Cafe Coffee Day redesigns its lounge format

To re-connect with its consumers who have moved up the economic ladder in the last few years, Cafe Coffee Day (CCD), India's largest cafe retail chain, will soon reveal a new look for its lounge outlets.

The company plans to convert its existing lounges into the new design and set up 50 new lounge outlets by the end of this financial year.

The company opened its first outlet in 1996. "While the central purpose of our cafes remains being hubs of conversation, over the years, our customers have moved up. To re-engage with them, we have worked on our lounges offering a more relaxed ambience and catering to a global palate," said Alok Gupta, director, Cafe Coffee Day. The company has 918 outlets in the country, located in 139 cities, of which 20 are lounges. It plans to touch 1,100 outlets by the end of this financial year.

The company's lounge is a more premium format compared to its cafes. In the lounges, the beverage is paired over gourmet cuisine and not just over fast food. The cuisine in the lounge will be European-styled and enable consumers to customise their food items like bread, pizza, etc. High streets, premium malls and airports are the type of locations the company is identifying to set up the new lounge outlets.

An investment of around Rs 35 crore is expected to be put into the expansion of the lounge outlets. All its stores are self-managed. On an average, it takes the company 18-24 months to predict how a particular outlet is likely to perform. "Lounges tend to deliver better top line and better bottom line, albeit at slightly higher rentals. A lounge could typically operate at 1.8 times to two times better top line over regular cafes," said Gupta. It is also planning to bring world trends of coffee brewing, such as pour over and siphon, to these lounges.

As part of its strategy to become a global player, CCD has set up four outlets in Vienna and two in Karachi.

"We are looking at setting up 20-30 cafes in Europe with a focus on the eastern part," said Gupta. He added that the company was exploring the inorganic route outside India with a cafe retail chain but declined to disclose more details. The company has revenues of Rs 400 crore.

The retail cafe market in India is estimated to be around Rs 800 crore, of which significant players other than CCD include Barista, Costa Coffee, Gloria Jean's Coffees and Aromas. Global cafe retailing major Starbucks is also reportedly evaluating an entry into the space in India.