INDUSTRIAL EXPOSURE PROJECT

On
A Study on Chain of Restaurants

“CAFÉ COFFEE DAY”

Submitted in Partial Fulfillment of the requirements for
the Award of Degree of Bachelor of Business
Administration (BBA)

2016-2019
Submitted by: Rahul

Under the guidance of: Mr. Shakti Sharma

BHARATI VIDYAPEETHUNIVERSITY
SCHOOL OF DISTANCE EDUCATION,
Academic Study Center – BVIMR, New Delhi
(A Constituent Unit of Bharati Vidyapeeth
University,Pune)AnISO9001:2000

Certified Institute

1
 NAAC Re-Accreditation Grade “A” University

ACKNOWLEDGEMENT

This project is a result of dedicated effort. It gives us immense pleasure to

prepare this is A Study on Chain of Restaurants “CAFÉ COFFEE DAY”
We would like to thank our project guide Mr. Shakti Sharma, for
consultative help and constructive suggestions on the matter on this project.
We would like to thanks our parents and colleagues who have helped us in
making this project a successful one.

2
DECLARATION

This is to certify that I have completed a Project titled "A Study on Chain
Of Restaurants “CAFÉ COFFEE DAY” under the guidance of
Mr. Shakti Sharma in the partial fulfillment of the requirement for the award

of Bachelors of Business Administration of BharatiVidyapeeth University,

New Delhi. This is an original piece of work & I have not submitted it
earlier elsewhere.

Rahul

3
CONTENTS
CHAPTER 1:- Introduction to Company
1.1:- Nature of Business/History
1.2:- Type & Ownership pattern
1.3:- Organizational structure
1.4:- Production Layout
1.5:-Organizational Policies
CHAPTER 2:- Industrial Analysis
2.1:- Industrial Overview
2.2:- Current Issues
2.3:- Key Competitors
2.4:- Environmental Scanning (PESTEL analysis)
2.5:-Porter’s Five Forces Model of Competition
CHAPTER 3:- Marketing Strategy
3.1:- Products of the company
3.2:- 4'Ps
3.3:- STP (Segmenting Targeting and Positioning)
3.4:- Distribution Channels
3.5:- Promotion Strategy
CHAPTER 4:- Financial Analysis
4
 4.1:- Sources of Finances
4.2:- Ratio Analysis (Any 3)
4.3:-Net Profit or Net Balance Sheet
CHAPTER 5:- Key learning from the company and
Recommendations
5.1:- Performance Analysis of the company
[Minimum 4-5 lines]
5.2:- Reasons for the diversification of the
company
5.3:- Comment on Organizational Leadership
5.4:- Market Share / Growth Rate of the company
5.5:- SWOT Analysis of the company
CHAPTER 6:- Finding
CHAPTER 7:- Conclusion

5
6
1.1 Nature of Business/History:-
Café Coffee Day(abbreviated as CCD) is an Indian café chain owned by Coffee Day
Global Limited, a subsidiary of Coffee Day Enterprises Limited. Coffee Day serves 1.8
billion cups of coffee, annually, in six countries.[3]

The tertiary sector of the economy (also known as the service sector or the service

industry) is one of the three economic sectors, the others being the secondary
sector(approximately the same as manufacturing) and the primary
sector (agriculture, fishing, and extraction such as mining).

The service sector consists of the "soft" parts of the economy, i.e. activities where people
offer their knowledge and time to improve productivity, performance, potential, and
sustainability. The basic characteristic of this sector is the production of services instead
of end products. Services (also known as "intangible goods") include attention, advice,
experience, and discussion. The production of information is generally also regarded as a
service, but some economists now attribute it to a fourth sector, the quaternary sector.

The tertiary sector of industry involves the provision of services to other businesses as
well as final consumers. Services may involve the transport, distribution and sale of
goods from producer to a consumer, as may happen in wholesaling and retailing, or may
involve the provision of a service, such as in pest control or entertainment. The goods
may be transformed in the process of providing the service, as happens in
the restaurant industry. However, the focus is on people interacting with people and
serving the customer rather than transforming physical goods.

History

Cafe Coffee Day Global limited Company is a Chikkamagaluru based business which

grows coffee in its own estates of 12, 000 acres. [4] It is the largest producer
of arabicabeans in Asia exporting to various countries including USA, Europe and Japan.
[5]

7
Café Coffee Day was started as a retail restaurant in 1996. [6] The first CCD outlet was set
up on July 11, 1996, at Brigade Road, Bengaluru, Karnataka. It rapidly expanded across
various cities in India adding more stores with more than 1000 cafés open across the
nation by 2011.

In 2010, it was announced that a consortium led by Kohlberg Kravis Roberts would

invest ₹10 billion (US$150 million) in Coffee Day Resorts, owned by the company.
[7]
 The same year, the logo was changed to the current logo, which the company stated
was to showcase the chain as a place to talk. [8] This was done with major changes in the
layout of the stores, including the addition of lounges and a total revamp of the interiors.
[9]

The company is known for being vertical integrated to cut costs: from owning the
plantations,[4]growing the coffee,[4] making the coffee machines[10] to making the furniture
for the outlets.[4]

1.2 Type and Ownership Pattern:-

Holder's Name No of Shares % Share Holding

Promoters 113929198 53.93%

Others 59886156 28.35%

General Public 22775846 10.78%

Foreign Institutions 12162621 5.76%

NBanksMutualFunds 2364773 1.12%

Financial Institutions 133125 0.06%

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1.3 Organizational Structure:-

9
1.4Production Layout
Café Coffee Day

has been experimenting with café formats for quite sometime.Backed by the motivation
of providing customers with exciting choices as well asconstantly redefining ‘the café
experience’, CCD has ventured into the followingformats:

Music Cafés

provide customers with the choice of playing their favourite musictracks on the Digital
Audio Jukeboxes installed at the café! There are around 85 cafeswith such jukeboxes. 32
cafes also provide customers with the visual treat of watchingtheir favorite music videos
by means of Video Jukeboxes.

Book Cafés

10
offer the perfect solution to people who think that the coffee experienceis incomplete
without browsing through the bestsellers or reading a classic. CCD’s book corners
accentuate the age-old combination of ‘coffee and books’. This excitingconcept has been
successfully tested at 15 cafes in 12 cities across India and thenumbers are set to grow
exponentially. CCD has tied up with English Book Depot,
one of India’s leading book distributors for placement and rotation of readingmaterials
appealing to Café Coffee Day’s discerning customers.

Highway cafés

on the Bangalore – Mysore highway and NH-8, presents the traveler en route not
only with good coffee and scrumptious snacks amidst great ambience butalso with clean
restrooms to get rid of that weariness from the road!

Lounge cafés

at Hauz Khas, Delhi and Southern Avenue, Kolkata(Southern Avenue)and Hyderabad

(Jubilee Hills) combines the style and luxury of a lounge with thelively ambience and
comfort of a café. With exquisite interiors, exotic menu andthematic music CCD Lounge
offers a whole new experience to the connoisseur whileassisting the latter through its
team of hostesses who are poise and style incarnate andare looked upon as fashion icons.

Garden café

at M.G Rd, Bangalore and GKII, New Delhi combine the joy of rejuvenating amidst
verdant landscapes and pots of coffee.

Cyber cafés

at Brigade Rd, Bangalore, Airport, Bangalore and Airport, Delhicombine the urge to surf,

not to mention get connected through the internet whileenjoying perfectly brewed cups of
coffees, both domestic as well as International blends. Other media, such as electronic,
print and outdoor, offer brand communicationthrough visual and audio modes to a large
section of the populace, both relevant andirrelevant. Café Coffee Day offers a much more
interactive, targeted communication,sometimes adding even a taste dimension to a brand
ideal. Various in-café collateralsused to impart visibility to a brand inside a café or to add
the element of interactivityto a campaign are Posters, Tent Cards, Danglers, Leaflets,
Brochures, Coasters, Drop boxes, Contest Forms, Stirrers, Standees etc. Over the years,
CCD has successfully promoted a number of brands/products/events through various
innovative tactics and promo ideas. Cashing in on its mass captive audience, we at CCD
have entered intotie-ups and promotions which are well knit with our brand promise and
which can becreatively used to woo the Indian Youth.

11
1.5:- Organizational Policies:-
Cafe coffee day only gathers personal information, such as, first and last names,
addresses and email addresses, when voluntarily submitted by you. For example,
personal information may be collected from you in order to get your feedback on our
Online Services and our products or to enter you in one of our contests or sweepstakes.
You may choose not to provide the requested information, but in that event the Site or
Mobile App may not function correctly or certain functions may not be available.

