Third Wave Coffee Roasters, a Bengaluru-based QSR coffee chain, saw its losses nearly quadruple in the financial year ended on March 31, 2023. The startup reported a net loss of INR 54.3 Cr in FY23, an increase of 272% from INR 14.6 Cr in the previous fiscal year.
Established in 2017 by Ayush Bathwal, Anirudh Sharma, and Sushant Goel, the startup now runs more than 100 stores nationwide. Additionally, it markets coffee products via its website and various e-commerce platforms.
Despite a 356% surge in sales to INR 144.4 Cr in FY23 from INR 31.7 Cr in the prior year, the startup experienced a rise in its losses. The boost in operating revenue is credited to the expansion of retail outlets managed by the startup.
Third Wave Coffee generates revenue through the sale of coffee and other food items, both through offline and online channels.
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With additional income factored in, the startup witnessed a 351.8% increase in total revenue, reaching INR 144.6 Cr from INR 32 Cr in FY22.
The startup’s overall expenditure surged by 332%, reaching INR 201 Cr in FY23 compared to INR 46.5 Cr in the preceding fiscal year.
The startup saw its procurement expenses skyrocket by 387%, reaching INR 43.3 Cr from INR 8.9 Cr in FY22.
Employee costs surged nearly fourfold to INR 57.6 Cr from INR 15 Cr in FY22. These costs primarily encompass wages, gratuity, and PF contributions. The increase in employee benefit expenses correlates with the startup’s expansion, marked by the opening of more outlets in FY23.
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In FY23, the startup allocated approximately INR 43 Cr towards rent, marking a substantial increase of 310% from INR 10.5 Cr in the preceding fiscal year.
Third Wave Coffee witnessed a rise in its EBITDA loss, reaching INR 38.7 Cr in FY23 compared to 12 Cr in the previous fiscal year. Despite this increase, the EBITDA margin showed improvement, narrowing to -26.8% from -37.8% in FY22.
In September last year, the startup secured $35 Mn in its Series C funding round, spearheaded by private equity firm Creaegis. Notably, existing investors such as WestBridge Capital and Udaan cofounder Sujeet Kumar also participated in the funding round.
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To date, the startup has secured a total funding of $62 Mn, with notable backers including Nikhil Kamath and Ayyapan Rajgopal.
In December last year, Third Wave Coffee underwent a restructuring initiative, resulting in the termination of approximately 10% of its workforce, or around 80 employees, aimed at streamlining its teams.
Third Wave Coffee competes with Slay Coffee, Blue Tokai, and Starbucks.
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