Professional Documents
Culture Documents
Introduction
Cafe Coffee Day is an Indian cafe chain owned by V.G. Siddhartha. It is basically owned by
Amalgamated Bean Coffee Trading Company (ABCTCL) now known as Coffee Day Global
Ltd. Caf Coffee Day was started as a retail restaurant arm in 1996.The first CCD outlet was
set up, at Brigade road in Bangalore, Karnataka.
Currently they have 1,530 stores and 600 kiosks across India as well as 30,000 vending
machines in 11,000 corporate offices across 29 states of India. CCD is a market leader in
India with 46% market share in terms of volume of outlets. Also CCD has its footprints in
Austria, Czech Republic, Dubai, Malaysia & Egypt.
Looking at their production capacity, they produce their own unique coffee beans and they
are one of the largest coffee exporter in India .Also their coffee machine costs lesser than the
western counterparts like Lavazza and Nestle machines. On an overall basis, revenue growth
has slowed to 9% year-on-year in FY14 after reporting a 34% revenue growth in FY13. On
an annualized basis, revenue growth has slowed further to 2.8% in FY15.
SCOPE: It encompasses strategic policies to be adopted for geographic and product
expansion.
Mission:
To be the best Cafe chain by offering a world class coffee experience at affordable prices
To achieve its mission Siddhartha has been constantly putting all his efforts to develop and
expand to maintain scalability in the market. Recently CCD has filed for an IPO in the
country. Coffee Day Enterprises is to offer 20% of its stake to the public for about $200
million.
Forbes based billionaires have made pre-IPO investments in the chain whose public offering
is expected to garner much investor interest. One of Caf days objectives is to utilize
nearly Rs.633 crore from the IPO proceeds towards loan repayments. The company is
thinking to expand globally and also putting efforts to enhance their range of product
offering. But there are certain challenges like:
- Ever increasing competition not only with late entrants global chains like Starbucks, Costa
Coffee, but also the newest, McDonalds McCafe which is soon going to be launched in India
- Rising cost of real estate and the ever challenging issue of recruiting and retaining the
expansive workforce across 1,700 outlets. Ever increasing attrition rate of as high as 40 per
cent at entry Level positions.
- Rising real estate cost and since they have no Franchise, they are paying high rents
- Providing range of product offering and changing the positioning of caf chain.
SWOT Analysis
STRENGTHS
WEAKNESSES
Largest retail chain of cafes
Weak brand image
ISO 9002 certified company
Lacks strength to maintain brand
Quality and taste
loyalty
Youth oriented brand
Poor ambience and dcor
Preferred for informal meetings
Wrong site selection -losses
Reduction in cost (Own production)
USP of brand Highly affordable
brand
OPPORTUNITIES
THREATS
Fastest growing industries in Asia
Competition with established brands
Gone international
and other International coffee cafes
like Starbucks, Costa Coffee, Coffee
Mochas, Gloria Jeans, Coffee, Coffee
Bean,
Hukka Parlours
PESTLE Analysis
Political
Economic
Social
Technological
Legal
Environmental
Competitor Analysis: Caf Coffee Day has 1469 stores in India and had kept lowest price of
small Cappuccino i.e. Rs.66. Indian Coffee Market in food service was expected to grow at
13-14%. So many companies were interested to launch in India.
Caf Coffee Days reach was very high as compared to its competitors as they had 1530
stores.
Figure 1.1
1469
140
129
88
105
95
107
120
106
95
90
70
66
175
100
80
60
40
100
18
17
17
11
No of Stores
Small Cappucino Cost(April 2015)
20
0
Series 3
We are taking one of the competitors into consideration to reflect on where CCD differs.
