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Café Coffee Day Operations Strategy Caselet

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Café Coffee Day: A Strategy for Affordable Luxury

Café Coffee Day (CCD) is India’s favourite coffee shop for the young and the young
at heart.
It is a part of India’s largest coffee conglomerate, Amalgamated Bean Coffee Trading
Company Limited. In Asia, it has the second largest coffee estate ownership, which
endows it with abundant source of coffee. In addition, there are 11,000 small growers
from whom CCD sources coffee beans. These choices with respect to the supply chain
for coffee beans enable them to provide single origin coffee to the connoisseur.
In some sense, CCD has brought in the concept of cafés to India. The first CCD outlet
opened in 1996 on Brigade Road in Bangalore continues to be one of the most
happening places in the city. Since then, CCD has grown into the largest organized
retail cafe chain in the country. CCD outlets are also present in Vienna, Austria, and
the Czech Republic. There are about 1700 outlets in India, and there are plans to
increase it to over 2000 outlets in India and 200 in overseas by December 2014.
The concept, strategic intent, service delivery design, and various other choices made
at CCD makes it unique. A typical CCD outlet is a smart, simple space where the
customers could sit down, talk, and listen to conversations, hold short meetings, or
even have a lot of good fun, all over steaming cups of coffee. A typical customer is
about 25 years old and never visits the CCD outlet alone. In a CCD outlet, the coffee
is served efficiently; the outlet is clean and the setting relaxed yet peppy. What
distinguishes CCD from the other competitors such as Barista, Au Bon Pain, and
Costa Coffee is the pricing strategy, which the MNCs struggle to get after a few
iterations. CCD offers a single-serve coffee machine that can dispense a cup of tea in
about 20 seconds. They have also developed a 5 Kg, 30 cm tall machine called Coffee
Day Wakeup, which is likely to be priced under ₹5,000 compared to Italy’s Lavazza’s
₹15,000 product.
The service delivery design of CCD is unique and is based on the strategic intent of
providing an affordable luxury to the chosen customer segment. There are four
formats available. These include Café Coffee Day, The Lounge, The Square, and
XPRESS Outlets. There are over 1500 Cafés spread across 200 cities in India where
over 300,000 customers step in on a daily basis. The Lounge offers a wide range of
food and beverages, targeting a more mature and affluent group of customers. The
Square is a premium range of cafés catering to the connoisseur and widely travelled.
The Lounge and the Square outlets are designed in such a manner that it can be used
for a serious business conference or for a relaxed meeting. Facilities available include
a free wi-fi, a presentation screen, single-origin coffee, and exquisite cuisine. The
XPRESS Outlets offer quick coffee to the moving population and are located in the
city’s key spots. Each of these outlets is designed to suit the targeted customer
segment. The XPRESS Outlets occupy just 60 square foot of space, whereas The
Square and the Lounge are much bigger.
The strategy of CCD is to be the best Café chain by offering a world-class coffee
experience at affordable prices. A closer look at various aspects of CCD suggests the
importance of developing a corporate strategy and aligning various aspects of
perations to the overall strategy. We shall see some of these aspects in detail in this
chapter.
Source: http://www.cafecoffeeday.com; “Tomorrow’s Goliaths: Café Coffee Day”, Business Today, December 2, 2011, pp. 80–84

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