In addition, when you visit our Web Sites or Mobile Apps, we may collect certain
information by automated means. The information we collect may include your Internet
Protocol (IP) address, computer/mobile device operating system and browser type, type
of mobile device, the unique device identifier (UDID) or mobile equipment identifier
(MEID) for your mobile device, the address of a referring web site (if any), and the pages
you visit on our Web Sites. We may use this information to operate, maintain, and
manage our Online Services and to provide services such as technical support. We
provide additional information regarding our use of "cookies" in this Privacy Policy
below.

Mobile Device and Location Information.

Mobile Apps and mobile versions of our Sites may collect precise information about the
location of your mobile device using location awareness technologies such as GPS, Wi-
Fi, and Bluetooth or cell tower proximity. Cafe coffee day uses this information for
location-based services that you request such as locating nearby Cafe coffee day
restaurants or identifying special offers that may be of interest to you, or personalizing
your interactions with McDonalds. For most mobile devices, you are able to withdraw
your permission for Cafe coffee day to acquire this information on your location through
the device settings. If you have questions about how to disable your mobile device's
location services, we recommend you contact your mobile device service provider or the
device manufacturer. If you would like us to delete location information we have
collected, please contact us at the email or postal address listed below. Please note that
the applications may not function properly following deletion, and that we may be
required by law to retain certain information.

Sharing of Personal Information

Cafe coffee day may share personal information within the Cafe coffee day Family. The
Cafe coffee day Family includes Cafe coffee day Corporation, our franchisees, our

12
subsidiaries and our affiliates. Of course, any use of this information by the Cafe coffee
day Family will comply with this policy. Occasionally, with your permission, we will
send marketing information to you, such as discount coupons, information about new
product offerings, etc. If you do not elect to receive such materials, we will not send
them to you.

Companies may be engaged by Cafe coffee day to perform a variety of functions, such
as, fulfilling orders, assisting with promotions, providing technical services for our Sites
or Mobile Apps. These companies may have access to personal information if needed to
perform such functions. However, these companies may only use such personal
information for the purpose of performing that function and may not use it for any other
purpose.

Cafe coffee day does not sell, transfer or disclose personal information to third parties
outside the Cafe coffee day Family. However, with your permission, we will, on
occasion send marketing information on behalf of one of our business partners about
products or services they provide that may be of interest to you. You may be asked if
you wish to receive marketing materials from Cafe coffee day business partners. If you
elect to receive such materials, Cafe coffee day will not share your personal information
with such partners but rather will send a mailing or e-mail on behalf of the partners.

Cafe coffee day reserves the right to use or disclose any information as needed to satisfy
any law, regulation or legal request, to protect the integrity of the Online Service, to
fulfill your requests, or to cooperate in any law enforcement investigation or an
investigation on a matter of public safety.

Children's Privacy Notice

Cafe coffee day understands the importance of privacy to visitors to and users of our
Online Services. We are especially committed to protecting the privacy of children who
visit or use our Online Services. This Children's Privacy Notice is designed to answer
your questions regarding our practices with respect to personal information we collect
through our Online Services from children under the age of 13.

Access

You are in control of any personal information you provide to us through our Online
Services. If at any time, you would like to correct the personal information we have
about you or if you would like to change your preferences for contacts from us or on
behalf of our business partners, you can let us know by contacting us at the email or
postal address listed below.

13
14
2.1 Industrial Overview:-

The tertiary sector of the economy (also known as the service sector or the service

industry) is one of the three economic sectors, the others being the secondary
sector(approximately the same as manufacturing) and the primary
sector (agriculture, fishing, and extraction such as mining).

The service sector consists of the "soft" parts of the economy, i.e. activities where people
offer their knowledge and time to improve productivity, performance, potential, and
sustainability. The basic characteristic of this sector is the production of services instead
of end products. Services (also known as "intangible goods") include attention, advice,
experience, and discussion. The production of information is generally also regarded as a
service, but some economists now attribute it to a fourth sector, the quaternary sector.

The tertiary sector of industry involves the provision of services to other businesses as
well as final consumers. Services may involve the transport, distribution and sale of
goods from producer to a consumer, as may happen in wholesaling and retailing, or may
involve the provision of a service, such as in pest control or entertainment. The goods
may be transformed in the process of providing the service, as happens in
the restaurant industry. However, the focus is on people interacting with people and
serving the customer rather than transforming physical goods.

Contribution of service sector in the economy

15
The advance estimates (AE) of the Economic Survey 2010-11 put the growth rate of the
services sector at 9.6%. This is despite global deceleration in the sector. The sector had
registered 10.1% growth in 2009-10.

The Survey presented by the Union Finance Minister, Pranab Mukherjee in the
Parliament today states that the Indian economy remains the second fastest growing in
the services growth with 8.9% rate, behind China (10.5%). An international comparison
of the services sector shows that India compares well even with the developed countries
in the top 12 countries with highest overall GDP.

The two broad services categories, namely trade, hotels, transport, and communication;
and financing, insurance, real estate, and business services have performed well with
growth of 11% and 10.6% respectively in 2010-11 (AE).

Only community, social and personal services have registered a low growth of 5.7% due
to base effect of fiscal stimulus in the previous two years, thus contributing to the slight
deceleration in growth of the sector. The construction sector, a borderline service
inclusion, grew at a moderate 8%. Among the four broad categories of services, in terms
of shares, financing, insurance, real estate, and business services; and trade, hotels, and
restaurants are the largest groups accounting for 16.7% and 16.3% respectively of the
national GDP in 2009-10.

The Survey says that in terms of exports, India is also moving towards a services led
export growth. In the first half of 2010-1, services exports growth was 27.4% despite a
dip due to the global crisis, which was more due to fall in the share of merchandise trade
to GDP. The growth rate in 2010-11 is expected to be 19.5 per cent for IT - BPO
services, 18.5 % for exports and 22.8% for domestic IT related services.

The contribution of the services sector to the Indian economy has been 55.2% in GDP
and has been growing by 10% annually. In terms of employment, although the primary

16
sector is the dominant employer followed by the services sector, the share of the services
sector has been increasing over the years.

The global economic and financial crisis had a dampening effect on the cross border FDI
floors. The Survey says that in order to maintain the level of FDI into the sector, the
major challenge is to retain India's competitiveness in this sector.

Making inroads into some traditional areas such as tourism and shipping and making
forays into globally traded services such as financial services, health care, education and
accountancy etc. are the other challenges that need to be overcome.

2.2: Current Issues

Cafe Coffee Day raids: Income tax dept finds Rs 650 cr concealed income; violations
of other statutes

Bengaluru: The Income Tax Department raids on Cafe Coffee Day (CCD) retail chain
since Thursday found Rs 650 crore concealed income from the documents seized, said an
official on Sunday.

17
"Documents seized from the search operations at 25 places of Cafe Coffee Day and its
group companies in Karnataka, Mumbai and Chennai have revealed concealed income of
over Rs 650 crore," a senior tax official said.

The search and seize operations, which began on 21 September, concluded on Sunday
evening in the offices of the group involved in coffee, tourism, IT and other areas.

"The searches concluded with the group's officials admitting to concealed income
exceeding Rs 650 crore and the detection of undisclosed income, which is expected to be
a much higher figure," said another tax official in an e-mail to IANS.

Income tax raids on VG Siddhartha, Cafe Coffee Day owner; shares fall 7% on BSE

The income tax department is conducting raids on the premises of VG Siddhartha, owner
of Cafe Coffee Day chain of restaurants.

Representational image

According to a report by ANI, over 20 locations in Bengaluru, Mumbai, Chennai and

Chikmagalur have been being raided.

Reacting to the news, shares of Cafe Coffee Day fell 4.5 percent to Rs 230.40 on the
Bombay Stock Exchange.

Siddhartha is the son-in-law of former Karnataka chief minister SM Krishna. The 84-
year-old leader had quit the Congress after nearly 50 years in January expressing his
unhappiness for being sidelined and joined the BJP in March this year.

Siddhartha hails from a family which has been in the coffee business for over 140 years.
He inherited 500 acres of coffee plantation from his father.
18
After finishing his M.Sc in Economics from Bangalore, he headed to Mumbai where he
worked briefly as an intern at J M Financial Services.

Two years later he went back to join the family business and opened the first Café Coffee
Day outlet in Bangalore on 11 July, 1994. Share of software firm Mind tree also fell more
than 2 percent as Siddhartha and Cafe Coffee Day hold stakes in the company.

Cafe Coffee Day staff slaps customer: Chain initiates probe after video goes viral on
social media

Jaipur: A video of a customer being slapped by a lady worker at an outlet of a leading

coffee chain went viral prompting the company to say that it would investigate the matter
thoroughly and then take appropriate action.

