Café Coffee Day : Success Story and Case Study

Going for a Coffee with your favourite person?

How can you forget CCD your coffee partner!

India’s favourite spot for coffee and discussion is now Café Coffee Day, or CCD for short. CCD is more than just a coffeehouse for Indians. The 1996-founded Bengaluru-based Indian multinational network of coffeehouses has quickly become one of the go-to hangouts for the millennial and Gen Z generation.

When CCD realized it was about to go bankrupt, it had already served over 1.6 billion cups of coffee annually in six nations. It made the decision to cease operations outside of India for this reason. Prior to this choice, it was present in a number of nations, including Austria, Egypt, Malaysia, Nepal, and the Czech Republic.

Table Of Contents

• Introduction
• Background of CCD
• CCD: The Beginning 
• Debts and Controversies
• Death and Disappearance of Founder
• Marketing and Business Strategy
• Different Combinations
• THe 3 A’s story
• Present Day CCD
• Success of CCD

Conclusion

Introduction

V. G. Siddhartha, the proprietor of Café Coffee Day, opened the first location on July 11, 1996, in Bangalore, Karnataka, with the motto “A big deal can occur over some espresso.”

In India, Café Coffee Day quickly spread throughout the cities, opening new locations and more than 2000 bistros by 2016. CCD has combined its method of advancement with the reputation and adoration it has attained over a period of 20 years.

Background of CCD

On its own 20,000 acres of land, the Chikkamagaluru-based Café Coffee Day Global Limited Company cultivates coffee. It is the largest producer of arabica beans in Asia, exporting them to a variety of countries, including the United States, Europe, and Japan.

In 1996, V. G. Siddhartha founded Coffee Day Global, the parent company of the Coffee Day chain, and this is when the Café chain was born. On July 11, 1996, the first location in Bangalore, Karnataka, opened its doors.

The largest hurdle encountered by Café Coffee soon after it was founded by CCD Coffee was to bring about a radical shift in Indian society, where the majority of the populace preferred drinking tea to coffee.

By 2011, more than 1000 bistros had opened across India, where CCD has quickly expanded to various urban areas. It was announced in 2010 that a group led by Kohlberg Kravis Roberts would spend $10 billion in CCD’s Coffee Day resorts. At the same time, the company also changed the brand’s logo to the one it currently uses to promote the chain as a meeting place.

This was accomplished with significant format changes for the businesses, including as the extension of parlors and a thorough interior redesign, and, most importantly, with the slogan “A lot can happen over coffee.” The company is vertically incorporated to reduce costs. In addition to owning the crops and producing the coffee, espresso machines, and furniture for the outlets.

How Did CCD Begin Their Journey?

CCD’s adventure began in 1996 when V.G. Siddhartha incorporated its parent company, Coffee Day Global Limited Company. The first CCD restaurant opened in Brigade Road in Bangalore, Karnataka, on July 11, 1996.

Siddhartha has a passion for innovation and earned his master’s degree in economics from Mangalore University. In the beginning of his career, VG Siddhartha invested heavily in the stock market. When he was only 24 years old, he was employed by JM Financial and Investment Consultancy in Mumbai. Under Vice-Chairman Mahendra Kampani, Veerappa Gangaiah Siddhartha Hegde worked there as a Management Trainee/Intern in portfolio management and securities trading on the Indian Stock Market.

However, when VG Siddhartha received the funding from his father to launch the business of his choice, he was forced to return to Bangalore after reaching his 2-year work anniversary with JM Financial Limited.

VG Siddhartha got began by investing Rs 30,000 in a stock market card and a business called Sivan Securities, later changed to Way2wealth Securities Ltd. Global Technology Ventures (GTV) was the company’s venture capital arm at the time.

In 1985, Siddhartha started investing in stocks on a full-time basis. By that time, he had also acquired 10,000 acres of coffee farms.

In 1993, the Amalgamated Bean Coffee Trading Company Ltd. (ABCTCL), a business specialising in coffee exports, was established.

