In this series on the fast food services market, it’s time to take a coffee break. This post is on Café Coffee Day & Barista Lavazza.
Café Coffee Day (CCD) has achieved cult status. A destination brand for the young (15-29 year old) and the young at heart, it’s been featured (discreetly) in umpteen Bollywood movies and been the subject of several case studies. Chetan Bhagat is supposed to pen his novels here (in a South Mumbai outlet, I reckon).
What’s different about CCD
1. With 833 cafes in 118 cities, it has the widest distribution among the seven food service brands being featured in this series (the others being McDonalds, Pizza Hut, KFC, Taco Bell, Barista Lavazza, Subway & Domino’s Pizza). Widest distribution both by number of outlets and by number of cities.
Indeed, it seems to be the largest national food chain by number of outlets among all brands.
2. And CCD’s outlets are all company-owned, it’s not a franchised chain, this too marks it out from the other six brands above.
3. Is it indeed one of India’s largest retail chains? As far as I can determine, in terms of number of outlets, only shoe company Bata India – with 1250 stores – is possibly ahead.
4. Their food stuff is outsourced, they only do the coffee.
5. Unlike the pizza and burger brands, CCD doesn’t do home delivery. Nor do Barista and Subway. Looked at another way, this is a revenue opportunity they are foregoing.
6. CCD is the only Indian brand among these seven prominent food services brands. That’s saying something.
And as Indian consumer service brands go, in my humble opinion, CCD ranks up there with India’s best, with the likes of Jet Airways, Shoppers Stop & HDFC Bank.
Going for ubiquity
There’s been talk that India has a potential for 5000 cafes and that about 1000 exist across the major brands (lion’s share being CCD’s).
In the key metros of Mumbai, Delhi & Bangalore, CCDs are everywhere, making them the place to meet up.
There are 158 outlets in the National Capital Region (NCR) (114 in Delhi city, 14 NOIDA, 26 Gurgaon, 4 Faridabad), 138 in CCD’s home town Bangalore and 117 in Mumbai.
There are another 44 in Chennai, 48 in Pune and 37 in Hyderabad.
CCD says it has plans to invest INR 1.5 billion to reach 1000 outlets, from current 800+.
They are also looking at 200 cafes overseas – Middle East, Eastern Europe, Eurasia, Egypt and South East Asia are being looked at. They have a handful in Austria & Pakistan.
Why go International ?
While several have tried, no Indian company has yet built an international consumer brand. Not sure why CCD is going international, there could be more than one reason. 5 possibilities (creative imagination at work 🙂
a. Such activity is sometimes part of a strategy to woo the investing public (CCD is funded by private equity, will look for an IPO one day).
b. It may be easier to build a supply chain in an international city than in small town India.
c. Real estate costs in Indian metros are high and comparable to international
d. CCD’s parent company grows and export coffee so this a natural
e. Or, just that it gets an organization (and CCD has close to 5000 people) excited.
What do you think ? Why is CCD going international ? Will it do well ?
How has CCD succeeded ?
It’s been, as far as one can see, a combination of marketing savvy, many innovations in the retail space and good management in general. Some insights into their strategies can be found here.
CCD’s founder, serial entrepreneur V.G. Siddharth is low profile, almost unknown among the public. This serial entrepreneur’s well connected background may have something to do with this. He’s said to be humble and customer-centric to boot. Here’s an interesting anecdote. In an age where many CEOs prostrate themselves before the media gods, ‘grounded’ leaders such as these deserve kudos.
CCD’s parent company has recently announced an investment plan of INR 17 Billion including diversification.
India’s Starbucks can at best be faulted for ‘not being the original’ ?
Apparently, ‘a lot can happen over coffee’.
Here’s a Case study by India Knowledge@Wharton (2009).
This brand’s been around as long as CCD. It’s gone through multiple ownership changes and as Barista by Lavazza, is currently in Italian hands. At one point, they were seen as being in a neck to neck race with CCD, but they now say they have a different strategy – coffee processing plant, beer and wine, et al.
My perception : lower on value for money than CCD, and will be challenged by newcomers like Costa Coffee.