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Exploring Business Loan Options For Opening Up A Starbucks Franchise In India

Published on Oct 3, 2024Updated on Feb 7, 2025

Exploring Business Loan Options For Opening Up A Starbucks Franchise In India

Starbucks entered the Indian market in 2012 through a joint venture with Tata Consumer Products. Headquartered in Seattle, Washington, Starbucks has made a mark on the coffee lovers of India, with 400+ stores as of March 2024, and is aiming for further growth. Targeting 1,000 stores across India by 2028, Starbucks is all set for expansion.

Known for its signature ambience, Starbucks offers warm lighting, cosy seating, modern décor, and soothing music. It creates a relaxing space for people to socialise, work, or unwind.

If you’re interested in exploring the possibility of starting a Starbucks franchise or a Starbucks-licenced store, this guide will take you through the important considerations you need to keep in mind. We will also cover the estimated Starbucks franchise cost in India and the options available to secure the funding you need.

How Does the Franchise Business Model Work?

A franchise model allows an individual or company, called the franchisee, to run a business using the products, trademarks, and name of another company, called the franchisor. The franchisor earns money through an initial fee and ongoing royalties, which benefits both parties.

In this model, the franchisor develops a business concept, product, or service, and creates a business system. The franchisee pays an initial fee to acquire the rights to operate the business and signs a contract agreeing to follow the franchisor’s system. The franchisor provides training, guidance, and ongoing support, while the franchisee manages day-to-day operations and pays royalties, typically a percentage of sales, to the franchisor.

The franchisor ensures that brand standards are met and provides marketing support to help the franchise succeed. This model allows for rapid brand expansion while maintaining consistency and quality across locations.

Exploring Starbucks’ Business Model

Starbucks’ business model is a mix of product-based and customer experience-based strategies. Starbucks is not only passionate about coffee but also about the overall customer experience, which includes high-quality coffee beans, in-store ambience, music, excellent customer service, diverse product offerings, strong brand recognition, and a commitment to sustainability.

Starbucks generates revenue through four main components:

  • In-store sales
  • Product sales (including packaged goods)
  • Licensing fees
  • Franchise royalties

Unlike traditional franchises, Starbucks follows a licensed partner model in most markets, allowing select partners to operate stores while maintaining company-owned stores in key markets. Licensed partners pay fees and royalties to operate Starbucks-branded stores, but Starbucks retains control over brand standards, product quality, store design, and consistency across all locations, whether company-owned or licensed.

Space Requirements for Tata Starbucks Franchise

The coffee industry in India, including Starbucks, is regulated by The Coffee Board of India. The general space requirements for a Tata Starbucks licenced store include:

  • Minimum Space: Typically around 500-1,500 square feet, depending on the location (mall, standalone, or high street).
  • Frontage Requirement: Minimum 15-20 feet of frontage for visibility and customer accessibility.
  • Coffee Preparation Area: A designated area for brewing and preparing beverages, with room for essential coffee equipment.
  • Seating Area: Seating capacity and area depend on the store size and layout. Larger stores often require a dedicated seating area.
  • Storage and Back-End Area: Space for inventory storage, refrigeration, and food prep.
  • Safety and Infrastructure: Adequate provisions for fire safety, uninterrupted power supply, and compliance with local regulations.
  • Sanitation and Waste Management: Proper waste disposal and hygiene standards for food handling.

*It is advisable to engage directly with Tata Starbucks for specific requirements if you are exploring a licensed partnership.

Cost of Opening a Starbucks Franchise

If you wish to know about the potential Starbucks franchise cost in India, it is important to understand that Starbucks does not offer a traditional franchise model, but a licenced partnership. The initial setup costs, which include store design, equipment, and training, typically range from INR 25 to 40 lakhs. Rent for prime urban locations can range from INR 5 lakhs to INR 10 lakhs monthly. Staffing, royalty payments, and obtaining the necessary licences are also crucial parts of the Starbucks franchise price in India.

Documents Required for Opening a Starbucks Franchise

Below is a general list of documents required to apply for a Starbucks franchise in India:

  • Aadhaar card
  • PAN card
  • GST registration certificate
  • Store lease agreement
  • Business registration certificate
  • FSSAI licence
  • Bank account statements

It is important to note that applicants with a prior background in food and beverage may be preferred.

Procedure to Get a Starbucks Franchise

The procedure to get a franchising license from Starbucks involves the following general steps:

  1. Application: The process starts with you filling out an application form available on Tata Starbucks’s website. You will be asked to provide relevant details. After completing the application form, it can be submitted online or by mail.
  2. Interview: Upon receipt of the application, the Starbucks team contacts you for an interview. The interview aims to assess your skills and expertise to run a profitable Starbucks franchise.
  3. Training: Upon successful completion of the interview, the training process begins. This is aimed at helping you understand the management and operation of the franchise.
  4. Agreement: After completion of the training, you will get into an agreement with Starbucks, outlining the terms and conditions of running a Starbucks-licenced store.

Starbucks’ Presence in India

As of March 2024, Starbucks has a stellar presence in India with over 400 stores across cities such as Mumbai, New Delhi, Hyderabad, Chennai, Bengaluru, Pune, Kolkata, Chandigarh, Ahmedabad and Surat. India is forecast to become the world’s third-largest economy by 2030, and Starbucks plans to leverage this booming economy to establish itself further in the country. The Indian market offers a unique advantage to Starbucks as one of the fastest-growing markets.

To achieve its objective of having 1,000 stores by 2028, Starbucks plans to enter Tier-2 and Tier-3 cities, double its workforce, and expand drive-thrus and airport stores.

The Bottom Line

In the Indian market, Starbucks holds the appeal of a global brand, presenting a compelling opportunity for entrepreneurs.

Given the substantial costs involved – from initial setup and staffing to royalty payments – having a reliable financial partner can significantly support your Starbucks franchise investment.

SMFG India Credit offers business loans to eligible startups that have been in business for 3 years or more. You can apply for unsecured amounts of up to INR 75 lakhs* at competitive interest rates.

* Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG India Credit's policy at the time of loan application. If you wish to know more about our products and services, please contact us

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