With the aid of ABCTCL, Siddhartha was able to trade over 20,000 tonnes of coffee from his crops, which were now producing 3,000 tonnes each year. As a result, the business rose to the position of second-largest exporter from India in about two years.

It started a new path as soon as its first coffee shop or CCD store was established on Bangalore’s busy Brigade Road.

The business quickly gained significant recognition for its ground-breaking idea, which allowed millennials to converse while enjoying their preferred beverage.

Coffee Day Global, a division of Coffee Day Enterprises, is the owner of CCD, the largest coffee chain in India as of this writing.

The owners of the “driving espresso brand in Germany,” Tchibo, served as his inspiration. This inspiration opened Siddhartha’s eyes and gave him a dream of a different world in general. It also inspired a heavenly notion. With that idea, he built his $1 billion domain cup by cup.

The business owned around 1,700 cafes, more than 48,000 vending machines, 532 kiosks, and more than 403 locations where ground coffee was sold. According to a Moneycontrol report from 2019, Coffee Day Enterprises has a revenue of Rs 4,264 crore every year.

Debts and controversies are increasing

As reported in March 2019, Café Coffee Day has a total debt of almost Rs 6,550 crore.

When coffee exports from India fell by 10%, the price of coffee fell to its lowest level in 13 years, which also affected Indian prices. In order to pay off this debt, Siddhartha was forced to sell L&T, a major engineering company, his entire 20.32% ownership in Mindtree, an IT services company with its headquarters in Bengaluru, for over Rs 3,200 crore. He was Mindtree’s greatest stakeholder and left the business after nearly 20 years of ownership.

The growing debts were simply unsettling for the company as a whole as well as individual Siddhartha. Going forward proved to be extremely difficult, even with the sale of his own holdings, since the necessary working capital could not be obtained.

All of these factors prompted Siddhartha to agree to a sale of shares in the flagship Café Coffee Day (CCD) to the multinational beverage company Coca-Cola for an estimated enterprise value of Rs 10,000 crore. In addition, Blackstone was allegedly in discussions with the business to pay roughly Rs 2,800 crore for the majority of Tanglin Developments, the founder’s real estate company.

The Income Tax Department began monitoring VG Siddhartha gradually after conducting its initial inspection of the owner of Café Coffee Day’s location in September 2017. When the search and seizure operations were complete, they found that the documents seized contained approximately Rs 650 crore in hidden income.

The senior officers of the Income Tax Department of the Karnataka and Goa regions eventually performed the income tax raids at more than 20 places, including Mumbai, Bengaluru, Chennai, and Chikmagalur.

The Death and Disappearance of CCD’s Founder

Siddhartha had been reported missing since July 29, 2019, and Coffee Day Enterprises confirmed this information on the missing MD.

Siddhartha had been reported missing since July 29, 2019, and Coffee Day Enterprises confirmed this information on the missing MD. On July 29, 2019, Siddhartha allegedly informed his driver that he planned to take a walk close to the bridge and ordered him to wait a distance away. After two exhausting hours of waiting for his return, the driver filed a missing person report with the police. The accusation that a fisher witnessed someone leap off the bridge wasn’t shown to be accurate for two days, though.

According to reports, VG Siddhartha, the owner of Café Coffee Day, complained in a letter that he had failed to build “the right profitable business.” Along with it, he said that a senior income tax officer had harassed him.

The company selected Ernst and Young to analyze its books of records in September 2019. They also requested that the inspector look into the circumstances surrounding Siddhartha’s most recent letter and the emphasis he placed on it.

CCD Marketing And Business Strategy

CCD has implemented very successful business ideas, which is broken down below.

Innovation and Growth

The enormous quantity of food and drinks allowed for CCD. Additionally, CCD’s bold actions and quick expansion into remote areas and level 2 urban communities in India were some successful strategies that pushed CCD to compete with rivals like Starbucks and Barista.