Representational image. Reuters

According to social media posts, the customer, who is a law student was trying to film a
video showing a cockroach inside a refrigerator when he was slapped.

However, the lady has told her company that she was objecting to her video being taken.

In the video, that has gone viral on Twitter, the woman employee is seen walking towards
the customer and then suddenly slapping him.

Cafe Coffee Day (CCD), the chain in question, took notice of the incident and tweeted
that required action will be taken. "We have escalated the recent issue at our Jaipur outlet
and are in talks with the consumers and the internal team to ascertain facts," CCD

19
tweeted. Later in a statement, the company said that the incident is currently under
"thorough investigation".

"The team member referred here hails from rural Odisha and is part of a programme run
by an NGO to uplift weaker sections of society especially the girl child," CCD said in a
statement. "As per lady team member, she had objected to her video being taken by the
customer and her repeated requests were also not heard, thus invading her privacy. Till
the time thorough investigation is being done, lady team member has been kept off duty,"
it said in its statement.

CCD said that it is also engaging with the Arpan Verma, the customer, on the same. The
incident did not happen in a regular cafe; it took place in a limited period makeshift
temporary setup running for tourist season, CCD said.

It also said that the lady team member underwent rigorous training before she was posted
in Jaipur.

Local police said that no complaint was lodged in this connection so far.

2.3: Key-Competitors
 Direct Competitors:

 Barista

 Cafe Mocha

 Costa Coffee

 Beyond Coffee

 Gloria Jeans

 Minerva Coffee Shop

 Indirect Competitors:

 McDonald

 Haldirams

 Global Competitors:

 Star Bucks

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Following are the major players in coffee shop industry:

A. Barista Lavazza

 One of India's largest franchised chains of coffee bars, the Barista Lavazza
coffee company operates around 205 outlets across India – 15 crème lounges
and the rest espresso coffee bars.

 It plans to open 300 new stores over the next three years and has begun
aggressively marketing its products outside Indian borders into neighboring
countries. Considered the Cafe coffee day of the East, Barista offers many of
the same menu items like espresso, lattes, cappuccino and various pastries, in
addition to basic coffee. Despite being Indian, Barista sticks closely to its
Italian roots by serving Italian coffees exclusively.

B. Costa Coffee

 British coffee retail chain Costa Coffee launched its outlet in New Delhi,
becoming the first international coffee chain to start operations in India in
September 2005.

 The chain is currently operational with 36 outlets and expanding aggressively

to tap this potential market.

C. Café Mocha

 It was started by a Mumbai based entrepreneur RiyazAmlani, who has a long

experience in the hotels and restaurants business. This store is strikingly
different from others, they love being over-the-top and thus it’s a place that
either you love it too much or find it ’Over the top’. Studying the marketing
Mix adopted by café mocha. Owned by Impresario Entertainment &
Hospitality Pvt. Ltd.

21
  Mocha opened its doors at Churchgate (Mumbai) in December 2001

 15 operational outlets across the country and its own central kitchen

 Future plans for Singapore, Dubai and New York and Chicago.

Retail players like Reliance Retail and Shoppers Stop are also retailing coffee with their
multi-products offering outlets like Reliance Timeout and Desi Café respectively.

COMPETITION

22
Barista is the major competitor

Barista coffee was establishes in 1999 with the aim of identifying growth opportunities in
the coffee business. Increasing disposable incomes and global trends in coffee indicate
immense growth potential in one particular segment.

More significantly, they believe they have been quick to spot a latent need waiting to be
trapped: Coffee lovers seek a complete experience. One that combines intelligent
positioning with the right product Mix and carefully designed cafés. In other words,
customers seek an “experiential lifestyle brand”. As of today, Barista exists in over 22
cities, and operates over 140 outlets nationally.

In the last 2 years, Barista has opened over 100 outlets in the country and with a new
outlet opening nationally every 14 dates; Barista is currently experiencing phenomenal
growth. With outlets opening in Sri Lanka and Dubai, Barista is looking at potential
growth opportunities in Asia, making it highly competitive international brand.

2.4: Environmental Scanning(PEST analysis)

Political Factors Affecting Cafe coffee day

This part of the PESTEL/PESTLE analysis framework identifies the impact of

governments on business. Cafe coffee day experiences the following political external
factors in its remote/macro-environment:

1. Regional integration of markets (opportunity)

2. Improving governmental support for infrastructure (opportunity)

3. Bureaucratic red tape in developing countries (threat)

Regional integration is a current trend and external factor that presents an opportunity for
Cafe coffee day to globally expand. Also, most governments around the world are
improving infrastructure, which creates the opportunity for Cafe coffee day to access
more markets or suppliers. However, bureaucratic red tape persists in most countries.

23
This external factor is a threat because it makes business expansion more difficult for
Cafe coffee day, especially in developing countries. Thus, this aspect of the
PESTEL/PESTLE analysis model presents mostly opportunities for Cafe coffee day
Coffee.

Economic Factors Important to Cafe coffee day Coffee

This component of the PESTEL/PESTLE analysis model refers to the economic

conditions and changes significant to business. Cafe coffee day faces the following
economic external factors in its remote or macro-environment:

1. High growth of developing countries (opportunity)

2. Declining unemployment rates (opportunity)

3. Rising labor cost in suppliers’ countries (threat)

The high economic growth of developing countries and the declining unemployment
rates create opportunities for Cafe coffee day to gain more revenues from various markets
around the world. However, the rising labor cost in developing countries is an external
factor that threatens Cafe coffee day because it increases the company’s spending for
ingredients. The firm sources much of its coffee beans from developing countries. Thus,
this part of the PESTEL/PESTLE analysis model presents mostly opportunities for Cafe
coffee day Coffee.

Social/Sociocultural Factors Influencing Cafe coffee day External Environment

This aspect of the PESTEL/PESTLE analysis framework shows the social conditions and
trends influencing consumers and business. Cafe coffee day must address the following
social/sociocultural external factors in its remote/macro-environment:

1. Growing coffee culture (opportunity)

2. Increasing health consciousness (opportunity)

3. Growing middle class (opportunity)

Cafe coffee day has opportunity to increase its revenues based on increasing demand for
specialty coffee, which is due to a growing coffee culture and a growing middle class
around the world. Also, the company has the opportunity to widen its array of more
healthful products to attract health-conscious consumers to Cafe coffee day cafés. Thus,
all the identified external factors in this component of the PESTEL/PESTLE analysis
model present opportunities for Cafe coffee day Coffee.

Technological Factors in Cafe coffee day

24
In this part of the PESTEL/PESTLE analysis model, technologies and related trends are
identified. Cafe coffee day experiences the following technological external factors in its
remote/macro-environment:

1. Rising mobile purchases (opportunity)

2. Technology transfers to coffee farmers (opportunity)

3. Rising availability of specialty coffee machines for home use (threat)

Cafe coffee day has the opportunity to improve its mobile apps and linked services to
gain more revenues through mobile purchases. The company also has the opportunity to
improve its supply chain efficiency based on new technologies coffee farmers use.
However, the rising availability of home-use specialty coffee machines is a threat to Cafe
coffee day because it increases the availability of substitutes to Cafe coffee day products.
Thus, this aspect of the PESTEL/PESTLE analysis framework presents mostly
opportunities for Cafe coffee day Coffee.

Ecological/Environmental Factors

This component of the PESTEL/PESTLE analysis model identifies the effects of

ecological or environmental conditions and changes on business. Cafe coffee day faces
the following ecological/environmental external factors in its remote or macro-
environment:

1. Business sustainability trend (opportunity)

2. Growing popular support for responsible sourcing (opportunity)

3. Growing popular support for environmentally friendly products (opportunity)

The business sustainability trend focuses on business processes that ensure minimal
environmental impact. In relation, responsible sourcing emphasizes corporate social
responsibility in the supply chain. Cafe coffee day has opportunities to enhance its
performance in these areas. Note that the company already has responsible sourcing
policies. Cafe coffee day also has the opportunity to offer more of its products in
recyclable packaging. Thus, in this part of the PESTEL/PESTLE analysis model, Cafe
coffee day Coffee has major opportunities.

