{"id":6640,"date":"2025-01-09T05:33:00","date_gmt":"2025-01-09T00:03:00","guid":{"rendered":"https:\/\/www.thirdeyesight.in\/?p=6640"},"modified":"2025-01-10T03:48:43","modified_gmt":"2025-01-09T22:18:43","slug":"slowdown-in-growth-of-cafe-chains","status":"publish","type":"post","link":"https:\/\/myechoproject.com\/TES\/slowdown-in-growth-of-cafe-chains\/","title":{"rendered":"Depresso! Caf\u00e9s go through the grinder"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><em>Sagar Malviya, Economic Times <br>9 January 2025 <\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Starbucks, Barista, Chaayos and Third Wave Coffee are among caf\u00e9 chains facing the brunt of a slowdown in discretionary consumer spending. The impact is more severe for these retailers as they opened hundreds of new stores last fiscal year even as losses widened. To be sure, smaller chains such as Tim Hortons and Blue Tokai have bucked the trend.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Experts attribute the expansion rush to the urge among these retailers &#8211; both chains and standalone stores &#8211; to outpace competition. In certain instance, it led the same retailer to add stores in the same location, impacting its own growth instead of growing the pie.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">At Rs 250 to Rs 350 for a cup of coffee, most chains target affluent, discerning coffee enthusiasts with artisanal brewing and experiential consumption, restricting the consumer base.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Devangshu Dutta, founder of retail consulting firm Third Eyesight, said the number of outlets have been expanding since 2022.<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>This was true for not just the new brands but also existing ones, Dutta said. \u201cCafe density in larger cities has gone up dramatically in the last couple of years.\u201d<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Growth rate fell to just 5% in FY24 from nearly 70% at Barista and Chaayos while Starbucks\u2019 sales growth declined to 12% in FY24 from 70% in FY23. Third Wave saw sales growth slump to 67% from 355% during the period. Cafe Coffee Day posted a 9% increase in FY24, though sharply slowing from 59% a year ago.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Tim Hortons, however, more than doubled its sales last fiscal, its first full year of operations. Blue Tokai also bucked the slowdown trend with a 70% growth in FY24, compared to 73% in FY23.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Blue Tokai cofounder Matt Chitharanjan believes growth in India\u2019s out-of-home coffee market is more than just a caffeine surge\u2014reflecting the country\u2019s shifting economic fabric. \u201cCoffee consumption is strongly linked to income growth and India has reached a tipping point where it will support growth in the segment and should only accelerate going forward,\u201d Chitharanjan told ET. \u201cWe have not seen any slowdown in coffee consumption and our positioning is also more product centric instead of just a cafe, which helped in double-digit same store sales growth.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Tim Hortons, a Canadian coffee chain, which opened its first outlet in India in 2022, plans to have over 100 stores in the next three years. British coffee and sandwich chain Pret A Manger too launched its first shop in Mumbai as part of a franchise agreement with Reliance Brands. It plans to open up to 100 stores over the next five years. Third Wave and Blue Tokai are running more than 250 stores combined while Starbucks had over 330 stores as of March-end.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Tata Starbucks\u2014the equal JV between Tata Consumer Products and US-based Starbucks Corp\u2014said store footfalls have become a concern and the company has tweaked portfolio and pricing to attract traffic. Last year, the chain introduced classic hot and iced coffee starting at Rs 150 for a small cup, about 20-30% cheaper than regular coffee offered at Starbucks and other cafe chains.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cThe stress is being seen across the quick service restaurant segment. It\u2019s an overall consumer spending issue, especially in urban areas. And my hypothesis is probably food inflation is higher than what we think,\u201d Sunil D\u2019Souza, MD at Tata Consumer Products said during the December quarter earnings call.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Globally as well as in India, coffee growers have been hit with uncertain weather conditions while geopolitical factors are also affecting supply chains, which in turn, lifted prices to a record high. \u201cThe biggest challenge is erratic weather and climate change which has sent coffee prices to a 50-year high, but we will have to see how it impacts our pricing and profit after the current harvest,\u201d said Chitharanjan at Blue Tokai.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em>(Published in <a href=\"https:\/\/economictimes.indiatimes.com\/industry\/cons-products\/food\/depresso-cafs-go-through-the-grinder\/articleshow\/117063927.cms\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Economic Times<\/a>)<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Sagar Malviya, Economic Times 9 January 2025 Starbucks, Barista, Chaayos and Third Wave Coffee are among caf\u00e9 chains facing the brunt of a slowdown in discretionary consumer spending. The impact is more severe for these retailers as they opened hundreds of new stores last fiscal year even as losses widened. To be sure, smaller chains [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":6641,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[215,631,60,3,43,46],"tags":[379,851,100,52,211,849,381,382,174,177,102,106,107,290,226,291,217,113,267,59,191,69,147,121,632,230,714,396,383,397,384,398,662,715,848,850],"class_list":["post-6640","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-food-grocery","category-food-service-restaurants","category-india","category-press-quotes","category-retail","category-strategy","tag-barista","tag-blue-tokai","tag-brand-building","tag-branding","tag-cafe","tag-chaayos","tag-coffee","tag-coffee-bars","tag-consumer","tag-consumer-behaviour","tag-consumer-markets","tag-consumer-segments","tag-consumerism","tag-consumption","tag-fast-food","tag-food-beverage","tag-food-service","tag-growing-brands","tag-growth","tag-india","tag-indian-market","tag-indian-retail-sector","tag-international-brands","tag-organic-growth","tag-premium-brands","tag-quick-service-restaurants","tag-restaurants","tag-same-store-growth","tag-starbucks","tag-store-efficiency","tag-store-operations","tag-store-productivity","tag-tata-group","tag-tea","tag-third-wave","tag-tim-hortons"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Depresso! 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