Third Wave Coffee, a leading coffee shop chain based in Bengaluru, has announced a substantial workforce restructuring, resulting in the layoffs of at least 10% of its employees across various sectors. This move comes mere months after the company successfully raised $35 million in a funding round led by private equity firm Creaegis in September, shedding light on the increasing pressure on Indian startups to achieve financial sustainability.
Confirming the layoffs, Third Wave Coffee characterized it as a “one-time restructuring exercise to consolidate our teams, impacting less than 10% of the organization.” Although the company emphasized its robust position post the recent fundraise, it chose not to disclose the exact number of employees affected. Media reports, however, suggest that the layoffs exceeded 100 people, with the news initially reported by financial news website MoneyControl.
The funding round in September saw participation from existing investors, including WestBridge Capital and Udaan co-founder Sujeet Kumar, and likely valued the firm at around $150 million, according to insiders. Third Wave Coffee now joins the ranks of several Indian startups facing workforce reductions shortly after securing funding, illustrating the challenges inherent in balancing growth and financial stability.
In October, Bizongo, a business-to-business (B2B) vendor-digitization platform, laid off approximately 15% of its workforce, around 50 employees, coinciding with the announcement of a fresh fundraise of $50 million. Similarly, Euler Motors, a GIC-backed electric commercial vehicles maker, let go of around 250 employees about six months after raising $60 million in funding in October 2022.
Third Wave Coffee, with its presence in over 100 outlets across India, half of which are situated in Bengaluru, also operates in Mumbai, Delhi, Gurgaon, Pune, Hyderabad, Noida, Coonoor, and Chandigarh. Beyond its physical cafes, the company markets its products through popular food delivery platforms such as Zomato and Swiggy and offers its packaged coffee powder. Planning to expand its footprint by adding another 50 to 60 outlets this year, as disclosed by co-founder and CEO Sushant Goel during the September fundraise, Third Wave Coffee faces stiff competition from local players like Blue Tokai and international giants like Starbucks and Tim Hortons.
Despite the challenges posed by a competitive market, Third Wave Coffee maintains an annualized revenue run-rate of approximately Rs 300 crore, according to sources familiar with the matter post the September fundraise.
The recent workforce restructuring at Third Wave Coffee spotlights the delicate balance that startups in India must navigate as they secure funding, expand operations, and strive for profitability. This move underscores the challenges faced by businesses in a dynamic market, where consumer preferences and economic uncertainties can significantly impact their bottom line. As Third Wave Coffee adapts to these changes, industry observers will closely monitor its strategies to emerge successfully in the evolving landscape of the Indian startup ecosystem.
