Starbucks Plans to Reduce Costs and Pricing in India Following Tata Investment Pause: Report

As per The Economic Times report, Starbucks is preparing to adjust its India operations after Tata Consumer Products reportedly paused fresh investments into the joint venture. The 2 companies run Starbucks India on a 50:50 basis. The investment pause is linked to concerns over operating costs and store-level profitability. 

Issues With the Current Store Format 

According to The Economic Times, Tata has raised questions about Starbucks’ global format being used in India. The standard 3,000 sq ft store layout, equipped to produce around 700 cups a day, has not matched local cost structures.  

With drink prices averaging about ₹400 and rentals remaining high in major cities, the model has become difficult to justify in a market where consumers often seek lower-priced options. 

Starbucks and Tata Leadership 

The reports noted that Starbucks CEO Brian Niccol met Tata Sons chairman N Chandrasekaran in Mumbai last week to discuss the next steps. The discussions largely centred on revisiting the store model and identifying changes that would make each outlet more financially sustainable. 

Shift Towards Smaller, Cost-Lighter Stores 

The joint venture is now considering a shift towards smaller stores specifically for Indian conditions. This includes lighter equipment, reduced staffing requirements and lower fixed costs. Pricing changes may also be explored to bring the offering closer to what Indian customers are willing to pay in a crowded and price-sensitive café market. 

India’s Role in Starbucks’ Plans 

Despite these issues, India remains part of Starbucks’ global expansion . During his visit earlier this year, Niccol described the country as important to the company’s long-term presence. He highlighted the effort to test different store formats, ranging from compact café setups to larger spaces built for longer stays. 

Read More: Starbucks Divests 60% Stake in China Retail Operations in $4 Billion Deal! 

Conclusion 

The restructuring is aimed at finding a workable format for the Indian market. The next phase of expansion will depend on how quickly the joint venture can implement these changes and improve store-level economics. 

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