Caf Coffee Day v/s STARBUCKS differentiation strategy
Parameters
Store Format
Ambience Experience
Target Customer
Affordability
Service Quality
Price
Coffee Quality
Location Preference
CCD
ABCTCL Exports
(Private Large Scale company)
Starbucks
U.S Based Starbucks Coffee
Company & Indias Tata
Group ( Joint Venture, 50:50)
Number of Stores
Brand Status
Type of Locations
Segment Profile
Product
Price
Global brand
Metropolitan cities
Working professional over 25
Tourist
people
and
well-travelled
Services: Self service is now getting replaced by the waiter-service have led to
increased cost to the company
Staffing: Lack of good quality training, poaching of employees, lack of loyalty and
commitment among its employees and mitigating attrition in front line employees
Lack of Global Presence: Loss of excitement in youth and they may get bored of the
existing products and services
Real Estate prices: High store set up cost and increased monthly rent and too many
stores increases the fixed cost of the company
Changing taste of consumers: New and innovative products are the need of an hour
and they concentrate on maintaining an updated menu and store appearances with
consumer preferences
Cost of renovation: Huge cost is involved in upgrading existing cafes and Lounges
( $55,250 and $84,500 respectively)
In order to attain a competitive advantage, CCD needs to build socially complex resources
and capabilities. It needs to build a social resources like reputation, trust, teamwork, culture
cannot be easily imitated. It needs to thoroughly review its HR investment in the various
sectors to see if business performance is aligned with the HR Strategy and serves its purpose.
As the current environment is very much changing because of changing customer preferences
and needs, CCD needs to develop dynamic capabilities to gain a sustained competitive
advantage. To ensure all this, below are the following business goals.
Business Goals
To build the resource and capabilities to manage the workforce through HR policies
and practices
Business Strategy: Clear and effective tracking of HR investment and business performance
and building capabilities and capacity to gain competitive advantage
HR Strategy
To inculcate the KASO among the HRs and new recruits in order to meet
organizational goals
To build the resource and capabilities to manage the workforce via implementation of
new HR policies and practices
Brand Experience: CCD has become the adda or the second place for most of the
youngsters in India. This is because of its laid back and relaxed environment it
provides to them and also because of the cost effective offerings.
Brand Reinforcement Cluster Approach: CCD has multiple outlets within a close
radius of its other outlets. E.g. The Bandra area has 6 CCDs in the same vicinity to
make it the Spot for sudden hunger pangs coupled with some warm conversation.
Multiple Formats: CCD has various formats of Cafes which include Squares,
Lounges, High Street Cafes, Garden Cafes, Mall Cafes, Xpress, etc.
Franchisee Company Owned: All the outlets are company owned. It may make it
more expensive to run but ensures there is no brand dilution.
Vertical Integration: With the value chain integration, from bean to the cup,
ABCTCL was able to reduce costs, assure adequate supply demand, and gain
economies of operation and scale.
Value Chain
Value Chain General Trend
Elements
CCDS Capability
Practices: Following practices would be required once Caf Coffee Day is on-board:
(a) HR Capabilities:
- Attracting and retaining skilled workers
- Training in terms of Regulations around the handling and sharing of employee
data across countries
- Training in terms of skills in accordance with the global business strategy
- Training to familiarize with the companys culture
- Grooming in terms of emotional and psychological mind-sets needed
- Rethinking the global structure and organizational design
(b) Functional Capabilities:
- Developing a sophisticated finance function by knowing the multiple financial and
accounting environments, since they vary across the globe
- Planning tax, as it can play an important role in accelerating the transition to
profitability
- Having the right incentives and controls in place to manage expansion, as rapid
growth exacerbates risks
- Having frequent communication between headquarters and local management
teams
- Building mutually beneficial relationships with suppliers and other partners
- Choosing which functions should be global, and which will be local. Functions
such as finance and IT can remain centralized
(c) Infrastructural Capabilities:
- Infusing fresh capital helps establish infrastructure capabilities
- Deciding the layout and design of each of the cafes in all locations
- Improving/advancing the machinery and technology to be used in the new
locations
