Third Wave Coffee Roasters appeared as a lighthouse of artisanal coffee culture in 2017 in the bustling streets of Bengaluru, amid the aroma of freshly ground coffee beans. Anirudh Sharma, Sushant Goel, and Ayush Bathwal founded the business, which acquired popularity fast because to its unique combination of high-quality coffee and a lively café atmosphere. Naturally, Third Wave Coffee Roasters has seen both successes and setbacks along the way, just like any large-scale endeavor. In this article, we will look into the specifics of this development.
Image Credits: Inc 42
Rapid Growth, Rising Losses:
A remarkable 356% increase in income, or INR 144.4 Cr, was realized by Third Wave Coffee during the fiscal year that concluded on March 31, 2023. The company’s excellent achievement can be linked to its growth in terms of retail locations, since it currently has over 100 locations around the country. A concerning 272% increase in the startup’s net loss from the previous fiscal year, nearly quadrupling to INR 54.3 Cr, cast a shadow over the balance sheet despite the euphoria of increased revenues.
Unpacking the Financials:
The surge in revenue was overshadowed by a corresponding escalation in expenditure, which ballooned to INR 201 Cr in FY23 from INR 46.5 Cr in FY22. Procurement costs surged by a staggering 387% to INR 43.3 Cr, while employee benefit expenses nearly quadrupled to INR 57.6 Cr. Additionally, rental outlays soared by 310% to INR 43 Cr. These spiraling costs resulted in an EBITDA loss of INR 38.7 Cr, compared to INR 12 Cr in the previous fiscal year, albeit with a marginal improvement in EBITDA margin to -26.8%.
Navigating Funding Rounds:
Significant finance has already been obtained by Third Wave Coffee Roasters, including a $35 million Series C round headed by Creaegis and includes participation from previous backers like WestBridge Capital and Udaan cofounder Sujeet Kumar. The company’s ambitious expansion plans were spurred by this inflow of capital, yet profitability remained elusive despite growing operating expenses.
Restructuring for Efficiency:
Following a strategic restructuring exercise in December, Third Wave Coffee laid off over 80 people, or roughly 10% of its workforce, in an effort to reduce costs and streamline operations. Keeping the company’s dedication to quality and customer experience intact, this move attempted to reduce expenses and streamline staff.
Navigating the Competitive Landscape:
With its emphasis on artisanal craftsmanship and individualized service, Third Wave Coffee Roasters carved out a position for itself in a highly competitive market dominated by industry titans like Starbucks and domestic competitors like Blue Tokai and Slay Coffee. But maintaining expansion in the face of fierce competition and rising operating expenses is a constant struggle for the firm.
Charting a Path Forward:
Third Wave Coffee Roasters is still striving for growth and quality in spite of the recent setbacks. In a congested field, the company stands out for its unwavering dedication to quality, innovation, and client happiness. Going ahead, the company’s long-term goals and maintaining its position as a pioneer in India’s dynamic coffee culture will be achieved primarily by strategic investments in technology, operational effectiveness, and additional funding rounds.
Conclusion:
In the volatile Indian coffee industry, Third Wave Coffee Roasters is a bright example of the power of persistence and innovative ideas. Despite challenging challenges like falling operating costs and increasing losses, the company is unwavering in its commitment to deliver exceptional quality and unrivaled customer experiences. In India, where coffee culture is changing quickly, Third Wave Coffee Roasters is leading the way by capitalizing on opportunities for sustainable growth, knowing the market, and using its advantages. Third Wave Coffee Roasters’ narrative, which epitomizes entrepreneurship in its purest form, never fails to enthrall and inspire with its special fusion of grit, passion, and astute strategic acumen.
