Bengaluru-based specialty coffee chain, Third Wave Coffee, has delivered robust revenue growth for the fiscal year ending March 31, 2024, but at the cost of mounting losses, reflecting its aggressive growth strategy.
The company reported a 67% year-on-year increase in revenue, reaching ₹241.3 crore ($28.6 million). However, the rapid expansion efforts have led to a steep rise in operational expenses, including staffing, rent, and raw material costs. As a result, the chain’s losses more than doubled compared to the previous year, amounting to ₹110 crore ($13 million).
Heavy Investments in Expansion and Digital Platforms
The surge in costs stems from Third Wave’s strategic investments in expanding its physical footprint, enhancing store delivery capabilities, and scaling its direct-to-consumer (D2C) e-commerce platform. Over the past year, the coffee chain added a net 15 stores, bringing its total to 119 outlets across eight Indian states. With strongholds in Bengaluru and Mumbai, Third Wave is targeting 160 outlets within the next six months and plans to launch up to 80 new stores annually starting April 2025.
Funding Boost and Leadership Reshuffle
To fuel its growth ambitions, Third Wave secured $35 million in a private equity round led by Creaegis in September 2023. The funding round, which valued the company at $150 million, was described as a “monumental step” towards accelerating expansion and enhancing its digital-first strategy.
In a key leadership move, the chain appointed Rajat Luthra, a former executive at Devyani International Limited (DIL), as its new CEO in early 2024. Luthra’s experience in scaling KFC’s operations in India has been touted as instrumental in driving Third Wave’s next phase of growth.
Investor Confidence in a Burgeoning Brand
Third Wave Coffee has raised over $60 million to date and enjoys the backing of prominent investors, including Bengaluru-based WestBridge Capital and Singapore-based Redbrook.
As it balances surging costs with its long-term growth vision, the coffee chain remains steadfast in its ambition to strengthen its position as a leading player in India’s specialty coffee market.