Legal Factors

The legal factors in the PESTEL/PESTLE analysis model are the laws and regulations on
business. Cafe coffee day must address the following legal external factors in its
remote/macro-environment:

25
 1. Product safety regulations (opportunity)

2. GMO regulations outside the United States (opportunity)

3. Increasing employment regulation (threat)

Cafe coffee day has opportunities to improve its performance by satisfying product safety
regulations and regulations on ingredients from genetically modified organisms (GMOs).
Cafe coffee day is already performing well in these aspects. However, increasing
employment regulation, especially in developing countries, threatens Cafe coffee day
Coffee’s access to the labor market. This external factor also impacts Cafe coffee day
through increased spending for human resources. Thus, in this aspect of the
PESTEL/PESTLE analysis model, the identified external factors present mostly
opportunities for Cafe coffee day Coffee.

2.5:Porters five forces model of competition

Starbucks Coffee’s Five Forces Analysis

Starbucks Coffee faces the influence of the five forces, as outlined in Porter’s model.
These five forces have varying intensities or strengths based on Starbucks’ position, as
follows:

1. Competitive rivalry or competition (strong force)

2. Bargaining power of buyers or customers (strong force)

3. Bargaining power of suppliers (weak force)

4. Threat of substitutes or substitution (strong force)

5. Threat of new entrants or new entry (moderate force)

Starbucks Coffee has a variety of challenges linked to these five forces. Only the
bargaining power of suppliers presents the least concern for the company. Based on this
five forces analysis, Starbucks must ensure effective measures to prioritize competitive
rivalry, the bargaining power of customers, and the threat of substitution.

Competitive Rivalry or Competition with Starbucks Coffee (Strong Force)

Starbucks Coffee faces the strong force of competitive rivalry or competition. In the Five
Forces analysis model, this force pertains to the influence of competitors on each other.
In Starbucks Coffee’s case, the following external factors contribute to the strong force of
competition:

26
  Large number of firms (strong force)

 Low switching cost (strong force)

 Variety of firms (moderate force)

This part of the Five Forces analysis shows that competition is among the most important
of Starbucks Coffee’s concerns. The company faces a large number of competitors,
which have different sizes, specialties and strategies. For example, Starbucks faces the
competitive force of McDonald’s and Dunkin Donuts, as well as other specialty coffee
companies. The strong force of competition is also due to the low switching cost, which
means that it is easy for customers to shift from Starbucks to other brands. Thus, based on
this component of the Five Forces analysis, competition should be among Starbucks
Coffee’s top-priority challenges.

Bargaining Power of Starbucks Coffee’s Customers/Buyers (Strong Force)

Starbucks Coffee experiences the strong force or bargaining power of buyers or

customers. In the Five Forces analysis model, this force is based on the effect that
individual and grouped customers have on business. In Starbucks Coffee’s case, the
following external factors contribute to the strong bargaining power of customers:

 Low switching cost (strong force)

 Substitute availability (strong force)

 Small size of individual buyers (weak force)

In this component of the Five Forces analysis model, the bargaining power of buyers is
also among the most significant forces affecting Starbucks Coffee’s business. Customers
can easily shift from Starbucks to other brands because it is affordable to do so.
Customers can also stay away from Starbucks if they want to, because there are many
substitutes, such as instant beverages and drinks from restaurants. These strong factors
overshadow the fact that individual purchases are small compared to Starbucks Coffee’s
total revenues. Thus, this aspect of the Five Forces analysis model shows that the
bargaining power of customers should also be among Starbucks Coffee’s top-priority
challenges.

Bargaining Power of Starbucks Coffee’s Suppliers (Weak Force)

Starbucks Coffee faces the weak force or bargaining power of suppliers. In the Five
Forces analysis model, this force refers to the influence that suppliers have. In Starbucks

27
Coffee’s case, the following external factors contribute to the weak force or bargaining
power of suppliers:

 High variety of suppliers (weak force)

 Large overall supply (weak force)

 Moderate size of individual suppliers (moderate force)

This part of the Five Forces analysis model shows that suppliers do not have much
impact on Starbucks. The large overall supply lessens the effect of any single supplier on
the company. Also, Starbucks has a policy for diversifying its supply chain. This policy
reduces the influence of suppliers on the business even though each supplier has a
moderate size compared to the Starbucks supply chain. Thus, based on this aspect of the
Five Forces analysis model, Starbucks Coffee does not need to prioritize the concerns or
demands of suppliers.

Threat of Substitution or Substitutes to Starbucks Products (Strong Force)

Starbucks Coffee also experiences the strong force of the threat of substitutes or
substitution. In the Five Forces analysis model, this force pertains to the impact of
substitute goods or services. In Starbucks Coffee’s case, the following external factors
contribute to the strong force of the threat of substitution:

 Availability of substitutes (strong force)

 Low switching cost (strong force)

 Low cost of substitutes (strong force)

This component of the Five Forces analysis model indicates that substitutes have strong
potential to negatively impact Starbucks Coffee’s business. Starbucks customers can
easily shift to substitutes because there are many substitutes, such as beverages from
restaurants, and instant and bottled beverages and other goods from grocery stores. The
cost of shifting to substitutes is low because Starbucks customers do not need to spend
for the shifting process. In addition, many of these substitutes cost less than Starbucks
products. Thus, based on this part of the Five Forces analysis, Starbucks must consider
the threat of substitutes as among its top-priority concerns.

Threat of New Entrants or New Entry (Moderate Force)

Starbucks faces the moderate force of the threat of new entrants or new entry. In the Five
Forces analysis model, this force refers to the potential effect of new players in the

28
industry. In Starbucks Coffee’s case, the following external factors contribute to the
moderate force of the threat of new entrants:

 Moderate cost of doing business (moderate force)

 Moderate supply chain cost (moderate force)

 High cost of brand development (weak force)

This part of the Five Forces analysis model shows that new entrants have significant
but not strong effect on Starbucks Coffee’s business. New entrants can compete
against Starbucks because of the moderate costs of doing business and supply chain
development. However, new entrants find it difficult to compete against established
brands like Starbucks because it is very costly to develop a strong brand. Thus, this
component of the Five Forces analysis indicates that the threat of new entrants should
be a secondary priority in Starbucks Coffee’s strategies.

29
3.1 Products

Description of various Food and Beverages:

Hot Coffees

30
 Espresso: Strong black coffee extracted at high-pressure and optimum
temperature.

 Espresso Americano: A shot of lightened Espresso diluted with hot water.

 Macchiato: A shot of Espresso topped up with milk foam.

 Cappuccino: Strong milk based coffee with a shot of Espresso, milk and milk
foam. It is one of the most popular hot coffees at Cafe Coffee Day.

 Café Latte: Milkier hot coffee, mild and goes best with coffee flavoring syrups. It
has a very thin layer of milk foam.

 Chocó chino: A blend of Chocolate ice cream and Espresso garnished with a
dollop of milk foam. It is neither a hot coffee nor a cold coffee. It is a warm
coffee.

 Cafe Mocha: Chocolate flavored Cappuccino. Goes best when served with
whipped cream. Garnish it with a dash of cocoa powder.

 Irish coffee: A light Espresso flavored with a choice of Irish Cream/ Hazelnut/
Caramel and topped with Whipped Cream.

31
  Caffeine Kick: Double shot of espresso diluted with hot water

 Black Velvet: A 'ristretto' strong coffee served around 5-20ml.

 Kenyan Safari: An international coffee with the hidden flavor of Blueberry.

 Colombian Juan Valdez: Rich, mild international hot coffee with fruity flavor.

 Ethiopian Qahwah: International hot coffee with a hidden mocha flavor.

 Hot chocolate: Lots and lots and lots of chocolate.

Cold Coffees

 Tropical Iceberg: Ice blended cold coffee with notes of chocolate. It is the most
popular cold coffee across the country.

32
 Tropical Temptation: A Tropical Iceberg topped with whipped cream and a shot
of chocolate sauce.

 Cold Sparkle: Ice blended cold coffee with a sparkling taste of coconut, it is
among the earliest cold coffees introduced in their menu.

 Iced Eskimo: Ice blended cold coffee with notes of coffee and cream balanced in
right proportions.

 Arabian Heights: Ice blended cold coffee with a distinct flavor of cardamom.

 Vegan Shake: It is made of 100%pure vegetable fat and does not contain any
animal fat & dairy product. It is unique and is being launched for the first time in
the country by CCD.

 Cappachillo: Coffee with sweetened creamy milk served on the rocks.

 Mochachillo: Chocolate flavored coffee with sweetened creamy milk served on

the rocks.

 Cafe Frappe: A judicious blend of ice cream and coffee that gives a smooth and
creamy effect.

 Almond frappe: Almond flavored rich, creamy cold coffee with whipped cream,
garnished with almond flakes.

 Chocó Frappe: A Cafe Frappe with an extra scoop of Vanilla ice cream and a
shot of chocolate sauce, garnished with cocoa powder.