The company has been able to meet client requests and maintain its competitive edge thanks to its several auxiliary businesses, such as Coffee Day Fresh ‘n’ Ground, Coffee Day Square, Coffee Day Resorts, Coffee Day Beverages, and so on.

Additionally, CCD’s consistent participation on Facebook, Instagram, and Twitter popular social media platform increased customer engagement. In order to engage with the customers in 2016, Café Coffee Day also used the Beano character.

Approach to Distribution

There are 1,752 CCD stores spread throughout 29 Indian states as of March 2020. With locations in Dubai, Malaysia, Cairo, Egypt, Austria (Vienna), the Czech Republic, and other countries, Café Coffee Day has also expanded outside of India. There are currently fewer than 1,000 bistros in the sorted-out division of India, despite the fact that there are potentially 5,000 bistros there.

Different combinations

The following notable actions helped CCD stand out from its contemporaries and competitors:

• The focus shifts from nutrition to creating the ideal experience. CCD launched its application to track consumer behaviour, personalise offers and improvements, enable cashless transactions via implicit wallets, and consistently produce.
• In order to enable cashless transactions at the stores in 2016, CCD teamed up with Freecharge. Customers may use their mobile numbers to pay and complete the transaction in less than 10 seconds. Whatever the case, author Harminder Sahni and MD Wazir Advisors see these as strategic contributions.
• CCD launched Café Concerts in 2016 with a focus on live performances in Mumbai, Delhi, Pune, and Bengaluru to further increase participation. When CCD first offered cafe concerts, they were distinctive and had a significant impact on drawing in the younger audience.

The 3As Approach

The main factors affecting competition in the retail market for espresso products are evaluation, item/administration quality, brand recognition, taste, and item assortment.

CCD has based its retail process on the three A’s to set itself apart from competitors:

Affordability – CCD makes sure that its products are reasonably priced to appeal to every type of customer, whether they are office workers or students in school or college.

Accessibility – The company wanted to make sure that the cafes were easily accessible. CCD thinks that by offering the same service everywhere, it can better serve individuals all over the nation.

Acceptability – CCD guarantees that customers will purchase and consume their goods without sacrificing taste. The plan was to gather folks for a time of relaxation and unwinding. With its appealing tagline, “Let us catch up on CCD,” which every Indian has undoubtedly heard at some point or another, the company further encouraged its clients.

The Present Day CCD

According to reports dated June 30, 2020, Café Coffee Day claimed having a total of 1480 outlets after closing 280 stores in the wake of FY20.

After the passing of its founder, the company had been attempting to reduce its debt by selling off its non-core assets. CCD has stated that it will pay back 13 of its lenders a total of Rs. 1644 crore in debt. The selling of its technology business park to Blackstone Group and Salarpuria Sattva for an ambitious price of Rs 2,700 crore had made this possible. The business has already sold its interests to L & L&T and Mindtree.

According to the most recent statistics dated March 31, 2021, CDEL’s net debt decreased to Rs 1,731 crore from Rs 2,909.95 crore in the FY20.

At the same time, CDEL revealed that Justice Manjunath had been appointed to “suggest and oversee actions” for the recovery of over Rs 3,535 crore that had allegedly been diverted to Mysore Amalgamated Coffee Estates Limited (MACEL), a personal company supported by the company’s late founder V G Siddhartha.

According to the most recent report, “Management of the Company is putting its best efforts to get the Company back on Track.” The debt levels have drastically decreased since the start of the financial year in March 2021, it was further said.

On a consolidated basis, CDEL’s net operational revenue in FY21 was calculated at Rs. 853 crores as opposed to Rs. 2,522 crores in FY20.

Currently, the brand is present in the coffee, logistics, and hospitality industries. The company’s coffee division, which includes the well-known café chain brand Café Coffee Day (CCD), was responsible for almost 47% of its total net revenue. The other components came from its logistics company and logistics, which generated 45% and 8% of the revenues respectively.

