Blue Tokai Coffee Roasters has experienced more than a five-fold growth over the past four fiscal years. The company’s revenue increased from Rs 41 crore in FY21 to Rs 75 crore in FY22, Rs 127 crore in FY23, and Rs 216 crore in FY24.
According to its earnings update 2014-2020 Blue Tokai said revenue from operations rose by 70% year-on-year to 216 crore in the month of April.
Coffee sales accounted for 93% of the total operating revenue at 201 crore in FY24 and the remaining came from bakeries. Blue Tokai currently operates 130 outlets and is targeting a total of over 350 locations in the next three years.
The company also had interest on deposits and gains on mutual funds of Rs 5 crores. In FY24 the company's total income was 221 crore compared to Rs.129 crore in FY23. Employee benefits led the cost list and it recorded 29.5% in the whole expenses up 95% from Rs 84 crore in FY24. During FY24, the procurement expenses at Blue Tokai increased 46% from the previous fiscal, to Rs 83 crore.
As a result of significant outlet expansion, rent costs surged by 94%, reaching Rs 33 crore in FY24.Moreover, legal, advertising, communication, travel, and other overheads were added on, which, with a rise of 66%, made total expenses rise to Rs 285 crore in FY24 from Rs 172 crore in FY23.
The company saw a 46% rise in losses to Rs 63 crore in FY24, from Rs 43 crore in FY23, as employee benefits and rent costs rose faster than revenue. The company, however, managed to improve its EBITDA margin, bringing the loss down from -24.7% in FY23 to -19% in FY24. Blue Tokai spent Rs 1.32 for every rupee earned during the fiscal year. It closed the last financial year of FY24, recording its current assets amounting to Rs 153 crores that consist of Rs 61 crore of cash and bank balance.
Blue Tokai has raised over $80 million so far, including a $30 million Series C round led by Verlinvest in August of the previous year. According to the startup data intelligence platform TheKredible, A91 Partners holds the largest external stake at 22.77%, followed by Verlinvest.
In terms of competition, Third Wave Coffee reported a revenue of Rs 240 crore with a loss of Rs 110 crore in FY24. Meanwhile, Starbucks India generated a significant Rs 1,218 crore in revenue in the same fiscal year. Sleepy Owl, Subko Coffee, and Seven Beans have yet to release their financial results for FY24.
Blue Tokai has demonstrated impressive growth, surpassing what would typically be considered a boutique size in its category by 2024. However, with the pressure to reduce losses and a larger base, its growth is expected to slow significantly in FY25, likely falling below 30%. This would place the company in an intriguing position, with a substantial topline exceeding Rs 300 crore, yet potentially facing net margins under -15%. At this stage, investor support is likely to remain strong, allowing the company to explore both options: staying independent or aligning with a larger player. A broader economic recovery will be crucial, as market sentiment plays a significant role in the sector. If GDP growth exceeds 7%, it could reshape investor expectations and bring a fresh perspective to the business.