33
  Devils Own: A smooth blend of cream and coffee drenched with chocolate sauce
and topped up with a shot of whipped cream.

 Kaapi Nirvana: It is their ultimate signature blend, very Indian with hidden
Caribbean taste, won the silver medal in the in the world barista championship
held in Oslo 2002.

 Rich coffee taste, heavy body with creamy texture and does not require any
additional flavors.

 Fruit Frappe: A judicious blend of ice cream and fruits having different fruity
flavors and thick cool texture. (Mango Frappe, Strawberry Frappe, Pineapple
Frappe, Lichi Frappe, Cold Chocolate).

Teas

 Assam Tea: A strong Tea grown in the best tea estates of Assam.

34
  Masala Chai: High grade Assam tea in combination with a Masala bag which is
meticulously prepared with pepper, cardamom and cinnamon to give an ethnic
feel.

 Ice Tea: A flavored cold tea served with lemon juice on the rocks, garnished with
a slice of lime.

 Granites / CremosasGranitas: A cool slush drink in different flavor variants.

 Pineapple Crush: Pineapple flavor.

 Cool Blue: Orange & hidden flavor of mint.

 Blood Orange: Orange flavor.

 Smoothies: Ice-drinks blended with ice-cream to give it a creamy texture, which

gives a smooth creamy after taste

 Strawberry/Mango Colada: A smoothie, flavored with strawberry/mango

garnished with whipped cream.

 Cremosa: A fizz drink served with fruit concentrate, soda and IceCubes Served
on the Rocks. (Flavor options: Litchi, Ginger

 Spice and Pina Colada)

Desserts

35
 Mousse Au chocolate: A double layered Chocolate mousse with a combination
of milk a dark chocolate & subtle coffee flavor for all the chocolate lovers.

 Mocha Pastry: A fresh coffee sponge cake flavored with Coffee cream and
syrup.

 Chocolate Fantasy Cake: Rich Chocolate Pastry pampered with a rich garnish
with chocolate truffle swirl.

 Pineapple Gateaux: Delicious cream and pineapple-flavored cake, very light and
refreshing.

 Chocolate Mousse: Creamy, Fluffy, Smooth, chocolate flavored dessert, ideal

with coffee.

 Black forest Cake: The all-time favorite Chocó pastry with cherries suited to our
Indian palate.

 Sugar/chocolate Doughnut: A deep-fried dumpling doused with cinnamon

flavored top dipped in sugar or chocolate truffle.

36
  Date& Walnut cake: Rich butter base Cake made of delicious combination Dates
& Walnut.

 Chocolate Brownie: A rich dessert made with the combination of chocolate,

butter, walnuts best with coffee. [TIP: Tastes best with a scoop of Vanilla Ice
Cream.]

 Banana walnut cake: Delicious teacake flavored with bananas and walnuts.

 Marble cake: A delicious combination of chocolate and vanilla butter sponge

best with tea or coffee, topped with pure chocolate.

 Cookies: A crisp sweet snack accompanying all coffee and teas with Chocó chips,
chocolate ginger, peanut butter and coconut macaroon flavor options.

3.2. Four P’s (Product, Price, Place, Promotion)

Product in the Marketing mix of Cafe coffee day

Café Coffee Day product mix constitutes a wide range of products that appeal  primarily
to Indian coffee and snack lovers. Products have a decided Indian taste to it – be it food
or coffee. Most of the eatables have been adopted to meet the Indian taste buds like
Samoa, baryonic, macula sandwich, tike sandwich etc. Thus they have been trying to
capture the Indian taste along with classic coffee. The best selling item in summer is
frappe, which is coffee and ice cream blended together. The young people favor it. In
winter it is cappuccino. Their merchandising includes funky stuff like t-shirts, caps etc.

37
Price in the Marketing mix of Cafe coffee day

Considering that Café Coffee Day knows its major customer lies in the bracket of 15-
29,it has tried to derive a policy whereby it can satisfy all its customers. The price for a
cup of coffee ranges from Rs.45 to Rs 80. From the time it first started its operations,
there has been only minor changes in the pricing policy of Café Coffee Day. The changes
have been more due to the government taxes than anything else

Price in the Marketing mix of Cafe coffee day

Considering that Café Coffee Day knows its major customer lies in the bracket of 15-
29,it has tried to derive a policy whereby it can satisfy all its customers. The price for a
cup of coffee ranges from Rs.45 to Rs 80. From the time it first started its operations,
there has been only minor changes in the pricing policy of Café Coffee Day. The changes
have been more due to the government taxes than anything else

Place in the Marketing mix of Cafe coffee day

The strategy CCD has adapted is to place a cafe in every possible location where some
business can be generated. This is a prime factor in determining the success of a retail
chain. Café Coffee Day looks to cater to their target market with strategically located
outlets.

Their outlets are generally located in High Street/ Family Entertainment Centers, gas
stations, near Collegesetc .

38
Promotion in the Marketing mix of Cafe coffee day

CCD  is  involved in all the areas of serious consumer passion like:

Television: Café Coffee Day held a contest around a very popular programme on Zee
English called Friends. All the six lead characters are shown often visiting a coffee shop.
They have tied up with Channel [V]’s Get Gorgeous contest.

Tie-ups:Besides that Café Coffee Day also tie up lot of the youth brands. So they have a
contest going on with Levis,another one with Scooty, Liril, latest one with Airtel Friends.

3.3:- STP (Segmenting Targeting and Positioning)

Segmenting

Strategic aspect of service Marketing

Café coffee day has different café formats across different cities. It can be categorized
into

 Music Café, for example- Café Coffee day In Hub, Bhangagarh, in Zoo
tinialietc.

 Book Café

 Highway Café

 Lounge Café, for example- Dighalipukhri Cafe

 Garden Cafe

 Cyber Café

 Airport Café

Targeting

Café Coffee Day has its main customer base in the group of 15-29 years. Its customers
are mainly middle class and upper middle class youth who are upwardly mobile. From
the market CCD seeks to target not just the youth but anyone who is ³young at heart´.
More than 10%of their customers are above 35 years age. The evidence of the connect

39
CCD has been able to make, particularly among the youth, comes from the findings of
the Brand Equity’s Most Trusted Brands 2008 survey. In the food service category, CCD
ranks No 2 while McDonald’s stands at No.3 and Barista lags at No 5.

Positioning

Research shows that 37% of the customers are between 20 and 24years. 27% of the
customers are between the age group of 25-29 years. 60% of the customers who visit the
café are male and 40% are female. 52% of customers who visit the cafes are
students.18% of the customers’ visit the cafes daily while another 44% visit weekly. Each
café, depending upon its size attracts between 500 and 800 customers daily, mainly
between 4pm and 7 pm. Customers describe Café Coffee Day as the place they frequent
most after “home and workplace/college”. It is a place where they meet friends and
colleagues, in groups of 3 or more. The prices here are perceived to be reasonable and it
is a place where customers come to rejuvenate themselves and be themselves rather than
a place to be “seen at” vis a vis other cafes.

3.4:- Distribution Channels

Distribution of outlets:

Every Café Coffee Day outlet is a part of India’s largest coffee conglomerate named
Coffee Day. Since all the cafes are owned by the company, it becomes easier for them
conduct feedback surveys like dipsticks etc. Coffee day’s most unique aspect is that it
grows the coffee it serves in its cafes. Pioneers of the Café Concept in India with the it’s
first Café at Brigade Road, Bangalore in 1996. This Café was opened as a Cyber Café
(first of its kind) but later, with the burst of cyber cafes it reverted to its core
competency…. Coffee. Café Coffee Day currently operates 213 outlets all over the
country. They have a market presence in over 49 cities. Delhi, NCR alone has 24 outlets,
and the number of outlets in the area is increasing at a phenomenal pace. Each café,
depending upon its size attracts between 400 and 800 customers daily. In addition to that
they are also going abroad. They will open 50 outlets overseas in 10 cities.

Location:

This is a prime factor in determining the success of a retail chain. Café Coffee Day is
focusing mainly in malls and main markets.

  Distribution of stock:

40
Café Coffee Day - Distribution

The distribution of coffee beans start from their roasting plant at chikmagalur. The coffee
beans are sent to the main offices of north and south India on monthly basis. The outlets
contact the Head Distributors on weekly basis. As far as other eatables are concerned, the
inventory is checked on daily basis and orders are placed according
tothe requirement. Café Coffee Day uses its own store vehicle (small van) for transportati
on needs.

