At the opening of its 250th café, Third Wave CEO Rajat Luthra and Co-founder Anirudh Sharma discuss unit economics, consumer shifts, menu innovation, digital engagement and the road ahead
Third Wave Coffee has spent the past decade building a nationwide café network, but as the brand reaches its 250th café, its leadership says the next phase of growth will be defined as much by the performance of individual stores as by the number of new outlets added.
In an exclusive conversation with BW Retail World following the opening of its 250th café in Lucknow, Rajat Luthra, CEO, and Anirudh Sharma, Co-founder, Third Wave Coffee, spoke about the lessons of scaling the business, the changing Indian coffee consumer, the importance of menu innovation, technology-led engagement and how the company plans to approach its next phase of expansion.
Scaling With A Focus On Unit Economics
For Luthra, the central question around expansion is not simply how quickly Third Wave Coffee can add cafés, but whether each store can operate as a sustainable business.
“Every store which we open has to make money,” he said, explaining that unit economics has been a key focus during his roughly three years with the company. The objective, according to Luthra, is to establish healthy store-level economics before continuing to scale the network.
He said around 90 per cent of Third Wave Coffee’s cafés are currently Ebitda positive, with the profitable stores delivering high double-digit Ebitda performance. For the company, this provides an important foundation for further expansion, with organisational profitability expected to follow as the business reaches greater scale.
Luthra also stressed that store productivity cannot be viewed through a single channel. Delivery, takeaway and dine-in all have an important role to play, but each has to be built around the customer experience.
For delivery in particular, the focus is on creating the best possible “home dining experience”, while cafés have to consistently deliver the kind of experience that encourages customers to return.
Coffee As A Habit, Innovation As A Growth Driver
One of the key challenges in the café business, Luthra said, is maintaining consumer interest even when coffee itself becomes a habit.
Coffee can drive repeat visits, but customers can eventually experience fatigue with the same food and beverage choices. This makes menu relevance critical to maintaining frequency.
Third Wave Coffee has therefore leaned heavily into limited-time offers, or LTOs. Luthra revealed that the company introduced around 56 innovations last year, with individual LTOs typically remaining on the menu for two to three months.
These innovations are also linked to occasions and seasons. Christmas, Diwali and Valentine’s Day, for instance, can create opportunities for new products that give customers a reason to revisit the menu. Some successful ideas can return the following year in a new form.
For Luthra, the objective is not innovation for its own sake. “Menu relevance is extremely, extremely critical,” he said, adding that the brand needs to remain connected to what is happening across the wider café, food and beverage ecosystem.
That thinking has also led to the creation of Backroom Brews, an initiative designed to help the company understand emerging trends and identify where consumers are moving.
Constant Evolution Has Been The Brand’s Playbook
Sharma approaches the question of growth from a different but complementary perspective: adaptability.
His biggest learning from building Third Wave Coffee has been that the company cannot rely on a fixed playbook. The approach that works for one café may not necessarily work for the tenth, and different markets can have very different consumer needs.
“The playbook for one store is very different from the playbook for the 10th store,” Sharma explained.
That has meant staying close to consumers and developing market-specific approaches rather than assuming that a format successful in one location will automatically work elsewhere.
Sharma believes this adaptability has become one of Third Wave Coffee’s strengths. The company has had to evolve not just its menu, but also the way it operates stores, designs outlets and approaches different markets.
He pointed to the brand’s early experience as an example. The first store had a very different menu and even involved making omelettes, but that format was not scalable as the network expanded. The company had to rethink its food proposition while retaining its focus on quality.
For Sharma, this ability to change is fundamental to staying relevant.
From Matcha To Cold Brew
Innovation has consequently become a defining part of Third Wave Coffee’s brand proposition.
Sharma said the company typically works on four to five beverage innovations every two months, spanning categories such as matcha, protein-led beverages, cold brews and oat-based drinks.
The aim is to identify what consumers are looking for and introduce products before they become commonplace across the market. Sharma pointed to matcha as an example, noting that Third Wave Coffee began offering it in 2019, before it became more widely available across cafés.
But he stressed that the company does not simply chase every trend.
The broader philosophy is to identify what consumers genuinely want and ensure that the brand has something relevant to offer them. This is also where Backroom Brews fits into the innovation strategy — helping the company understand emerging trends while developing its own interpretation of them.
For Sharma, giving consumers a reason to discover something new each time they visit remains an important part of the café experience.
Technology Is About Frequency, Not Just Convenience
Technology is another area where Luthra sees considerable potential to improve the existing business.
Around 75 per cent of Third Wave Coffee’s transactions are now digital, compared with roughly 60 per cent when Luthra joined the company. But the significance of digital goes beyond simply allowing customers to order through an app.
According to Luthra, technology helps the company understand customer behaviour, identify what consumers are looking for and build stronger engagement with repeat customers.
The brand’s digital ecosystem, including order-ahead capabilities and loyalty-led engagement, can therefore be used to encourage frequency and personalise the customer experience.
Customer feedback remains equally important. Luthra said understanding what consumers are saying about the experience is critical to improving the business.
This creates a feedback loop between the physical café, digital channels and product development — helping the company understand not only what customers buy, but also what they want next.
The Consumer Is Different In Every Market
The need for market-specific strategies is particularly relevant as Third Wave Coffee expands beyond the markets where it first established itself.
For Sharma, India cannot be treated as one homogeneous café market. Consumer preferences, food habits and coffee culture can vary significantly between states and cities.
That means expansion requires more than replicating an existing store format. The brand needs to understand the local consumer and adapt its proposition accordingly.
The Lucknow launch itself reflects that approach. The opening of two cafés in the city, including the brand’s 250th outlet in Hazratganj, marks Third Wave Coffee’s entry into a market with its own established food culture and an emerging café ecosystem.
But for Sharma, the larger lesson is that every new market requires the company to remain close to consumers and continue learning.
250 Cafés Is A Milestone, Not The Finish Line
The opening of the 250th café in Lucknow marks a significant point in Third Wave Coffee’s 10-year journey, but Luthra and Sharma’s comments suggest that the company is now focused less on the symbolism of the milestone and more on what the underlying business can deliver at scale.
The company is targeting around 320 cafés by FY27, while continuing to invest in product development, its roastery and innovation capabilities.
For Luthra, however, the expansion will continue to be guided by the same principle: growth has to be supported by sound unit economics.
For Sharma, the priority is equally clear — the company must continue evolving as consumers evolve.
Together, those two perspectives point to the strategy Third Wave Coffee is taking into its next decade: expand the network, but remain disciplined about store economics; build a stronger digital relationship with customers, but keep the café experience central; and continue adding new products without losing sight of what consumers actually want.
The 250th café, therefore, is less a culmination of the journey than a marker of the next phase — one in which scale, profitability, innovation and consumer relevance will increasingly have to move together.
