What Starbucks brings to India
What should we expect from the launch of Starbucks in India? Will it be an up market version of Coffee Day or should we expect a distinctive experience i.e. one with premium pricing? Will they Indianize quickly? How fast will they expand? We’re sticking our necks out and making some predictions.
Last week, a decade since it first started scouting around the Indian market Starbucks announced plans to launch its first stores in Delhi and Mumbai by August 2012.
The company’s international operations have been firing on all cylinders in the past one year. After initially stumbling in China it has begun to turn the corner.
While it will no doubt look to avoid those mistakes in India and lean on its JV partner for guidance the question remains: what should we expect from the launch of Starbucks in India? Will it be an up market version of Coffee Day or should we expect a distinctive experience i.e. one with premium pricing? Will they Indianize quickly? How fast will they expand? We’re sticking our necks out and making some predictions.
Whether Starbucks passes on these costs to consumers remains to be seen. People in the trade whom Forbes India spoke with said they expected a basic Starbucks coffee to cost an average of Rs125 – higher than the Rs60-75 that Café Coffee Day charges but lower than the Rs150 other international chains inIndiacharge.
In addition to coffee they expect food to be another key driver of footfalls. In India food usually makes up for 25 percent of revenue something Schultz knows only too well. “Just like we have done in China, we will create local relevancy, especially on the food side,” he said in an interview last year.
Given that a coffee shop generates returns of Rs200-250 per square foot -- about a fourth what the typical restaurant does-- getting a local food offering that drives footfalls will be key. (Per square foot returns are not an indicator of profitability as the footfalls in a coffee shop are higher). Here again the tie up with the Tata’s comes in. TajSATS, which is well versed with Indian food habits will be roped in to supply food to Starbucks outlets.
As we look ahead to the launch, we’d love to hear from you readers about what you’d like to see from Starbucks. Post your thoughts on the comments section.