India’s new-age coffee chains are accelerating expansion despite continuing losses, as investors bet that the country’s under-penetrated branded cafe market can deliver long-term growth.
Third Wave Coffee plans to open 100 cafes this financial year while targeting company-wide break-even. Blue Tokai aims to expand from 240 outlets to 800 by FY30 and is preparing for an eventual public listing. Nothing Before Coffee (NBC), which has grown to 114 cafes across 45 cities, plans to more than double its network over the next two years.
The expansion comes even as profitability remains elusive. Investors, however, are increasingly prioritising store-level economics over headline profits, arguing that India’s cafe market is still in its early stages of growth.
“The earlier failures in the cafe segment were largely capital-discipline failures, not failures of the category itself,” said Vish Narain, managing partner at Pulsar Capital, which is backing Blue Tokai’s international expansion.
“Chains expanded store count before proving unit economics. Investors today understand that India’s per-capita coffee consumption is still in its early stages. They are reading past shutdowns as wrong execution, not wrong thesis,” he said.
Dissecting the Balance Sheets
The numbers highlight the challenge.
Heissette Beverages, the parent of Third Wave Coffee, accumulated losses of Rs 320 crore between FY21 and FY25, while total assets stood at Rs 538 crore at the end of FY25, according to Tracxn. Muhavra Enterprises, Blue Tokai’s parent, reported accumulated losses of Rs 175 crore over the same period, with total assets of nearly Rs 370 crore. Financials for FY26 are not yet available with Tracxn.
NBC accumulated losses of nearly Rs 3 crore over FY24 and FY25 against total assets of Rs 18 crore. Mumbai-based premium chain Subko Coffee, with 16 outlets in India and one in Dubai, posted losses of Rs 45 crore over five years, while total assets stood at Rs 61 crore at the end of FY25.
Third Wave Coffee said around 90% of its outlets are Ebitda-positive and expects to achieve company-wide break-even during FY27. Blue Tokai, backed by Verlinvest, is targeting profitability by March 2028.
NBC declined to specify a profitability timeline but said it has adopted a franchisee-invested, company-operated (FICO) model to reduce cash burn while retaining operational control.
“FICO lets us expand quickly with franchisee capital while keeping operational control,” said Ankesh Jain, co-founder and chief executive officer, Nothing Before Coffee.
Structural Shifts
Experts attribute the investor interest partly to improving outlet economics as operators shift from large dine-in formats to compact grab-and-go and cloud-kitchen models.
“These formats materially cut capex per outlet and shrink payback timelines, making the category venture-fundable rather than just a slow-and-steady, self-funded business,” said Krishna Dev Pathak, investment banker and advisor to early-stage startups.
Lower capital requirements have strengthened unit economics, reinforcing investor confidence despite delayed company-level profitability.
Investors are also betting on a broader shift in consumer behaviour. Anuj Kejriwal, chief executive officer and managing director of Anarock Retail, said rising incomes, urbanisation and changing preferences are gradually moving India from “a tea economy to a coffee economy”. The shift is widening the addressable market for organised coffee chains beyond the metros into smaller cities.
Consumers increasingly use cafes as workspaces, meeting points and all-day dining destinations, prompting chains to diversify into food, desserts, packaged coffee, vending solutions and merchandise.
“The cafe model is now well established as part of consumers’ lifestyles,” said Devangshu Dutta, founder and chief executive of retail consultancy Third Eyesight.
Challenges remain. Rentals in premium locations have surged, coffee prices remain volatile, and labour and supply-chain costs continue to pressure margins.
For now, investors appear willing to fund rapid expansion, betting that disciplined execution and improving unit economics will eventually turn India’s cafe boom into a profitable business.