Starbucks in talks with some realty companies

Starbucks, the world’s largest coffee chain, is still in talks with New Delhi-based Jubilant FoodWorks and some of the top real estate and retail chains to set up standalone stores in the country, said a person with direct knowledge of the development. Starbucks has signed a binding memorandum of understanding (MoU) with Tata Coffee to set up stores in Tata Group’s associated retail outlets and hotels besides sourcing and roasting coffee beans in Tata Coffee’s Kodagu facility in Karnataka.

In an interview with an international newspaper, Starbucks Corp chairman Howard Schultz said the company would select an Indian partner with which it will develop standalone stores in India, without offering a time frame. Though Seattle-based Starbucks held talks with many Indian companies, including Jubilant, Reliance Industries, DLF Retail and DB Realty among others in the past, nothing fructified.

Jubilant FoodWorks Limited, a Jubilant Bhartia Group Company, holds the master franchisee rights for Domino’s Pizza in India, Nepal, Sri Lanka and Bangladesh. Among pizza chain operators, Jubiliant is the largest player with around 340 outlets. In the second quarter of the current financial year, it added 18 stores with net sales going up 67 per cent during the quarter.

Reliance Retail, however, denied holding talks with Starbucks. In June 2007, Starbucks said it would file a revised application for its entry into India after its earlier proposal for franchise operations was put on hold by the Department of Industrial Policy and Promotion. The department was of the view that the plan did not conform to FDI rules.

Starbucks had proposed to enter the Indian market through a franchise agreement with 51 per cent owned by its Indonesian franchisee V P Sharma with the rest owned by Future group chief Kishore Biyani. “Starbucks follows multiple strategies across the world. In some places it runs franchise stores. In some, it has its own stores and in others it runs a mix of stores. India is a too big a market for Starbucks to rely on only one partner,’’ said a retail consultant who did not want to be named. “Apart from real estate, what a partner brings to the table matters during the negotiations.’’