IRN: How does someone end up paying Rs 50 for a coffee and keep coming back for more?
Alok: (smiles) We are an affordable lifestyle format. So our pricing is actually lower than most of our competitors. Having said that, the modern cafe is the third place for the Indian consumer between the home and the office. With more and more Indians out in the workplace, the cafe provides a comfortable environment for him or her to spend time in. The customer attaches a high value to that experience in the cafe. The ease and privacy provided by Cafe Coffee Day helps the customer conduct that business conversation or that interview in a conducive environment.
IRN: People compare your model to Starbucks. Is that a fair comparison?
Alok: I don't think the comparison is unfair. However, we believe in adapting rather than adopting the model. In the West, there is a social relevance to cafes, as they are primarily coffee drinking nations. In India, cafes form a part of our extended lives. The cultural and socio-economic context is different.
IRN: What is your biggest strategic priority at the moment?
Alok: Driving penetration and frequency of usage. Per capita, we are still one of the lowest consumers of coffee. It is less than 100gms per year. Whereas, tea is 10 times this amount. We are putting in significant effort into building the category. We have a 'Friends of Coffee' initiative going on right now for example, where we educate the customer on different kinds of coffee and their attributes. We are also investing money in designing and selling coffee makers and related products. They range from affordable (Rs 260) to luxury options (Rs 3000) for all kinds of customers. The good thing is that we have received genuine interest from our customers who wish to know more about coffee.
IRN: Any innovations in processes or products at Cafe Coffee Day that you are proud of?
Alok: We are proud that we have been able to deliver millions of cups of cappucinos consistently day in and day out. It's not an easy task by any means. We have also done some good work with our backward integration program. We run a vocational program at Chipmangulur that has worked well and is a scalable model in providing employment to young people. The training focuses on processes and getting the employees to understand the impact of their actions.
IRN: Do your employees truly understand and appreciate coffee?
Alok: I would say that they understand coffee today. Love for coffee will happen, but that will take time. We have a Coffee Guru in the company who writes about different aspects of coffee and our store employees get to read and understand these on a daily basis. Coffee is a fascinating product. It is the only drink that engages all 5 senses.
IRN: What gets you up in the morning and excited about work?
Alok: (smiles) What gets me up every morning is the fact that someone else has gotten up before me and is busy at work. What is exciting about this business is that the opportunity is huge. It is the only beverage that one can start the day with and end the day with. We have only scratched the surface so far.
IRN: What keeps you awake at night?
Alok: Actually, I sleep pretty well. (pauses). The only preoccupation is how quickly we can bring about the change. Being a nascent industry, we have to create our own packaging, engineering and technology. There is very little outside support in this space.
IRN: How has CCD evolved over the years?
Alok: Did you know that we actually started as a cybercafe? So, it was an internet browsing space that also served coffee. Now, we sell coffee and offer internet as an add-on, so things have certainly changed since the early days. For the past several years, our strategy has been consistent, which is to grow coffee through the cafe space. We have adapted and made changes such as increasing our food offering, design changes, etc. However, we are still affordable lifestyle in terms of our offering.
IRN: How is the backend structured? What are the challenges?
Alok: We have invested in our vendor partners, from milk, food suppliers to ground level logistics. We manage our inventory churn well now. It has evolved over the years by implementing strong processes with the support of strong senior partners.
IRN: What is the future rollout strategy? People joke about how CCDs are everywhere nowadays.
Alok: For a country of 1.2 billion people, there are around 1800 modern cafes in the country today. I think we are far from saturation. At the moment, we are aggressively investing in expansion. The growth of modern retail has provided us opportunities to be in large and small stores, whether its bookstores, hypermarkets, lifestyle formats; also airports and other public places. As a society we are becoming a more outdoor society and are spending more time on the road. One of the top out-of-home needs is food and beverage and we can certainly play a big part in that.