Coffee versus cafe? India is poised at an inflection point

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Jun 5, 2025

Abhijeet Anand, Founder and CEO of Abcoffee, and Deepak Shahdadpuri, Managing Director and founder of DSG Consumer Partners, dive into India's evolving coffee culture. They discuss how India's cafes balance food and coffee, the struggle for profitability, and shifting consumer behaviors, especially among younger generations. The role of quick commerce and innovative strategies for attracting customers is also highlighted, emphasizing a transformation in how coffee is consumed and experienced in modern-day India.

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INSIGHT

India's Cafe Profitability Challenge

Indian cafes struggle financially due to high real estate costs and luxury positioning.
Coffee culture in India is more about experience, less about daily caffeine consumption.

INSIGHT

Food's Big Role in Indian Cafes

Food sales make up about 50% of Indian cafe revenue, unlike less than 10% in other geographies.
Indian cafes depend heavily on food to sustain business due to differing consumption habits.

INSIGHT

Transaction Volume Limits Profit

High transaction volume is vital for cafe profitability; Indian cafes face low daily transaction counts.
Indian cafes are neither fine dining nor quick service, leading to unsustainable unit economics.

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This episode of Two by Two was first published on 08 May 2025.

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The coffee culture in India has come far today. But has it reached the point where daily commuters grab their cup of joe from their favourite cafe on their way to work? Or do they get it delivered in minutes? Or is the cafe only a destination for meetings?

The cafe ideally serves all three use cases. But the bigger reason has more to do with what we as Indians associate with cafes when we walk into a cafe. Some answer lies in the split between food and beverages in India. Food is as big a component as coffee and coffee beverages in a cafe in India. While globally, most numbers suggest the split for food is ~10%.

But there are more fundamental reasons why the cafe business is hard to crack at scale. From volume of transactions happening to catching up on the ‘grab and go’ coffee culture.

But even with all the troubles, more players seem keen to enter the market. Why?

Hosts Rohin Dharmakumar and Praveen Gopal Krishnan have a fun and insightful conversation about India’s coffee culture and its coffee drinkers’ tastes in the latest episode of Two by Two. And joining them for the discussion are Abhijeet Anand, founder and CEO, Abcoffee, and Deepak Shahdadpuri, managing director and founder of DSG Consumer Partners.

Welcome to episode 41 of Two by Two.

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This episode of Two by Two was produced by Hari Krishna. Rajiv CN, our resident sound engineer, mixed and mastered this episode.

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