Tata Capital > Blog > Loan for Business > Exploring Business Loan Options for Opening up a Starbucks franchise in India
03 December 2024
7 mins read
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With a calm atmosphere, aesthetically pleasing decor, and the tingling aroma of freshly brewed coffee– owning a cafe is a dream venture for many entrepreneurs. There is just something about that pleasant environment that reduces all your stress, even if you are at the other end of the counter.
Don’t you wish to own a coffee house as well, maybe one as iconic as Starbucks? What if we tell you that it is possible to turn this desire into a reality? That’s right, Starbucks is now offering franchise options to willing entrepreneurs of the nation.
Let us learn more about this lucrative business opportunity by learning more about the Starbucks franchise, its business model, and the cost required to set up your outlet.
| Financial Aspects | Details |
| Initial Fee | This refers to the capital you will require to start your Starbucks franchise in India |
| Coverage of Initial Fee | This refers to the cost of the initial set-up, support, training, and licencing fees or the Starbucks brand |
| Capital Needs | You will need capital for equipment, building, buying supplies, inventory, staffing, marketing and advertising. |
| Royalty Fee | A portion of your net sales will cover the Starbucks brands, ongoing training and support. |
| Advertising Fee | A portion of your net sales for advertising and promotional campaigns |
| Variable Factors | Starbucks franchise prices can differ based on the size and location of the store. |
| Ongoing Expenses | This refers to rent, utilities, staffing costs, and other operational expenses |
The franchise business model is a mutually beneficial relationship between the franchisor and you, the franchisee.
Here, the brand allows you the right to use its brand name, trademark processes, and time-tested business model. In return, the brand would ask for an initial fee and an ongoing yearly royalty fee at the time of franchise application.
A franchise business model is a win-win scenario for both parties involved. While you can benefit from the brand’s name and get a loyal pool of regular customers, the franchisor can expand its presence with minimal effort.
With a global mission to inspire and nurture the human spirit, Starbucks has risen to become a top global brand. In India, Starbucks operates through a partnership with Tata Group. The combined synergy of Starbucks’ in-depth coffee knowledge and Tata’s expertise in dealing with Indian customers has complemented their business.
That said, Starbucks does not follow the traditional franchise model. Starbucks coffee franchise is more inclined towards owning and operating its stores. Instead, what it offers is a Starbucks-licensed coffee store.
In the Starbucks Coffee Franchise model, coffee store owners must get a license from the firm. With this, Starbucks will maintain its premium quality while assisting in interior designing, menu planning, equipment leasing, and staff hiring and training.
| Requirement | Details |
| Minimum space required | You will need a comfortable area to open for your outlet |
| Frontage requirement | You will need to have a spacious frontage for your outlet |
| Coffee preparation area | You will need to allocate space for coffee brewing and beverage preparation |
| Seating area | You must be able to offer comfortable seating to customers |
| Infrastructure and safety | Your outlet must have an uninterrupted power supply, fire safety measures and a safe environment for staff and customers. |
| Equipment | You will need a cash drawer, register, POS system, etc. |
| Facility standards | Your outlet must have adequate lighting, ventilation and sanitation |
| Compliance | Your outlet must adhere to local safety, health, and environmental regulations |
| Food handling | You have to ensure food and beverages are prepared in a hygienic manner and stored safely |
| Waste disposal | You must have a designated area for waste disposal |
| Brand standards | You have to maintain strict compliance with brand standards, including using the approved materials, meeting quality standards, and keeping consistent with the look and feel of the brand. |
A licensed Starbucks will cost you around Rs. 25-40 lakhs as the initial fees. In addition to that, you will also have to pay around Rs. 6 Lakhs in rent. But these are not the only expenses a bustling Tata Starbucks franchise incurs.
You will first have to secure a food license from the respective authority, costing you considerable money. Furthermore, you need to employ your staff, which can cost, on average, Rs. 1.5 Lakhs per person per annum. Add to this the other miscellaneous costs like operational, store decor, and royalty.
Thankfully, Starbucks is popular enough to guarantee a decent monthly revenue. With an average yearly income of Rs 25-30 lakhs and a year-on-year revenue growth of 14%, you can look to remain profitable in the long run.
Before you apply for a Tata Starbucks franchise, ensure that you have access to the following documents:
1. PAN Card
2. Aadhar Card
3. Business registration certificate
4. Store lease agreement
5. GST registration certificate
6. Food license
7. Bank account statement
In addition to the documents, do note that Starbucks prefers to accept license rights to those with a background or prior experience in the food and beverage industry.
If you want to approach Starbucks in franchising, then you will have to go through the following process:
Application: Visit the official Starbucks website and look for an option for licensing application. Fill up the application form and submit it. The company will review your application, and if you meet their criteria, you will be invited for further discussions.
Interview: If your application looks promising to their management, Starbucks will invite you for an interview. This interview will judge your skills and suitability for managing a Starbucks business.
Training: You will undergo a training program once you pass the interview round. This will ensure you understand Starbucks’ standards and learn how to run a Starbucks franchise efficiently.
Final Agreement: You will receive the final agreement once all the formalities are handled. Here, you will be told in detail the terms and conditions of running a Starbucks franchise. If you agree, you can operate a Starbucks-licensed coffee store.
Since entering the Indian market in 2012, Starbucks has expanded its presence to several major cities, serving as a testament to its success and the demand for its coffee culture. The partnership with Tata Group has been instrumental in adapting Starbucks’ global brand to local preferences, making it a beloved choice among coffee enthusiasts.
As per the recent tally, Starbucks has more than 300 outlets in India, spanning over 70 cities. But these are just baby steps for this giant coffee franchise. Starbucks has over 16000 stores in the USA and over 1200 in the UK. With a vast Indian market waiting to be explored, Tata Starbucks will be looking to hit the 1k mark in India soon enough.
The Tata-Starbucks partnership offers a unique opportunity to bring the world-renowned Starbucks coffee experience to your local community. With the right strategy, location, and financial support, your Starbucks franchise could become a hub for coffee lovers and a successful business venture.
If you are looking for the best way to finance the initial investment, Tata Capital’s business loans are here to help reduce your burden. Powered with minimal documentation, quick approval, and fast loan disbursal, you can finance your Starbucks coffee franchise investment amount within a few days. Apply for a Tata Capital business loan today!
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