Starbucks’s Profit Margins took a Hit Leaving Less in the Hands

Indians started tasting the brew of coffee that most Americans enjoy on a daily basis. Tata Starbucks opened its stores across the country in posh locations allowingIndians space and time to work, date or just hang out If you have ever wondered how much a single store of Starbucks in India earns a tad over ?93,000 per day – taking its monthly earnings to around ?30 lakhs. But not all that is in the cash counter can be pocketed. An average Starbucks storeshells out ?6 lakhs as rent. The bad news is that rentals are going up. Last year, the rental expenses of the Tata Starbucks JV went up by 35%.This is true even as the outlets of Starbucks are getting smaller. Adding employee and raw material costs, only a part of the ?30 lakhs can be counted in as profit. In fact, for the first time last quarter, Starbucks’s profit margins took a hit leaving less in the hands.
The silver lining is that the footfalls of Starbucks have not gone down, even as the stores are getting smaller. Every day, , as many as 425 people walk into the store. That number has remained steady for the last four years.

These walk-ins also seem to be buying more. In the last quarter, , its sales went up by 27%, unaffected in spite of the economic slowdown that is making most Indians hold on to their cash.In the last three months, 28 new Starbucks stores were opened. The joint venture in India now has 174 stores across 11 cities. Unlike other food and beverage brands like Subway,Starbucks does not give away franchises to open a store to individuals. But people do have an option to apply for  a licensed shop in locations like airports, universities and supermarkets.

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