Starbucks Franchise Cost in India

Pricing of a Starbucks franchise in India depends on a number of factors such as the location, size of the store as well as the market forces. However, it can be regarded as a large expenditure in most organizations.

Key factors affecting Starbucks Franchise Cost in India:

Location: Areas of operation, where the access is considered very strategic in view of the large population, normally have expensive rental charges and cumulatively raise the costs of franchise fees.
Size of the store: Larger stores incur high costs of capital investment on construction, fixtures, and equipment than the small-scale stores.
Local market conditions: This is on the basis of the fact that cost of labor, raw materials and other overhead costs may differ with regions of the country.

Typical franchise costs

While specific figures can fluctuate, here’s a general breakdown of the potential costs associated with a Starbucks Franchise Cost in India.

Franchise fee: This is a one off payment to Starbucks for the licence to use their brand and business plan. It varies from several million of rupees to more than ten million of rupees.
Initial investment: This comprises expenses such as the security of the site and construction or leased premises of the store, equipment, fixtures and inventory. It can normally be in the scale of several crores of rupees to more than ten crores INR.
Working capital: This is the capital that is required to cater for initial costs of running the business which include wages, accommodation, power and publicity costs. It can be several lakhs of rupees.

Additional costs

Royalties: Regular payments made to Starbucks in terms of percentage of the total sales.
Advertising: Participation to nationally advertised star bucks campaign.
Training: Expenses that are incurred in the process of educating the human resource of Starbucks concerning acceptable standards and policies.
Technology: On the technology side they included point of sale systems, inventory management software and other technological structures.

Financial requirements

Generally, when applying for the franchise to open the Starbucks outlet in India, originality, financial capital and background check into the persons applying is imperative. This may include:

Net worth: A minimum net worth of several crores of rupees;
Liquid assets: Substantial working capital to fund the establishment costs and sub sequent operational expenses.
Income: A fixed income or an additional source of income to cater for the franchise.

Potential returns

Starbucks: However, the cost of entering into a franchise with the company might be expensive initially but has the potential of yielding a lot of profit. Brand awareness, customer loyalty and sound business model can help Starbucks to formulate good business strategies and be profitable.

Key considerations

Competition: The coffee market is gradually shifting in India and a lot of local and international brands are coming into the market.
Local preferences: It will also allow them to adapt menu offering and marketing communications to the requirements of the Indian market.
Operational challenges: Performing day to day tasks may also be challenging when managing a franchise because of issues like human resource or supply chain, regulatory issues among others.