Exclusive: Barista Coffee eyes 900 stores in 5 years, bets on tier-2 expansion and quick commerce: CEO Rajat Agrawal

Homegrown coffee chain Barista is accelerating its expansion across India and overseas markets, with plans to nearly double its store network over the next five years, said CEO Rajat Agrawal.

“We are now among the largest in terms of network for a homegrown brand… and this is just the beginning,” Agrawal said in an exclusive interview with Fortune India.

From a current network of 510 stores across geographies, Barista is targeting nearly 900 outlets over the next five years. Its expansion strategy is not limited to metros but is driven by an early and deep focus on smaller cities.

“We have built a network that goes far beyond metros, tier-2 and tier-3 markets are where the real growth is coming from,” he added.

At present, around 430 of Barista’s outlets are in India, while another 80 are in Sri Lanka, contributing roughly 15-20% of the overall business through a franchise-led model. The company is now preparing to enter the Maldives and is also exploring further expansion across South Asia. However, the real growth story lies within India’s hinterland.

Backed by Gourmet Gateway India Limited (formerly Intellivate Capital Ventures Limited), which holds around an 88% stake, Barista is positioning itself as more than just a coffee chain. The Delhi-based Gourmet Gateway is the ultimate holding and parent entity of Boutonniere Hospitality Private Limited (BHPL) (formerly Carnation Hospitality), which directly operates the Barista Coffee brand.

Plans to add 60-70 stores annually

Barista plans to add 60-70 stores annually, maintaining its current expansion pace. At this rate, it expects to scale up to 900 outlets over the next few years. Over the past five years, the company has added nearly 300 stores, demonstrating consistent growth despite pandemic-related disruptions, said the CEO.

Nearly 65% of Barista’s stores are now located in non-metro markets, which contribute around 60% of revenues. Cities across Punjab, Haryana, Jammu & Kashmir, and the Northeast have emerged as strong growth drivers, with deep penetration even in smaller towns.

“We identified tier-2 and tier-3 markets early, at a time when many questioned the viability of coffee consumption in these regions. Today, these markets are proving highly profitable due to lower rentals and strong consumer adoption,” Agrawal noted.

New growth engines

Alongside store expansion, Barista is building new growth engines. Its vending machine business, currently with around 500 machines, is expected to scale up to 2,000–2,500 units over the next three years. This segment generates the bulk of its revenue through the supply of coffee and consumables, accounting for nearly 85–90% of vending revenues.

The company is also expanding its presence in quick commerce and e-commerce. Barista products are already available on platforms such as Blinkit and Amazon, with plans to go live on Swiggy Instamart, Zepto, and BigBasket. While quick commerce currently contributes less than 5% of revenue, the company aims to scale this to 10% over the next four years.

Importantly, Barista is prioritising profitability over aggressive expansion. “We are among the few profitable coffee chains in India. Our strategy is not just to grow topline but to ensure strong unit economics across channels,” Agrawal said.

The company follows a hybrid expansion model, with around 25% company-owned stores and the rest operated through franchise partners. This asset-light approach has enabled rapid scaling while maintaining healthy returns on investment.

Barista’s product strategy has also evolved beyond coffee, with nearly 20–30% of beverage sales now coming from non-coffee categories such as bubble tea, matcha, and zero-sugar drinks. Food, contributing 25–30% of revenue, has become a key focus area, especially as café visits in India become increasingly dining-oriented.

New-age offerings such as protein-enriched foods, plant-based milk options, and health-focused beverages are helping attract younger consumers, particularly Gen Z. Categories like bubble tea now contribute around 10% of sales, while matcha adds another 4–5%.

Coffee remains an experiential product

Despite rising competition and the growth of delivery platforms, Agrawal believes the café model remains resilient. “Coffee is still an experiential product. Consumers prefer to visit cafés for the overall experience, not just the beverage,” he said.

On the supply side, the company remains largely insulated from global disruptions as it sources coffee domestically. However, some cost pressures may arise from packaging and fuel-linked inputs.

Looking ahead, Barista sees strong structural tailwinds for the coffee market in India, with consumption steadily becoming more mainstream. “Coffee is transitioning from an occasional indulgence to a daily habit. That’s a big shift and opens up significant long-term opportunities,” Agrawal said.