While the availability of cold beverages and expansion of the on-premise menu is boosting sales, these cafes are also recording a spike in orders for delivery of summer-specific items. In addition, new-age cafes are popular destinations for remote working and meetings, which is further boosting footfalls.
Bubble tea brand Boba Bhai is seeing a significant upswing in sales due to the extreme weather conditions, according to its founder Dhruv Kohli who estimates that there is a “huge uplift in sales that is close to 40-45%”, specifically in Delhi.
ETtech“Our grab-and-go sales have also increased over 10% and the dine-in has increased around 10-15%,” he added. Boba Bhai is now gearing up for a quick expansion with a new outlet in the NCR region due to open by the first week of July.
AbCoffee, another specialty coffee chain with most of its outlets located in corporate parks, has also seen sales rise as employees congregate at these on-campus outlets to avoid the excessive heat outside.
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Rajat Luthra, CEO of Third Wave Coffee, said “It (cafe) is a nice environment where you can sit, be there, and the category is also very relevant. This is a space which is more interesting at this point in time.”
VC interest
The Bengaluru-headquartered company is set to open 50 stores in its existing markets such as Bengaluru, Delhi, Mumbai and Hyderabad, besides entering new cities like Chennai.
This strong growth in the cafe business contrasts with the performance of restaurants, pubs, and bars across Indian cities, which reported an up to 40% dip in sales and footfall due to the extreme heatwave, as reported by ET on June 1.
So much so that new-age tea and coffee chains are attracting strong interest from venture investors as they expand operations and experiment with their offerings.
For example, in March, AbCoffee raised $3.4 million in funding led by venture capital fund Nexus Venture Partners. In April, Boba Bhai raised Rs 12.5 crore in seed funding from Snapdeal founders’ venture fund, Titan Capital, and Global Growth Capital UK.
Third Wave Coffee also raised $35 million in a funding round led by private equity firm Creaegis in September 2023 for expansion of its store network in existing markets as well as to enter new cities.
This uptick is not limited to venture-backed specialty coffee and tea chains alone. US cafe chain Starbucks, which operates in India in a joint venture with Tata Consumer Products Ltd, has also introduced a summer-specific menu including cold brews and iced beverages.
In April, following the company’s March-quarter earnings, Tata Consumer Products’ managing director and chief executive Sunil D’Souza had said, “Tata Starbucks, while they had, I would say, a subdued quarter given the overall trends that we’re seeing in the QSR business, we saw March better than February and April better than March. So, we see a better trend right now, but we remain focused on the larger India opportunity.”
Remote work
Nikhil Kamath-backed specialty coffee chain Subko has observed an increased influx of individuals using their cafes for work, particularly those with hybrid working structures or freelancers.
“We have built our spaces to cater to different kinds of requirements. A lot of them are designed to host people who are working, offering free Wi-Fi. We already see an influx of people coming on a daily basis where they use the cafes as their workspaces,” said Neha Joshi, senior director of operations at Subko.
While others such as Chaayos are banking on greater traction for their expanded menus with the tea chain launching new products like smoothies, icy slush, and pop fizzes.
Nitin Saluja, cofounder and chief executive of the Tiger Global-backed tea cafe chain, said that the company is “seeing over 10% same-store sales growth month after month during this year’s summers.”
