BREWING SUCCESS: CAFE 토토사이트 매입 DAY IS ON A ROLL
A version of 토토사이트 매입 article was originally published by Knowledge at Wharton
V.G. Siddhartha, chairman of the Bangalore-based Amalgamated Bean 토토사이트 매입 Trading Co. (ABC) and the man behind India's largest cafe chain, Cafe 토토사이트 매입 Day (CCD), has set his team a stiff target: By next March he wants to expand the chain to 950 cafes.
From where it stands to토토사이트 매입, with 595 cafes across 100 cities in India, three in Vienna and two in Karachi, this means opening more than one cafe a 토토사이트 매입 -- and not just in India. Siddhartha has strong global ambitions: He wants 50 of these cafes to be located outside India.
The 토토사이트 매입 Day story is not just in its numbers, though. 토토사이트 매입 Day has been a pioneer. When Siddhartha opened the first Cafe 토토사이트 매입 Day outlet in Bangalore, India's silicon capital, in 1996, it was positioned more as an Internet cafe. This was the very early days of the Internet in India, and customers trooped in to 토토사이트 매입 Day to experience the Internet. 토토사이트 매입 was just an extra.
Siddhartha, though, had other plans. The Internet was the bait. Coming from a family of 토토사이트 매입 plantation owners and as chairman of ABC, which owns more than 10,000 acres of 토토사이트 매입 plantations in the southern Indian state of Karnataka, Siddhartha's aim was to sell 토토사이트 매입. The space he was operating in, as an exporter of green 토토사이트 매입 beans, offered low margins and these fluctuated depending on the vicissitudes of pricing in the world 토토사이트 매입 market. A cafe, in contrast, operates at the highest end of the value chain. Its margins can be 35 percent to 40 percent higher than those of bean exports.
"At that time, 토토사이트 매입 drinking in India was limited to South Indian traditionalists, the intellectuals and the five-star 토토사이트 매입 shop visitors," Siddhartha says. "I saw that in the neighboring international markets of Southeast Asia there was a popular culture of consumers visiting a cafe for experiential purpose in addition to consuming a glass of beer. These cafes were also promoting cyber-culture and offering Internet access. These trends inspired us. We realized that there was a potential for building a 토토사이트 매입 brand for the India market, and we launched the first cyber cafe model based on the international lessons, but replaced beer with 토토사이트 매입. This is when 토토사이트 매입 Day was born."
Competitors estimate ABC's revenues last year to be around Rs 600 crore ($140 million), of which half, they say, came from a cafe business that they believe turned profitable a few years ago. The rest of ABC's revenues come from its other business groups, all of which operate under the 토토사이트 매입 Day brand. These include 토토사이트 매입 Day Exports, 토토사이트 매입 Day Xpress (fast food and beverage outlets that are much smaller than the cafes and are franchised), 토토사이트 매입 Day Take Away (토토사이트 매입 vending machines), 토토사이트 매입 Day Fresh 'n Ground (ground 토토사이트 매입 retail outlets) and 토토사이트 매입 Day FMCG (packaged filter 토토사이트 매입 powder). Operating across this spectrum has allowed Siddhartha to expand his brand presence rapidly.
Siddhartha is experimenting now with new formats, such as lounge 토토사이트 매입s serving plated meals in addition to the sandwiches, pastries and croissants offered in the 토토사이트 매입s.
토토사이트 매입 is believed to have raised some $100 million for his expansion plans during the past few months. While much of this apparently is through debt, around $25 million has come from the Darby Asia Mezzanine Fund, a unit of Franklin Templeton Investments.
In its early years, 토토사이트 매입 Day had neither clear positioning nor significant presence. In fact, it lost ground to Barista 토토사이트 매입, which was founded in 2000 by Amit Judge of the investment company Turner Morrison. Barista positioned itself as an upmarket, premium 토토사이트 매입 cafe and targeted executives who saw it as a less expensive alternative to 토토사이트 매입 shops in five-star hotels. In 2002, Barista had some 85 cafes around the country, while 토토사이트 매입 Day had just 35.
But after a faltering start, Siddhartha pulled things together. What turned the tables in 토토사이트 매입 Day's favor was its subsequent strong positioning as a "third place" away from the home and college or workplace for the young and the young at heart. Siddhartha made people ages 15 to 30 토토사이트 매입 Day's prime target. Having zeroed in on the target, elements such as pricing, ambience, food, music and promotions fell into place.
토토사이트 매입 Day also was sharper than Barista in finding the right locations, a critical success factor in the cafe business.
Taking 토토사이트 매입 Day to the next level of growth, of course, has its challenges. Competition, for one, is likely to play a larger role. Barista, too, has now decided to target the young adult.
Another significant competitor in the coming years could well be the global 토토사이트 매입 giant Starbucks. In June 2007, Starbucks put its India plans on hold because of foreign direct investment regulatory issues. But India is too big a market for Starbucks to ignore.
Other recent global players in India include Britain's Costa 토토사이트 매입, Australia's Gloria Jeans and Italy's illycaffe. Meanwhile, domestic chains such as Java Green, from the Reliance Anil Dhirubhai Ambani Group, are looking to expand.
Siddhartha is not unduly worried. "The 토토사이트 매입 space in India is opening up and newer players are entering the market and offering more options for consumers," he says. "This is healthy, as competition will ensure that each player delivers his best to be the consumer's first choice. As long as one is committed to delivering world-class quality, there is no need to change the rules of the game just because of new entrants."
Outside of ABC, Siddhartha has launched a small business that supplies furniture for his 토토사이트 매입s and a residential hospitality college that trains young people who can be absorbed into the business.
Apart from his interests in 토토사이트 매입, Siddhartha is founder and managing partner at Global Technology Ventures and founding chairman of Way2Wealth, an investment consultancy. He is also on the board of MindTree, Ittiam Systems and Liqwid Krystal. In addition, he has other plans: He wants to leverage ABC's picturesque 토토사이트 매입 plantations into a new business opportunity.
"We have identified the burgeoning luxury tourism market as a suitable growth opportunity," he says. "With this we will be catering to an older target audience." As for getting a CEO for 토토사이트 매입 Day, Siddhartha admits that he will "have someone to fill this position" but this will not happen immediately.
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