‘Need to be careful about opening Starbucks stores’

Kolkata, Aug 14 (IANS) Tata Starbucks Pvt Ltd (TSPL) will take a cautious approach in opening further outlets in the country and will focus on recovering its fixed costs first to achieve the break-even point, an official said.

“It is important we open stores carefully to see we don’t go at the wrong locations… We need to be cautious about where we go,” chairman of Tata Global Beverages Cyrus P. Mistry said here on Friday at the company’s annual general meeting (AGM).

The Tata Group firm which owns brands like Tetley, Himalayan mineral water and Eight O’ Clock Coffee is the India partner for the Seattle-based Starbucks coffee chain.

“It is important that the business takes each step and understands the market properly and that’s the phase we’ll go through,” he said while responding to a question from a shareholder.

Mistry said at the store level, a number of stores are making profit but the “scale is still sub-scale”.

“Unless we reach a scale where we can recover our fixed costs in totality, we won’t break-even,” he said.

Tata Global Beverages has invested Rs.60 crore during 2014-15 to step-up operations in TSPL whose net assets stand at Rs.93.26 crore.

However, the private joint venture firm suffered a loss of Rs.23.50 crore in the previous fiscal year.

“Tata Starbucks is one case where we are investing on growth and it will take time for the business,” he said.

The venture added 29 stalls during 2014-15 taking the store count to 72 by March 31, 2015.

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