- Zepto attempted to disrupt the cafe-chain model in India by selling the beverage through dark stores; in a few months, the company clocked over 100,000 daily orders
- It seemed like quick commerce was the path to profitability in a business where giants like Cafe Coffee Day and Starbucks have been struggling for years
- Running a coffee chain in India means shelling out on rent, equipment, and fighting tea enthusiasts; India’s per capita coffee consumption stands at 70g compared to the global average of 1.3kg
- But Zepto, without the hassle of real estate, can’t seem to escape the coffee jinx
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In February, when Zepto Cafe clocked over 100,000 daily orders, it seemed like the company had cracked the coffee code, after all. But it was probably just a caffeine kick.
Less than six months later, in July, the 10-minute food-delivery arm of quick-commerce firm Zepto shut down “cafe” services at 44 of its nearly 1,000 stores. Industry insiders, though, estimate that the number of cafes shut down was closer to 100.
Put simply, many coffee machines in Zepto’s dark stores, designed to revolutionise how Indians consume the beverage, had started gathering dust. It was a steep fall from the $100 million gross merchandise value run rate that Aadit Palicha, the company’s chief executive,
Running a cafe in India is something that even the boldest players have struggled to perfect, even after decades. Mid-market physical coffee chains like Cafe Coffee Day have collapsed, premium brands like Starbucks are fighting an
The challenges are easy to spot. India may be the world’s seventh-largest coffee producer, but its per capita coffee consumption stands at a minuscule 70g compared to the global average of 1.3kg.
“The math simply doesn’t add up when you factor in rental costs, labour complexity, and consumer price sensitivity,” said Abhinav Mathur, CEO of Kaapi Machines, a firm that supplies and services high-quality coffee machines. Cafes cough up 15–20% of their sales as rent at prime locations. For instance, Starbucks reportedly pays Rs 25 lakh ($29,000) per month to operate in Mumbai’s prime spots. The company needs to sell over 500 cups a day just to break even on rent.
“Every cafe chain in India eventually faces the same dilemma. Coffee might be addictive, but profitability isn’t,” Mathur added.
So, when Zepto Cafe launched in 2022, it offered an alternative: one where customers didn’t have to visit stores.
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