(d) Branding and Marketing capabilities:
- Recruiting a local marketing head for each geography, who can incorporate the
cultural differences in the marketing and branding strategies
- Deciding the location and layout based on the demographic and geographic
profiles of the target market
- Building the technology that supports product expansion
(e) Distribution and logistics Capabilities:
- Deciding the number of distribution and wholesale centers across each location
- Developing capabilities to forecast demand and, then decide the distribution
network accordingly
Currently Caf Coffee Day is facing 40% attrition at the entry level
This rate is too high in comparison to the industry average and poses a threat to Caf
Coffee Day as an employers brand image
2. Product Portfolio:
-
Currently Caf Coffee Day has the same menu across the country , where as they
could cater to different cultures by localizing their menu according to the region
Their menu has been restructured many times but does not offer anything that is
specific to a certain region
3. Consultants- hiring strategy : CCD has tied up with 10 consultants for hiring
purposes, but they do not provide a specified time period or job description which
ends up hindering their whole recruitment process
4. Global expansion:
- In order to compete with Starbucks, CCD needs to look into global expansion
- Caf Coffee Day aims to be one of the top four coffee chains around the globe, in
order to do that they need to focus on international expansions
- Their competitor, Starbucks, is prevalent throughout the world
How can Caf Coffee Day fill these gaps?
I.
A more comprehensive and standardized hiring process and solve the attrition
issue at hand
-
II.
Since CCD is facing a attrition rate of 40%, they need to work on their hiring process
as well as their retention plan. This can be done after identifying the problems with a
comprehensive analysis of the employee environment. This analysis can be done
through conducting ssatisfaction surveys
Also coaching, training, mentoring, stretching jobs and providing adequate
advancement opportunities can be used as ways to retain employees
Effective implementation of the induction and on-boarding process
III.
Caf Coffee Day is dealing with a very high attrition rate thus it needs to concentrate
on the whole hiring process with some changes in the on-boarding and induction
system
Localized menus and store ambience in order to attract new customers
Currently Caf Coffee Day has the same menu across the country, where as they could
cater to different cultures by localizing their menu according to the region. Their
menu has been restructured many times but does not offer anything that is specific to
a certain region.
IV.
Specified time frame, job description , with clearly defined roles and
responsibilities
The hiring process at CCD lacks clarity, hence they need to work on the job
description of entry level employees with a clarity on the roles and responsibilities.
CCD does not give a specified period of time to fill a position thus the position
remains empty for a while which causes problems in the whole functioning of
branches. At times they are understaffed and at times they are over staffed which
results in a loss of efficiency and money.
The CEO of Caf Coffee Day, Mr.Venu Madhav said that Caf Coffee Day aspired to
be one of the top four coffee chains in the world. In order to do so Caf Coffee Day
needs to look into global expansion in Asia for starters.
Standardized induction and on-boarding procedures will allow new recruits proper training
and bonding to company culture. It can also consider outsourcing its recruitment processes to
experienced HR agencies. Internal recruitment methods that can be used in CCD are job
postings and promotion from within, as well as a career path for the management employees.
External recruitment methods that can be used in CCD are walk-ins, where people apply on
their own and also employee referrals, where current employees recommend possible job
applicants. Specified time frame, job description, with clearly defined roles and
responsibilities.
2. Hiring new people across different global markets
As of March 2015, there are 1530 outlets across 29 states of India. Cafe Coffee Day has also
expanded outside India with its outlets in Austria (Vienna), Czech Republic, Dubai, Malaysia
& Cairo, Egypt. CCD should slowly start expanding and venturing into newer markets
whereby improving its footprint as well as attracting newer talent. By employing local
baristas and middle management, more informed decisions can be made.
The customer service and labour regulations are more smoothly carried out. Can exploit
Eastern and European markets. Diversification strategy can be followed and college students
(for full and part time) can be utilized.
