India’s early romance with Starbucks is showing signs of strain as the coffee giant’s local business reports slowing momentum and widening losses. The company posted revenue of ₹1,277 crore in FY25, a modest increase of five percent, but its net loss rose sharply to ₹135.7 crore. The contrast with the brand’s entry in 2012 could not be more striking. Back then, customers willingly queued outside its first Mumbai outlet for a chance to hold a cup bearing their hand-written names.
Thirteen years have passed and the chain now operates 500 stores. Yet, the joint venture between Starbucks and Tata Consumer Products finds itself at a crossroads. Tata has made it clear that additional capital will be contingent on a leaner and more viable model for a market where rent, labour and consumer price sensitivity have reshaped the economics of the café business.
Senior executives from Starbucks, including global chief executive Brian Niccol, met Tata Sons chairman N Chandrasekaran in Mumbai recently to discuss the reset. The conversations centred on the need to move away from expensive large-format stores that occupy close to 3,000 square feet and depend on equipment built for far higher volumes than many outlets currently generate.
Analysts say the challenge is straightforward. A single Starbucks store must sell at least 400 to 500 cups a day to justify its footprint, even as smaller competitors operate profitably from compact spaces. Meanwhile, the rapid spread of rivals has chipped away at Starbucks’ once-unquestioned dominance. Tim Hortons and Pret have expanded their presence, while homegrown chains such as Third Wave and Blue Tokai together operate more than 300 cafés across major cities.
The strain is not limited to India. In the United States, Starbucks is closing stores, restructuring operations worth a billion dollars and battling an expanding workers’ strike. The company’s leadership insists a turnaround is underway, with plans to revive its role as a welcoming “third place” for customers. How that ambition aligns with shifting global and Indian market realities is now the question the brand must urgently answer.
