Starbucks brews lower-priced coffee to revive same-store sales

NEW DELHI: Starbucks has launched a “classic” coffee menu with prices discounted from regular coffee prices in some stores, as the cafe chain attempts to combat falling footfall across the food service industry.

Launched in September, the menu includes classic hot and iced coffees – starting at $A small donation of $150. This is at least 20-30% cheaper than the regular coffee offered by Starbucks.

The move comes as restaurants and cafes feel the pinch of a slowdown in the wider dining out industry. This can be attributed to high food inflation adversely affecting households.

Starbucks reported a 2% rise in revenue for the three months ended Sept. 30, in line with a trend of softening demand in the industry, according to a quarterly report from the chain’s local partner in India, Tata Consumer Products Ltd. .

“Same-store sales growth is a challenge and has been for a few quarters,” Sunil D’Souza, managing director and CEO of Tata Consumer Products, told BusinessWeek : “By the end of the quarter, we launched the ‘Classic Menu’. ” Mint on Monday. “It’s a different coffee and a different set of food items, but they also happen to be cheaper. We’ll use that to get more consumers into the store.”

Starbucks entered India in 2012 through a 50:50 joint venture with Tata Group Plc. The company opened a net 19 new stores in the September quarter, bringing its total store count to 457 across 70 cities.

Reduce foot traffic

D’Souza said foot traffic has slowed, while consumer spending remains unchanged. “If consumers come into the store, they’re spending the same amount as before. The problem is that fewer people are coming in. That’s what’s going to have an impact on sales and same-store sales. We’re going to do it with this classic menu Attract people into the store.”

The menu, which also includes some sandwiches, will be rolled out in stores where footfall is “clearly under pressure”. “We’re going to make sure there’s localized communication around this,” he said. Last year, the coffee chain launched a new menu that included a smaller 6-ounce cup called “Picco,” as well as a new menu designed to attract more Bite-sized food options for your audience.

Starbucks is following in the footsteps of the quick-service restaurant (QSR) industry, where burger, pizza and other fast-food chains are rolling out lucrative in-store deals and revamping their look and feel to lure customers back to their stores, even as takeout business remains strong.

Earlier this year, Indian Domino’s pizza chain Jubilant Foodworks launched $Provide in-store consumers with a 99 lunch feast to attract diners to come back.

D’Souza said the Indian cafe market remains a “long-term opportunity”. Last year, the company announced plans to open 1,000 Starbucks stores by 2028. In the short term, you’re going to have some issues as you go through these different cycles,” he said.

Meanwhile, competition has intensified as more and more homegrown cafe chains expand in metropolitan areas.

D’Souza said that given the growth in consumption in India, new players are bound to join.

“Sometimes when new entrants come in and open stores for a period of time, there will be some disruption, especially because some of them will use pricing and so on to attract consumers,” he said. “As long as we continue to focus on providing consumers with Value, building our brand, building the in-store consumer experience, I don’t think I’d worry about that. “

In fiscal 2024, the coffee chain’s revenue was $1,218 Crores.