What Business Are you In – Case Study: Cafe Coffee Day
Who sells the largest number of cameras in India? Canon/Nikon/Sony? Well, the answer is Nokia.
As far as music sales is concerned, Airtel makes more money than SaReGaMa.
Is Indian Railways into the business of train travel? Or Travel? [and is competing with airlines as well as bus service?]
Is Video Conferencing service really in the business of conferencing? Or collaboration [aren’t they competing with airlines?]
The most difficult question for any company is to answer – ‘What Business are we in?’ [read: What Business Am I in – How many Startups can answer this?] and how can one build auxiliary/enabling services around the core product to increase the app
eal-quotient of the business?
Coming back to the topic, i.e. what business is CCD into – let me share that I end up visiting atleast 2 CCDs a day (see I am not saying I visit 2 CCDs a day, I am actually, being forced to visit 2 CCDs a day owing to my business demand).
On a daily basis, I meet entrepreneurs/VCs etc and most of my meetings happen in the Coffee Days. Let me also admit that I hate going to Coffee Day, but prefer to use them for business meetings.
Why?
Because CCD is not just in the business of coffee. It’s in the business of enabling businesses/people to meet each other. Given CCD’s presence in Bangalore, the simplest meeting point that everybody knows is a CCD (it’s an easily identifiable landmark), as opposed to Barista/Lavazza which are quite lesser in number.
But is the coffee at CCD good? No, it’s just too bad. A lot worse than Barista.
But the hard reality is people are spending money, consuming coffee at CCD – much more than the coffee that is being consumed at Barista or other places.
So while others are building coffee business, CCD is building real estate/meeting-point business where coffee is just a by-product.
Does that make a great business sense? Is that the right approach to build business?
Well, you decide. But,do ask yourself – what business are you in? How can you build ‘enabling’ services to make people consume more of you?
About the author - Ashish Sinha is a Startup Mentor/Product Strategy Coach, and the founder/chief editor of pluGGd.in.
He has launched/managed couple of products (consumer as well as enterprise) in US and India, and now consults with startups/small businesses on their product/media strategy. He can be reached at: ashish (at) pluGGd.in [+91 98452 06443]
Yes CCD is building real estate business, but only 10% cafe they have, rest 90% is on rent.
Nice. Agree with your POV.
I remember studying in my Business Strategy class that McDonalds(Roy Kroc?) said they’re in the business of Real Estate. I’m sure you are juxtaposing that to CCD.
And, I quote: “We are in the real estate business. The only reason we sell hamburgers is because they are the greatest producer of revenue from which our tenants can pay us rent.” This qyote is attributed to their erstwhile CFO, Harry Sonneborn.
One can read more about this here:
http://money.howstuffworks.com/mcdonalds2.htm
Gud one
Thanx
I agree with Manish on this. Most of the CCD’s in India are run by franchises and are mostly on rent. CCD probably has just 10%.
Radhika
Nice article..
Just making your argument simpler: Clearly define your competitors.
In case of CCD, its not Barista, but its some hotel meeting rooms.
In case of Trains, its airlines and bus services.
In case of companies like Nescafe (I am not able to think of any other coffee company), its chachm, tea and milk
and so on..
– Pratik
The best among food chains is dominoes. Their home delivery model ensures minimum commercial rentals and offers really good conversion opportunity for lazy and tired bums from the office-going junta.
Since Indians consume more tea(assuming), does that mean if Tata Tea comes up with a chain of tea shops, they should do better than CCD. After all better to meet in a place with good chai then coffee. !!!
coffee leverages on attractions of opposite sex…. while tea represents office colleagues. Dead meat, in other words.
Does that ring any bells?
Now that’s some real research
A lot can happen over a coffee
CCD is’nt a place for coffee lovers, it is considered as a meeting/dating place. People pay for using their space
Exactly! Their Tag line says it all!
@Ashish Nice Article. Reminds me to think which business am I in?
Wow.. great insight its really hard to say what business you are in?
Good article getting me to think what business are we really in? all the anciliary stuff.
The SCOOP …….THE RUMOR ……. is Reliance is coming up with ……..”RELIANCE CAFE” where they will steal out 5ml to 10 ml of coffee from each cup and …. charge for a full cup…… like they do in Reliance mobile billing…… So this is new Business Model
Reliance web world actually tried to promote itself as a meeting point and gave conference room on hourly rental basis but for some reason that never picked up. Any idea why??? Was there coffee bad or the ambiance too office type.
I believe same thing happens in a lot of other businesses. Here the space is provided free and Coffee is pushed as a revenue generator.
Compare this to Bollywood. Actors would do movie for free also (most do it irrespective of the Crore Rs. signing amount we hear about) because appearing in a movie will attract more advertisers and endorsement contracts, where the real big money comes from.
May be blog do the same. We give content for free and push the ads along. Only in this case we can only hope they would click on it.
Even all the Cineplexes are not in the business of showing movies. Rather, it is the F&B that brings in the money, and helps in break-even of the RE at an earlier stage than the conventional 10-15 years model. Hence, the alarmingly high prices of food items and non-allowance of external food inside
The starting of the article is copied from a WSJ article “Have breakfast or be a breakfast” by a professor from IIM Bangalor Prof. LR moorthy.
However the CCD example is unique
Crap.
Is that’s your argument, the professor has completely copied our earlier article – competitive-analysis-substitutes-alternatives
You happened to read his article received thru email forwards before this article. Do you have the balls to tell him?
Cheers,
Ashish
u r true but, ccd is an meeting point same as kind of Barista is the hanging place for the youngsters to spend time and money.