Blue Tokai, the specialty coffee brand backed by A91 Partners and actor Deepika Padukone‘s Ka Enterprises, reported a noteworthy surge in operating revenue during FY23, jumping over 70% to INR 127 crore compared to the previous year.
In the fiscal year ending March 2023, the Gurugram-based company experienced a 3.5-fold increase in net losses, reaching INR 43 crore. This uptick in losses can be attributed to the company’s substantial expansion efforts in a competitive market, where it contends with venture-backed players like Third Wave Coffee and established giants such as Starbucks India and Cafe Coffee Day.
According to regulatory filings obtained from Tofler, Blue Tokai saw a significant rise in total expenses, surging from INR 90 crore in the preceding fiscal year to INR 166 crore in FY23. This increase was predominantly driven by elevated costs associated with raw materials, employee salaries, and rents.
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Over the past year, the company has expanded its operations by opening over 30 stores, bringing the current total to approximately 92 outlets. Cafes contribute to almost two-thirds of Blue Tokai’s revenue.
Blue Tokai functions across three domains: brick-and-mortar café establishments, online retail and marketplace platforms, and business-to-business (B2B) offerings.
The firm has a presence in both India and Japan, boasting four roasteries and a chain of physical stores across cities like Delhi-NCR, Mumbai, Bengaluru, Hyderabad, Kolkata, Chandigarh, Mohali, and Pune. Additionally, it hosts periodic pop-ups in Tokyo.
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In fiscal year 2023, the company experienced raw material costs amounting to INR 50 crore, nearly doubling the INR 26 crore reported in FY22. This increase aligned with the upward trend in input costs observed across the food and beverage sector, driven by persistent high inflation rates.
Blue Tokai’s employee benefit expenses nearly doubled in FY23, reaching INR 43 crore from INR 22 crore a year earlier. Concurrently, the company’s rent costs also increased at a similar rate, climbing to INR 17 crore in FY23 from INR 9 crore in FY22.
In January last year, Blue Tokai announced a $30 million fundraise led by A91 Partners. At the time, the company had said it planned to add 200 stores over a three-year time frame. The fundraise took Blue Tokai’s total amount raised in external capital to $46 million.
Third Wave Coffee, a competitor of the company, secured a $35 million funding round led by the private equity firm Creaegis in September. During that period, it was reported that the Bengaluru-based quick-service restaurant (QSR) chain was achieving an annualized revenue run rate of INR 300 crore. However, in December, the company implemented workforce reductions, affecting at least 10% of its employees across different verticals.
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In September, Abcoffee, a tech-enabled specialty coffee chain, successfully raised $2 million in a seed funding round with Tanglin Venture Partners as the lead investor. Competitors in this sector include Slay Coffee, supported by Fireside Ventures, Alteria Capital, and Rebel Foods (the parent company of Faasos), along with Sleepy Owl Coffee, Hatti Kaapi, and Rage Coffee.
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Traditional participants like Starbucks India and Cafe Coffee Day have experienced growth in a sector that analysts suggest is undergoing heightened consumption. During the first half of fiscal year 2023-24, Coffee Day Enterprises, the parent company of Cafe Coffee Day, disclosed an 18% year-on-year surge in its operating revenue, reaching INR 481 crore, along with a net profit of INR 31 crore during the same period.
In January, SnackFax reported that Starbucks CEO Laxman Narasimhan stated the company’s intention to open a new cafe every third day in India, with the goal of reaching 1,000 stores by 2028.
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The Indian arm of the US-based company, operating as a joint venture with Tata Consumer, manages approximately 400 cafes across India. In the fiscal year 2022-23, Tata Starbucks achieved a revenue surpassing INR 1,000 crore, marking the first time it has crossed this milestone since its establishment in 2012.
India also witnessed the entry of other global players into the coffee quick-service restaurant (QSR) segment, including Canada’s Tim Hortons and the British brand Pret A Manger.
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