflation has not hurt demand, says Tata Starbucks CEO

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Starbucks India CEO Sushant Dash pointed out that while walk-ins have increased, delivery numbers have also remained high (File Image)

Starbucks India CEO Sushant Dash pointed out that while walk-ins have increased, delivery numbers have also remained high (File Image)

Starbucks in India has surpassed pre-pandemic footfall levels and will continue to expand in the country, CEO Sushant Dash told Moneycontrol in an interview. India remains one of the fastest-growing markets for Starbucks globally, he said.

Footfalls at Starbucks stores exceeded customer visits in 2019-20. Dash said Starbucks in India has been ahead of its pre-Covid numbers from the start of the year. Currently, the coffee company serves almost 330,000 customers every week.

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Recovery

Dash said the Starbucks in India, a joint venture with the Tatas, has conducted normal business for some time now. However, the rate of recovery differed depending on the segment.

“Stores in office spaces took a bit more time to recover because a lot of people worked from home. Then the hybrid model started and now we are seeing that people are going back to their normal office schedule,” he said.

Expansion

Tata Starbucks has more than 300 stores in India across 36 cities. In its 10th year in India, Starbucks opened 32 outlets and expanded to 10 cities.

“From a business point of view, we are good and that is why we are so confident about our store expansion and going to other (smaller) cities,” Dash said. “We have been bullish for the last 18 to 24 months, which is indicated by the kind of expansion that has happened. We will continue to be on the same path.”

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The company opened more than 50 stores in India in FY22, its biggest expansion in the country.

Digital thrust

Apart from store expansion, Tata Starbucks is also bullish on its digital and online outreach. It engages with 1.3 million people across platforms such as Instagram. The company offers deliveries via mobile, app, WhatsApp and through e-commerce companies.

Accordingly, Dash pointed out, while walk-ins have increased, delivery numbers have remained high.

“This has helped the business grow and that’s been a big positive. I feel ordering in food is going to be a normal behaviour, even as things get back to normal,” he said. “Hence, deliveries will continue to play an important role.”

Inflationary pressure

According to Dash, the increase in prices of inputs has impacted the company and triggered a wave of cost optimisation.

“Inflation is a reality. It has hit everyone across the board. It has impacted us in terms of cost. We have seen inflation in the range of 8 to 9 percent over the last six-seven months. But we have found ‘ways and means’ to handle it,” he said. “However, inflationary pressure has not changed our strategy of expansion or thought process. We have not seen any major impact of it on demand.”

Financials

Dash said the company has been ‘cash positive’ for some time now. Sales increased 76 percent to Rs 636 crore in FY22.

Innovation, new stores

Recently, the JV introduced Starbucks Reserve in Mumbai. The premium store offers a selection of rare, small-lot coffees. The outlet features two bars – the main bar has all the core and seasonal beverages, while the reserve coffee bar has more exclusive handcrafted beverages.

“Bringing the reserve store demonstrates our commitment to the market. We will continue to evolve our brand and business in India,” Dash said.

10 years in India

In 2012, Starbucks entered India through a 50/50 joint venture with Tata Consumer Products. The first store was opened by Howard Schultz, the interim CEO of Starbucks, and Ratan Tata, Chairman Emeritus of Tata Sons, at Fort, Mumbai. At present, it has over 2,000 employees and the stores are branded Starbucks Coffee – A Tata Alliance.

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