3.5:- Promotion Strategy

"Marketing mix" is a term used to describe the "four Ps" of marketing, which are price,
product, place and promotion. These promotional strategies are ways companies
communicate information about their products and services with the end goal of
increasing sales (Reference 1). Examples of promotional strategies in marketing include
advertising, public relations, personal selling and sponsorship

Advertising

Advertising is a promotional marketing strategy companies use to create awareness about

their products and services. The goal of advertising as a promotional strategy is to
generate a response from your target customer (Reference 2). You can use a variety of

41
different types of advertising: television and radio advertisements; print advertisements in
newspapers, magazines and journals; direct mail advertisements in which you send
marketing materials directly to a select list of customers; and outdoor advertising such as
posters, banners, signs and bus ads.

Public Relations

Public Relations are a promotional strategy that seeks to establish and maintain
communication and understanding between your company and the public (Reference 2).
Public relations is a long-term promotional marketing strategy that helps communicate
positive updates about your company, product or service, and helps you control damage
when a problem arises that puts your business in the public spotlight. Examples of public
relations strategies you can use include press releases, media interviews, corporate web
videos, company blogs and interactions in social media.

Personal Selling

Personal selling is another promotional strategy you can use to market your business.
Personal selling involves hiring one or more sales people to manage personal customer
relationships and sell your products and services. Whether you have a large sales force or
you do all the selling yourself, personal selling is an important strategy for the majority of
businesses. When you determine your personal selling strategy, track and measure the
business you bring in through your sales efforts to help establish best practices for
effective selling.

Sponsorship

Sponsorship is a promotional strategy in marketing in which your company pays to be

associated with a certain event, cause or other organization (Reference 2). For example,
large companies pay to sponsor professional sports teams, television events and
international competitions such as the Olympics. In exchange for sponsoring these
events, companies get brand exposure and publicity. At the local level, you can sponsor a
little league team, local festival or concert to help spread the word about your business.

According to café coffee day

CCD  is  involved in all the areas of serious consumer passion like:

Television: Café Coffee Day held a contest around a very popular programme on Zee
English called Friends. All the six lead characters are shown often visiting a coffee shop.
They have tied up with Channel [V]’s Get Gorgeous contest.

Tie-ups:Besides that Café Coffee Day also tie up lot of the youth brands. So they have a
contest going on with Levis,another one with Scooty, Liril, latest one with Airtel Friends.

42
Association with movies:CCD can be seen in movies like Khakhee and Mai Hoon Na

Sales Promotion:Café Coffee Day uses special ‘Café Citizen Card’ for rewarding Café
Coffee Day’s customers. It is a loyalty program to gain new customers and retain the
existing ones.

43
4.1 Sources of Finance:-

Holder's Name No of Shares % Share Holding

Promoters 113929198 53.93%

Others 59886156 28.35%

44
General Public 22775846 10.78%

Foreign Institutions 12162621 5.76%

NBanksMutualFunds 2364773 1.12%

Financial Institutions 133125 0.06%

4.2 Ratio Analysis:-

Key Financial Ratios of Coffee Day
Enterprises

Mar '17 Mar '16 Mar '15 Mar '14 Mar '13

Investment Valuation Ratios

Face Value 10.00 10.00 10.00 10.00 10.00

Dividend Per Share -- -- -- -- --

Operating Profit Per Share (Rs) 2.02 0.27 2.35 5.35 -3.84

Net Operating Profit Per Share (Rs) 4.68 2.37 19.66 22.81 6.84

Free Reserves Per Share (Rs) -- -- -- -- --

Bonus in Equity Capital -- -- -- -- --

Profitability Ratios

Operating Profit Margin(%) 43.07 11.51 11.95 23.44 -56.16

45
Profit Before Interest And Tax
41.74 8.39 9.11 14.80 -57.64
Margin(%)

Gross Profit Margin(%) 42.55 10.14 9.76 21.33 -62.87

Cash Profit Margin(%) -80.46 -186.61 -412.78 -168.71 -687.86

Adjusted Cash Margin(%) -80.46 -186.61 -412.78 -168.71 -687.86

Net Profit Margin(%) -82.53 -226.84 -444.28 -245.23 -757.02

Adjusted Net Profit Margin(%) -80.97 -187.74 -414.82 -170.17 -694.01

Return On Capital Employed(%) 1.69 0.62 0.29 1.17 -0.41

Return On Net Worth(%) -4.40 -5.87 -32.75 -17.90 -13.70

Adjusted Return on Net Worth(%) -4.40 -5.87 -32.75 -17.90 -13.70

Return on Assets Excluding

87.80 91.38 266.66 312.37 377.86
Revaluations

Return on Assets Including

87.80 91.38 266.66 312.37 377.86
Revaluations

Return on Long Term Funds(%) 1.69 0.62 0.30 1.17 -0.41

Liquidity And Solvency Ratios

Current Ratio 3.13 3.11 0.96 1.82 0.41

Quick Ratio 3.13 3.11 1.08 1.84 0.41

Debt Equity Ratio 0.40 0.28 3.20 3.08 1.36

Long Term Debt Equity Ratio 0.40 0.28 3.12 3.07 1.36

Debt Coverage Ratios

Interest Cover 0.35 0.12 0.04 0.21 -0.08

Total Debt to Owners Fund 0.40 0.28 3.20 3.08 1.36

Financial Charges Coverage Ratio 0.35 0.13 0.04 0.22 -0.07

46
Financial Charges Coverage Ratio
0.35 0.13 0.04 0.22 -0.07
Post Tax

Management Efficiency Ratios

Inventory Turnover Ratio -- -- -- -- --

Debtors Turnover Ratio 6.62 130.44 3.36 3.70 2.03

Investments Turnover Ratio -- -- -- -- --

Fixed Assets Turnover Ratio 13.77 4.01 -- -- --

Total Assets Turnover Ratio 0.04 0.02 -- -- --

Asset Turnover Ratio 0.04 0.02 0.02 0.02 0.01

Average Raw Material Holding -- -- -- -- --

Average Finished Goods Held -- -- -- -- --

1,964.8
Number of Days In Working Capital 2,966.94 229.40 2,230.95 -12,984.29
0

Profit & Loss Account Ratios

Material Cost Composition 40.75 42.50 23.07 -- --

Imported Composition of Raw

-- -- -- -- --
Materials Consumed

Selling Distribution Cost

1.26 19.76 -- -- --
Composition

Expenses as Composition of Total

-- -- -- -- --
Sales

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit -- -- -- -- --

Dividend Payout Ratio Cash Profit -- -- -- -- --

Earning Retention Ratio 100.00 100.00 100.00 100.00 100.00

47
Cash Earning Retention Ratio -- -- -- -- --

Adjusted Cash Flow Times -- -- -- -- --

4.3 Net profit or Net balance sheet

Balance Sheet - Coffee Day Enterprises Ltd.

Rs (in Crores)

