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US coffee chain Starbucks on Thursday announced its foray into six new cities in India, marking its single-largest store expansion in a year. The company, which has a joint venture with Tata Consumer Products in India, opened new stores in Siliguri, Nashik, Guwahati, Thiruvananthapuram, Goa and Bhubaneshwar. In an interview, Sushant Dash, CEO, Tata Starbucks Pvt. Ltd, spoke about the business disruptions from the Omicron variant of coronavirus, plans to step up its retail expansion strategy and the competitive coffee retail landscape in India. Edited excerpts:

With fresh curbs in place, how has business been affected?

We will be watching as the situation evolves. I think it’s still early days. With the new restrictions in different states, that is, different timings, capacities, weekend and night curfews, there is an impact if I look at the store operating index from where it was to where we are now, over the last seven to eight days. But it’s too early to say in terms of what the impact will be.

How are you managing possible employee shortages due to the ongoing wave?

As of now, we haven’t had any issues. It’s not like we haven’t had cases but things are still very much under control. We have not had any issues in terms of where we had to close stores, or we had to make any changes in terms of timing etc. As of now, at least, the numbers are very small, so no impact.

Will the new wave impact the target for opening more stores?

We have been very aggressive (with store openings). In fact, if there is one headline that I would look at from the last 12 months is the rapid expansion that we have done in terms of the store count and the number of cities we have entered. In fact, over the last 12-13 months, we have opened 51 new outlets, which is the highest single number of stores that we have opened by far.

From August 2020, we have entered 15 new cities. In fact, in this one-month period, from December to January, we entered six new cities. So, our expansion plans continue. We are very bullish about the potential of organized retail here. There could be temporary blips because of covid-19 but long-term, we remain optimistic about the Indian market and will continue to expand.

Is the aggression part of shift in strategy?

I don’t think there’s a shift in strategy. It’s the continuation of our strategy; we have obviously fast-tracked expansion because we believe in the potential of this market. Both our partners are willing to invest and that’s a huge positive for us.

As an example, wherever we have entered, in the next tier of towns, after the metros, the numbers have been very good. We have been welcomed, and we have found the consumer base. Sometimes, why you need to wait for the opportune time is the real estate. Because one is the potential in terms of numbers and consumers, but the other is also to get the right real estate to create the Starbucks experience. And that sometimes is a challenge.

How would you describe the competitive landscape we are seeing in the coffee market?

So, you obviously watch competition closely, but I think there’s enough space for everyone. We are a growing economy and there is enough potential. We are more concerned about how we optimize our offering, how we give consumers the best Starbucks experience that we can. That’s actually our priority.

Will you continue with this speed of expansion next fiscal?

The short answer is we will continue to expand. This is not just the strategy for the last 12 months. We will continue to hopefully accelerate, from the numbers that we have and be more aggressive. We will open in newer catchments in existing cities and look at opportunities outside.

Will you look at introducing lower price points in India?

We haven't had that issue as of now. As I said, the numbers have been very good. In the new cities, consumers want to experience Starbucks. So, they've been coming to the store. If I look at the numbers from a transaction or a per bill point of view, they're as good as any other city. As of now, I don't think we're looking at doing anything different from a pricing point of view.

 

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