Third Wave Coffee firms up growth plans in Chennai; launches 2nd outlet

CHENNAI: Specialty brand, Third Wave Coffee, is on an aggressive expansion mode, as it has been on an inauguration spree in recent times. On Saturday, it opened its second outlet in the city, a 45-seater, at Kilpauk, which follows the first one operational at the Palladium mall earlier this year.

Rajat Luthra, CEO, Heisetasse Beverages Pvt Ltd, owners of Third Wave Coffee brand, who is in the city for the inauguration, said plans are afoot to add 10 more cafes in the city by December this year. The strategy has been to identify locations that fit the Bengaluru-based brand’s objective of achieving profitability through unit economics. “We have signed up one more for Chennai and two other cafes are under construction," he said, adding Adyar is another area where one of the outlets would come up.

Efforts are on to bring Chennai operations on par with Bengaluru, which accounts for 46 of the overall 139 stores. Three outlets of the quick service restaurant were inaugurated on Thursday at Mangalore, Gurugram and Bengaluru, also as part of the pan-India scaling up exercise.

He said the target is to reach the 150-store mark by the end of this fiscal year. The chain, which has been cutting losses consistently, is confident that it can attain profitability by scaling up operations and by its optimisation approach. “90 per cent of our stores are giving us good (positive) EBIDTA, which has been possible through optimisation,” he said, noting that the past eight years of business experience has given the café brand the ability to enhance capacity of its roaster by eight times.

Looking at eventually becoming an omni-channel brand, Luthra said 80 to 100 more cafes would be coming up by next year. Highway outlets would also be a focus area for Third Wave Coffee brand, which has an outlet upcoming on the Pune expressway. Two more highway cafes are scheduled for inauguration next month.

Typically, 150 to 170 transactions happen at every store on a daily basis, fulfilling the needs of roughly 2 to 2.5 customers per transaction. It takes around seven months for a store to become EBIDTA positive. Merchandising constitutes 4.5 per cent of sales, he said, adding the brand has also introduced newer categories such as pizza.

Boosted by double-digit growth, Third Wave Coffee is looking at Rs 300 crore revenue this fiscal.

PERKING UP

• Coffee and food QSR brand founded by Sushant Goel, Anirudh Sharma and Ayush Bathwal in 2015

• Has raised $6 million in Series A funding round from Sujeet Kumar (co-founder, Udaan), Arpan Sheth (Bain & Company), and Ayyappan Rajagopal (CEO, Cleartrip) and others

• 139 stores operational largely concentrated in south

• Aggressive growth plans for expansion in Chennai