Currently, CCD runs 333 CCD Value Express kiosks in addition to 572 cafes operating in 165 cities. Additionally, it boasts of having more than 36,326 vending machines that “dispense coffee in corporate workplaces and hotels under the brand”.

Successes of CCD

• 2007-The Times of India’s “Best Coffee Bar” category was won by Cafe Coffee Day.
• 2008 – saw Cafe Coffee Day win the Burrper’s Choice Award after burrp.com users voted it the “Coolest Café”
• 2009 – The Asia Retail Congress awarded Espresso Day Global the title of “Retailer of the Year” in the category of Food & Beverages (cooking administrations).
• 2010 – Cafe Coffee Day win the “India’s Most Popular Coffee Joint: 2010” category of the Indian Hospitality Excellence Award.
• 2012- According to a Brand Equity research from 2012 (EconomicTimes), Cafe Coffee Day was ranked as the second most exciting brand in India’s category of “Nourishment Services” and the 26th most trusted service brand overall.
• 2012 – Cafe Coffee Day win the mouthshut.com Best Coffee Bar Award.
• 2013-Brand Equity survey (Economic Times) ranked Cafe Coffee Day as the 26th Most Trusted Service Brand in India.
• 2013 – The National Centre for Promotion of Employment for Disabled People presented Cafe Coffee Day with “The NCPEDP – Shell Helen Keller Award 2013″ in 2013 for setting an excellent example and opening doors to employment for people with disabilities.
• 2013- The Star Retailer Awards’ category for “Best Customer Service in Café Restaurant” named Espresso Day Global as the Best Retailer in 2013.
• 2013 -CafeCoffee Day win the retail category of ABP news’ Brand Excellence Award.
• 2012-2013- The Coffee Board of India awarded a bronze medal to Espresso Day Global in 2012–2013 for being the third-best exporter of green espresso.
• In 2014, ABP News named Espresso Day Global “Retailer of the Year” (Organisation Food & Grocery) for excellence in retail.

Conclusion

CCD has captured a significant market share of the Coffee market. With offering the best experience to the customers and ambience CCD has changed the way Indians had coffee. CCD is a big name in the industry and has hundreds of outlets and millions of vending machines installed by the company across the country. Over the years, the company has expanded its business in different parts of the nation and aims to create a unique space for the coffee lovers in India.

CCD FAQs

Does Cafe Coffee Day owe money?

Yes, CCD has a sizable debt load. Coffee Day Enterprises reported having debts totaling Rs 518 crore, comprising both short-term and long-term obligations, and that company has missed payments totaling roughly Rs 263 crore.

Is Cafe Coffee Day going out of business?

Since April 2019, around 500 cafe locations of the coffee chain Cafe Coffee Day have been shut down as the corporation works to stop the declining profitability of its coffee operation and gets ready to sell the company. In order to prepare for divestment, CCD was forced to close these outlets.

How did Cafe Coffee Day turn out?

Soon after the passing of its founder V.G. Siddhartha, Coffee Day Enterprises Limited claimed that at least 2,000 crores ($270 million) was missing from company finances. This prompted their board to launch an investigation.

The CCD Slogan is what?

The theme of Cafe Coffee Day is “A lot can happen over coffee”.

Who are Cafe Coffee Day’s competitors?

Starbucks, Costa Coffee, Barista, and Gloria’s are a few cafe coffee day rivals.

Can I work while sitting in CCD?

Until you’re asked to leave, you’re free to sit and work.

Why has CCD lost money?

Due to the alleged suicide death of the founder, V.G. Siddhartha, in 2019, CCD is at a loss. His unexpected passing resulted in a significant loss for the business. The Covid-19 epidemic and the lockdown have also taken a toll on the brand.

What ought I should eat at CCD?

Coffee, sandwiches, snacks, and CCD combos are available for ordering.

Read Also-Parle-G: The Biscuit That Became India’s National Snack