Particulars Mar'17 Mar'16 Mar'15 Mar'14 Mar'13

12 12 12 12 12
Liabilities Months Months Months Months Months

Share Capital 206.00 206.00 16.23 15.89 15.89

Reserves & Surplus 1602.75 1676.37 374.50 430.78 524.08

Net Worth 1808.75 1882.37 390.74 446.67 539.97

Secured Loan 720.42 523.00 1241.58 1368.15 730.98

Unsecured Loan .00 .00 .00 .00 .00

TOTAL LIABILITIES 2529.17 2405.37 1632.32 1814.82 1270.95

Assets

Gross Block 7.01 12.15 11.95 11.82 11.79

(-) Acc. Depreciation 1.58 3.50 2.84 2.22 1.54

Net Block 5.43 8.64 9.11 9.61 10.25

48
Capital Work in Progress .00 .00 .00 .00 .00

Investments 2001.01 1996.53 1586.53 1586.53 1594.91

Inventories .00 .00 .00 .00 .00

Sundry Debtors 28.68 .45 .29 16.78 .78

Cash and Bank 21.10 56.92 .66 .54 .27

Loans and Advances 718.56 532.90 497.00 461.16 233.54

Total Current Assets 768.34 590.27 497.95 478.48 234.59

Current Liabilities 245.08 165.85 412.02 239.16 561.81

Provisions .54 24.23 49.25 20.64 6.98

Total Current Liabilities 245.62 190.08 461.27 259.80 568.80

NET CURRENT ASSETS 522.72 400.19 36.68 218.68 -334.21

Misc. Expenses .00 .00 .00 .00 .00

TOTAL
ASSETS(A+B+C+D+E) 2529.17 2405.37 1632.32 1814.82 1270.95

49
50
5.1:- Performance Analysis of the company

51
Performance Ratios:

   ROA(%) -2.97 -6.43

   ROE(%) -4.31 -13.24

   ROCE(%) 1.60 0.74

52
5.2:- Reasons for the expansion/ Contraction or diversification
of the company
Coffee Day Enterprises (CDEL), parent company of the Cafe Coffee Day (CCD) chain of
cafes (1,538 in India), is to have an Initial Public Offer (IPO) of its equity, worth Rs
1,150 crore.
It is the country's largest cafe chain and enjoys strong brand visibility. What puts one off
is the parent also being a holding company, with unrelated diversification. For instance,
CDEL has stakes in information technology (16 per cent stake in Mind tree), logistics (53
per cent in Sical Logistics), Special Economic Zone development (100 per cent stake in
Tanglin), financial services (81.9 per cent in Way2Wealth Securities) and hospitality
(100 per cent in The Serai Resorts) businesses.
It is the coffee business the market is gung ho about. This business (the CCD retail chain,
corporate coffee vending machines and exports, under Coffee Day Global) is nearly half
of annual revenue and about 45 per cent of earnings before interest, taxes, depreciation
and amortisation (Ebitda). Key strengths include the owned and registered CCD brand (in
40 countries), a vertically integrated coffee business and a strong management team.
Apart from being a well-known brand, with nearly half of domestic market share.
While competitive intensity in the business is high, CCD's record provides confidence.
The coffee business is also seen growing faster, leading to a higher share of CDEL’s
revenues as one goes ahead.
However, CDEL is a holding company and the market typically ascribes a 20-25 per cent
discount to the total value of such companies. This is because a holding company's
financials and prospects are dependent on dividends paid by its various subsidiaries and
their respective fortunes. Also, a lack of direct control. And, the more diversified a
company, the more difficult it is for the market to assign visibility and sustainability to its
earnings.
The CDEL management, however, remains committed to making all investments only in
its coffee business over the next five years. They believe the other businesses are capable
of generating enough cash to fund their own entities. This provides some comfort on
CDEL's capital infusion strategy.
The financials, however,
are not exciting. CDEL's
consolidated revenues have
grown in only single digits
in the past two years and
the net loss has increased,
from Rs 21 crore in FY13
to Rs 87 crore in FY15.
This financial year's first
quarter saw a Rs 20 crore

53
loss. A large part is due to interest cost, which might come down as it repays debt from
the IPO proceeds. The coffee business is slightly better off.
A little over half the issue proceeds (Rs 633 crore) will be used to repay debt — Rs 510
crore for paying parent company debt and the rest for the coffee business. Further, Rs 288
crore will be used to expand the coffee business. This should help improve profits.
Meanwhile, at the price band and a fully
diluted equity base, the offer is priced at
21-21.5 times the FY15 ratio of enterprise
value (EV) to Ebitda. While there are no
strictly comparable listed peers of CDEL,
both the parent and the coffee business are
making net losses despite delivering
healthy Ebitda over the past five years.
Deven Choksey, managing director, KR
Choksey Investment Managers, says: “The
coffee business is valued at 1.25 times the
FY15 sales, which does not appear expensive. The non-coffee businesses are valued at Rs
3,600 crore of the total valuation of Rs 6,500 crore. Valuations have the potential to
increase as business starts generating sustainable profits.”

However, not all analysts share the view. Arun Kejriwal, an investment advisor, believes
the valuations are not attractive. Going forward, though, there are a few other catalysts
for the coffee business. CDEL has slowed its pace of store expansion from about 200 new
ones annually in the past to about 135 for the next three years. This will cap incremental
depreciation. Additionally, it has closed a little over 100 stores due to viability issues,
which lowers costs further. Repayment of debt will reduce interest costs by 30 per cent.
These factors will rub off favourably on earnings.
The coffee business is making cash profit but high depreciation and a break-even time of
three to three and a half years for new stores have kept profits under pressure. Despite
slowing consumption demand, the coffee business has seen positive same-store sales
growth, of three per cent in FY15 and nine per cent in FY14. It was 6.4 per cent in this
June quarter.
On the whole, the unrelated assets and holding company structure are major distractions.
Weakness in the real estate and IT markets could also impact its SEZ business, while
global trade volumes have a bearing on its logistics business. The management, though,
believes its investments in the non-coffee businesses can be monetised and utilised
whenever a good investment opportunity arises in the coffee business.
In this backdrop, only investors comfortable with the holding company structure and
wanting to play the India consumer story might apply

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5.3:- Comment on Organization Leadership
Cafe Coffee Day Global limited Company is a Chikkamagaluru based business which
grows coffee in its own estates of 12, 000 acres. [4] It is the largest producer
of arabicabeans in Asia exporting to various countries including USA, Europe and Japan.
[5]

Café Coffee Day was started as a retail restaurant in 1996. [6] The first CCD outlet was set
up on July 11, 1996, at Brigade Road, Bengaluru, Karnataka. It rapidly expanded across
various cities in India adding more stores with more than 1000 cafés open across the
nation by 2011.

In 2010, it was announced that a consortium led by Kohlberg Kravis Roberts would

invest ₹10 billion (US$150 million) in Coffee Day Resorts, owned by the company.
[7]
 The same year, the logo was changed to the current logo, which the company stated
was to showcase the chain as a place to talk. [8] This was done with major changes in the
layout of the stores, including the addition of lounges and a total revamp of the interiors.
[9]

A cup of coffee at CCD

Sandwich, Coffee & Tea served at Cafe Coffee Day

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A veg burger at CCD

Cafe latte At CCD

The company is known for being vertical integrated to cut costs: from owning the
plantations,[4]growing the coffee,[4] making the coffee machines[10] to making the furniture
for the outlets.[4]

Outlets[edit]

As of March 2015, there are 1530 outlets across 28 states of India. [11] Cafe Coffee Day
has also expanded outside India with its outlets in Austria (Vienna), Czech Republic,
Malaysia, Egypt and Nepal.[3]

Subsidiaries[edit]

In June 2010, CCD acquired Café Emporio, a café chain from the Czech Republic. Cafe
Emporio has 11 cafés in Czech Republic. While 7 of them are in Prague, 1 is in Brno and
Olomouc and 2 are at Freeport-Hate.

Cafe Coffee Day's divisions include:

 Coffee Day Fresh 'n' Ground, which owns 450 coffee beanand powder retail
outlets

 Coffee Day Square, a high level coffee bar in Bangalore, Chennai, Mumbai, New
Delhi

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  Coffee Day Xpress, which runs 900 plus Coffee Day kiosks

 Coffee Day Beverages, which runs over 34,000 vending machines

 Coffee Day Exports, its exporting wing

 Coffee Day Perfect, its fast-moving consumer goods packaged coffee division

 Coffee Day B2C Plant, Coffee vending machine manufacturing division

Controversy and criticism[edit]

On March 12, 2017, a customer Arpan Verma was slapped by a female employee of
CCD's Hawamahal outlet in Jaipur while he filmed cockroaches spotted inside a fridge
there. The video went viral on social media and was soon followed by a false sexual
harassment case filed by the employee against Arpan Verma . [12] With regard to the
incident, CCD replied on March 27, 2017, "We are aware of the recent issue at our Cafe
Coffee Day outlet in Hawamahal Jaipur. We have escalated this issue and we are in talks
with the consumer and the internal café team to ascertain facts. We will take the required
action without compromising in our endeavor to deliver quality products and services to
our patrons." The incident triggered several protests against CCD that included the
hashtag #boycottccd on social media.

5.4:- Market Share / Growth Rate of the company

India has traditionally been a tea drinking nation. Per capita consumption of coffee has
been ~ 110 grams per year in comparison with developed countries where coffee
consumption is substantially higher. With growing influence from coffee chains like Cafe
Coffee Day, Starbucks, Costa Coffee etc., coffee consumption and socializing at coffee
shops is increasingly becoming popular in India.

On the back of young population, increasing proportion of working age population, and
higher disposable income, the size of the organized Cafe market is estimated to grow to
Rs. 151 billion by 2020 at a CAGR of 15% (Source: Company’s DRHP).

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Cafe Coffee Day has been the pioneer in establishing coffee culture in India with the very
first outlet back in 1996 in Bangalore, followed by Barista in 2000. Cafe Coffee Day
faces competition from both local and international players in terms of price, product
offerings, and ambience of outlets for coffee, food and beverages. The competitors range
from large and established companies to emerging startups and unorganized small food
and beverages vendors. Primary competitors in include Starbucks, Costa Coffee,
Barista, Coffee Bean and Tea Leaf and other local Cafes.

5.5:- SWOT Analysis of the company

Strengths in the SWOT analysis of Cafe coffee day

 Products of extremely good quality and taste – The coffee menu of Cafe coffee
day is renowned and people just love its shakes as well. Besides this, Cafe coffee
day has also started some sandwiches and tid bits which are a huge hit with
people as well.

