Sip, Savor and Scale: Cafe Franchising Trends for 2025

Coffee consumption in India is on an exponential rise and has people cutting across generations hooked to it. The Indian Coffee Market was valued at USD 478 Million in 2022 and is expected to reach USD 1,227.47 Million by 2032, growing at a CAGR of 9.87% during the forecast period 2024-2033; as per the recent custom market insights report.

This stupendous rise in the consumption of coffee is fuelled by the growing café culture in the country. The past 10-15 years have seen café culture brought close home by big brands like Starbucks, Tim Hortons, Barista, Café Coffee Day, Third Wave Coffee etc. These brands have successfully been able to match the overall café experience with the needs, demands and desires of the young, working population that views these cafes and outlets not just as coffee outlets but also as places for work, socialising or relaxation.

Rajiv Khurana, AVP- Business Development, Barista explains what has really worked for the café scene to explode in the country in the recent past. “Growing urbanization is an important factor as people are increasingly seeking out lifestyle-driven experiences. Also, coffee is popular among younger generations who enjoy socializing at cafes. The growing global exposure has been instrumental in the growth of café culture in the country since international coffee trends have inspired new tastes and preferences. The rise of specialty coffee is also working in the favour of the rising café culture as there's a growing appreciation for quality beans and artisanal brewing. Lastly, the west inspired ‘work-from-cafe culture’, where cafes become popular workspaces, blending productivity with relaxation has a lot of contribute too.”

Furthermore, the café culture in the country is getting a big boost from tier II and tier III cities that are ready to ape and embrace western concepts. The rising disposable incomes and global aspirations are ensuring growing demands for the café culture.

As per a recent industry report, the market size for cafes and bars in India is estimated to be worth $17.54 billion in 2024, and is expected to grow to $26.17 billion by 2029. The branded cafe, bakery, and smoothie bar segment in India is valued at $697 million in 2024, with a compound annual growth rate (CAGR) of 25.59% since 2022. Coffee cafés make up about 40% of the branded cafe market, with around 2,650 units.

Around the early 2000s, the cafe culture was an experience reserved for dates and special occasions. Post-pandemic however, the experience has shifted to a more casual setting. With a rise in freelancers, independent workers, self-employed individuals in the country and international cultural influence, cafe culture is creating a strong grip over the country. Entry of international café brands that have introduced an array of different flavours, exposure to western trends and media that have influenced the perception of coffee as a symbol of affluence, influence of social media platforms that allow Indians to stay connected with global trends, including the growing fascination with coffee and a large young population base (with over 600 million consumers between the ages of 18 and 35) are leading to increasing demand for coffee outlets.

In a recent industry report, Akshay Jatia, President & Executive Director, Westlife Foodworld (master franchisee for McDonald’s in West and South India), said, "The Gen Z today needs a good cup of coffee that matches their on-the-go lifestyle. According to Euromonitor, 69% of Indian millennials see coffee as a companion during conversations, while 50% prefer it when meeting friends or clients. To stay relevant, brands must continuously innovate menus, enhance store experiences, and engage digitally. McCafé, for instance, sources premium beans from Chikamagaluru, offering artisanal brews that cater to evolving tastes, while maintaining affordability. The expansion of café offerings is also building a coffee-at-home culture across India.”

Currently McCafé operates in around 92% of McDonald's stores, with plans to expand to 100% over the next few years. McDonald's India (W&S) aims to open 45 to 50 new stores every year until 2027, with a total investment of around INR 1400 crore over the next few years.

With the café culture brewing stronger every year, Rajiv Khurana, AVP- Business Development, Barista points out 3 important characteristics that will set a benchmark for the café segment in 2025. “Sustainability – Consumers are increasingly conscious about where their coffee comes from, with a focus on eco-friendly practices and ethically sourced beans. Premiumization – There is a growing demand for high-quality, specialty coffees and unique offerings, such as cold brews and craft beverages. Experience-driven spaces – Cafes will continue to evolve into lifestyle hubs, offering not just great coffee but also a memorable atmosphere, with curated designs, workspaces, and social settings.”