Foreign college students and hospitality majors can be targeted so as to reduce the cost of
training. CCD can even target the university level recruitment avenues offered in foreign
educational institutes to get fresh talent at affordable package bands. CCD should strive to
become an Equal Opportunity employer. All qualified applicants should receive consideration
for employment without regard to race, national origin, age, sex, religion, disability, sexual
orientation, marital status, or any other basis protected by local, state or federal law.
3. Attracting and retaining skilled employees
Keeping in mind the high attrition rate in the industry it is very important to attract and retain
talented employees. CCD should occupy significant mind share amongst prospective
aspirants. By becoming the employer of choice in the coffee retail industry, the brand
visibility widens. If the employees are treated well, they perform well. Enough and more
career opportunities and training will attract skilled talent. By coming up with newer
employee welfare and benefit schemes existing employees can be retained.
Baristas and younger employees can be given tuition and education assistances. New
recognition programs, career sabbaticals and other time-off programs for employees at every
level. Plus, 30% in-store and online discounts can be considered. More employer branding
through word-of-mouth and social media can attract talent. Employee stock option facilities,
medical and health care insurances as well as performance based incentive schemes can
retain talent to a huge extend.
At Caf Coffee Day job satisfaction comes only when the employees love their job. At CCD,
there's no reason not to! Hence, the E.E. Club was formed as an initiative to encourage interdivisional engagement. By hosting a plethora of events like outbound trips, employee picnics
and Friday fun days, etc the employee morale can be boosted.
A constant check on the employee satisfaction levels through surveys and random checks can
lead to higher employee productivity. By introducing monthly employee engagement
activities to drive a forum can be created for talent expression as well as to provide
opportunities to network with employees of the group companies.
Best performer awards and best caf of the region titles should be kept so as to have spirited
competition. CCD brand is nothing without its baristas. By giving employees reasons to
believe in their work and that theyre part of a larger mission, An employee with a
connection to the work of the company will then operate for its good just like a personal
matter. Treat each store like a small business and be creative with training sessions.
STARTEGY
Objectives
Measures
Targets
Initiatives
FINANCIAL
S
Market
share
growth
Growth
Shareholder value
Increase market
share to 70%
CUSTOMER
Customer
satisfaction
INTERNAL
BUSINESS
PROCESSES
Process
performanc
e
Time
Service
Satisfaction
Retention
Operational
efficiency
LEARNING
AND
GROWTH
HR
practices
References
Employee
retention
Employee
satisfaction
Increase process
Lounge and square
efficiency by 10% redesign
Automation of
equipment
Reduce attrition
EE club
by 10%
Outbound trips
EE survey and
feedback
1. http://sloanreview.mit.edu/article/building-your-companys-capabilities-throughglobal-expansion/
2. https://www.accenture.com/pl-en/insight-outlook-manage-global-workforce.aspx
3. http://www.ey.com/GL/en/Issues/Driving-growth/Beyond-Asia---Challenge4
4. http://www.chinabusinessreview.com/developing-china-sales-and-distributioncapabilities/
5. http://www.cafecoffeeday.com/
6. http://www.financialexpress.com/article/industry/companies/cafe-coffee-enterprisesbrews-rs-1150-crore-ipo/90650/
7. http://www.livemint.com/Money/ZBzgpvrFUU5W5ZgabVxprM/Coffee-Day-IPOthe-cup-looks-halfempty.html
8. http://www.forbes.com/sites/saritharai/2015/05/28/cafe-coffee-day-starbucks-rival-inindia-filing-for-ipo-at-1-billion-valuation/
9. https://en.wikipedia.org/wiki/Caf%C3%A9_Coffee_Day
10. http://landor.com/#!/work/case-studies/caf%C3%A9-coffee-day/
11. http://tejas.iimb.ac.in/articles/79.php
12. https://www.scsglobalservices.com/files/cafe_man_verinsops_v5_2_010614.pdf