 It’s a youth oriented brand, with appeal for the masses – It has a huge potential
as 40% of the people who enter a CCD are young.

 It produces/grows the coffee it serves hence reducing the cost – This is a major
point for Cafe coffee day and the backwards integration saves a lot of cost.

 Its USP is affordability with comfort – You can sit for a whole day in cafe
coffee day and no one will ask you to leave. This comfort is a major USP of Cafe

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 coffee day. At the same time, the menu is affordable so people come from time to
time to have their comfort time in CCD.
Weaknesses in the SWOT analysis of Cafe coffee day

 Losing its charm – The brand has lost its charm which it had in the start mainly
because it is not investing in promotions and the entry of Starbucks as well as
various local competition has affected the brand image.

 Lacks strength to maintain brand loyalty – It has become the neighborhood

coffee shop but not something that people stay loyal to.

 Poor Ambiance and decor – Many Cafe coffee day outlets have very poor
ambiance and decor. The flagship stores are maintained perfectly and are driving
the brand image. But there are also stores opened with poor interiors. Something
which the brand should take care of because it is a franchise model.

 Many of the CCD stores are incurring losses due to wrong site selection– This
has been hurting CCD over time as many stores with the brand name of CCD
have been open at the wrong site and not on main roads. Being a retail
establishment, this affects turnover and the brand name as well.
Opportunities in the SWOT analysis of Cafe coffee day

 Introducing more products and better items in the menu – Starbucks is being

loved because it has several benefits over Cafe coffee day. One of the benefits is a
better menu of things to eat along with the coffee.

 Better interiors – Cafe coffee day needs to maintain standards in the interiors of

all outlets that it has. As you move out of the city, you will find the interiors to be
even more shabby. This reflects badly on the quality and consistency of the brand.

 Coffee cafe industry is one of the fastest growing industry in Asia – This is

actually true and the awareness is increasing with more and
more international level players entering the market.

 More people like to visit CCD for informal meetings – Again true. Cafe coffee
day can market itself as a meeting point as well as an informal gathering point,
just like McDonalds has birthday section in various outlets.

 CCD has gone international, and is planning to attract many new

international markets, hence gaining international recognition
Threats in the SWOT analysis of Cafe coffee day

 Competition – Cafe coffee day has a lot of competition especially with other
coffee cafes like Barista, Mochas, Starbucks, Costa coffee and others.

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 Indirect competition – Other hukka  palours like Sheshas , Peshawar , Koylas, U
Turn are also gaining lot of attention and preferred by young generation to hang
around which in turn is attracting the market captivated by CCD

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1. When asked about the most important factor that contributed to their choice of coffee
café, an equal number (40%) of respondents selected the taste of coffee/food and the
ambience/ experience. Only 20% of them choose value for money as their most important
factor. Finding out how customers feel about the taste and quality of products offered,
could help both these organizations improve their share, by adapting and improving their
products.

2. The Coffee at Café Coffee Day seems to have a slight edge over Barista. This is quite
an important fact, considering Café Coffee Day uses its own brand of Coffee beans, while
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Barista uses a combination of imported coffee beans and coffee beans from
TATA Coffee.

3. Though most customers visit café for coffee, other drinks like Granitas,
Cremosas,smoothies and ice teas are very popular. Cafés need to focus on providing the
right kind of drinks in the right taste and with a certain level of quality.

4. Café customers usually have a light snack or side order along with what they
aredrinking. This provides an opportunity for cafés to offer these eatables atmarginally
higher prices, and increase their revenue. Increase in revenue though, would be useless if
they offered substandard eatables, which can often be caused by inefficiencies in storage
and distribution, which leads to eatables becoming stale. That’s why it is important for
cafés to provide high quality food, which allows them to charge a premium.

5. Café Coffee Day got a positive rating with respect to the variety of their
eatables(especially their Indian food), although the quality was often inconsistent. While,
respondents described Barista’s sandwiches as “tasteless” and “sometimes stale.

6. Overall, Café Coffee Day has done well to live up to its USP of being an affordable
brand.

7. Café Coffee Day’s delivery process involves a restaurant- like approach. When the
order is ready, and the customer has not collected it from the counter, a Cafe Coffee Day
attendant comes to the customers’ table and delivers the order. Cafe Coffee Day received
an excellent rating of 4.5/ 5 for this process. A lot of the respondents praised Café Coffee
Day for their delivery process.73

8. A customer’s visit to a coffeehouse doesn’t end with his purchase of coffee. Heroes
there for the service the organization provides, and this service is provided directly by the
staff. Café Coffee Day stayed at the above- average level.

9. One of the main characteristics of a service in Intangibility a major effect

of intangibility is that since the service cannot be seen or touched, it is very difficult
communicating its qualities or advantages to the customers. This also poses a problem in
creating a brand image for the organization. Café Coffee Day uses their  physical
evidence to promote and develop their brand. Also, considering that 40%of the sample
stated   Ambience/ Experience as the deciding factor in their choice of a coffeehouse, a lot
of emphasis needs to be placed on this aspect.

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10.Customers come to a café because they want to have a good time with friends
or family. Other forms of entertainment at cafés are very useful for enriching customer
experiences and increasing customer retention. Music, T.V., games; books, etc are
peripheral services that a café offers to its customers. These services add to the overall
ambience of the café. Café Coffee Day has taken steps on the right direction as well,
installing Q-Jam  jukeboxes at every outlet. But besides that, they have nothing really to
speak of. This is why they only received an average rating of 3/ 5. They should
concentrate more in this area, because there is plenty of scope for improvement.

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Conclusion
Café Coffee Day is a chain of coffee shopsinIndiahaving its headquarters
inChikkamagaluru,Karnataka. A division of Amalgamated Bean Coffee TradingCompan
y Ltd. (ABCTCL), it is commonly known as Coffee Day or CCD. It openedits first cafe
in 1996 on BrigadeinBangalore, and today has the largest cafe retail chain in India – with
720 cafes in 112 cities. A majority of its cafes are located in Bangalore. The cafe chain
has had much success riding, and to some extent creating, the cafe culture wave that
swept acrossmetropolitanIndia following strong economic growth resulting in an increase
in youth spending. It has even tied upwithWorldSpaceandMicrosenseto enable its cafes
with satellite and Wi-Fi, respectively. Its first Wi-Fi cafe was opened on Lavelle. Café
Coffee Day sources coffee from 10000 acres (40 km²) of coffee estates, the second
largest in Asia, that is owned by a sister concern and from 11,000 small growers. It is one
of India’s leading coffee exporters, with clients across theUSA,Middle East, Europe and
Japan.

For a brand to stand out and be successful there has to be a personal commitment from
staff at all levels. The target customers must identify with it. It should be vibrant and have
a “life” of its own. Café Coffee Day got a high rating in the market survey, for the Taste
& Quality of their products. If they work on this aspect, there is huge potential for them
to attract customers, just based on the taste and quality of products. This is also helped by

64
the fact that they grow their own coffee beans, and this provides an important base for
future expansion and growth. Café Coffee Day is projected as an “affordable” brand. This
strategy has worked extremely well so far, and Café Coffee Day got a high rating, both
for their prices and for their value for money. The Café Coffee Day brand, although
clearly a youth- oriented brand, lacks the power and strength expected to maintain brand
loyalty. The brand doesn’t project clear image to customers about what Café Coffee Day
is all about. This could prove a deterrent during future national and international
expansion. With regard to the physical evidence associated with the brand, Café Coffee
Day needs to do a lot of work if they hope to catch up with Barista. My first
recommendation for Café Coffee Day is to clean up the décor at every outlet, wherever
unnecessary advertising is taking place.

SUGGESTIONS
 Café Coffee Day has done extremely well so far to project itself as an affordable
youth- oriented brand. But there are still certain areas where their brand needs
to be much stronger.
 With regard to the physical evidence associated with the brand, Café Coffee Day
needs to do a lot of work if they hope to catch up with Barista. My first
recommendation for Café Coffee Day is to clean up the décor at every outlet,
wherever unnecessary advertising is taking place.
 Although it might be an important source of revenue, long-term customer  percept
ion of the brand isn’t very positive.
 Café Coffee Day would do better to provide promotional space for its partners
with the use of clever collaborations, and not printed advertisements and posters
everywhere.
 My second recommendation is that Café Coffee Day looks at its currentrecruitme
nt, selection and most importantly, its current training policies.
 Customers are not happy with the behavior and service of the staff, and Café
Coffee Day is lagging far behind Barista is this aspect.

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