Home >companies >people >Tata Starbucks CEO Avani Davda resigns

Tata Global Beverages Ltd on Thursday said Avani Davda, chief executive officer of Tata Starbucks Pvt. Ltd, a joint venture of Tata Global Beverages and Starbucks Corp., has resigned to pursue opportunities outside the group.

The joint venture, which completed three years in October and operates 78 stores, has appointed Sumi Ghosh as the new chief executive officer effective 1 January. Ghosh is an eight-year Starbucks partner, and was most recently the vice-president of Starbucks Midwestern US region. He also brings three decades of consumer retail experience, including 10 years in brand management and operational leadership roles.

The change in leadership comes at a time when the venture is facing questions on performance and outlook on profitability. “In a new venture, the management comes in with lot of assumptions and performance which are not questioned in the first couple of years. In this period, it’s all hunky-dory. However, it’s only in the third year that a new venture starts looking at numbers and questioning performance," said K. Sudarshan, regional managing partner (Asia), EMA Partners International, a headhunting firm, adding ideally, the term of a chief executive should be of a longer term.

In 2014-15, Tata Starbucks reported a net loss of 42 crore on revenues of 171.2 crore, according to a November report by Economic Times, which quoted the numbers filed in its annual report with the Registrar of Companies.

Starbucks started with big stores and are now opening smaller ones as it continues to expand and look at profitability, said an industry expert who did not want to be identified, adding however deep their pockets may be, companies have to look at profitability and with the high cost of operations for a Starbucks outlet, this will take longer. An average Starbucks store is 1,700-2,000 sq. ft, which is much larger than Cafe Coffee Day, Barista and Dunkin’ Donuts stores, that are on average 800-1500 sq. ft, according to the Red Herring Prospectus of Coffee Day Enterprises Ltd (CDEL), which runs India’s largest cafe chain Café Coffee Day.

The cafe market in India is not easy. Last year, Australian coffee cafe brand Gloria Jean’s Coffees exited India. Even Barista which was bought by Delhi-based Carnation Hospitality Pvt. Ltd last year for a reported 100 crore is on the block again. If a deal goes through, this will be the fourth time Barista, which started serving coffee to Indians beginning 2000, changes hands, according to a November report by Mint.

Nonetheless, it’s a large market and incumbents continue to expand. Currently, there are approximately 100 café and bakery chain brands with an estimated 3,200 outlets spread across various cities in India, said the CDEL prospectus. CDEL made an initial public offering of 1,150 crore in October. Smaller chains like Australia’s Di Bella are also fast expanding.

Ghosh and his family will relocate from Chicago to Mumbai early next month. He will work with Davda till early February to ensure smooth transitioning, the company said in its statement.

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