Coffee business is an art - very true when you see your initial on the hot cup of latte, and once again proved whilst sitting with Manish Tandon, President of Citymax, the master franchisee of Gloria Jean's Coffees in India. In a candid conversation with Suranjana Basu.
Suranjana Basu(SB):Starbucks have entered India; don’t you think that the competition will really heat up? What’s your strategy to stay ahead?
Manish Tandon(MT): No, I don’t think so. On the contrary, these brands will actually drive the coffee drinking culture. For such a huge market like ours, Starbucks’ entry will not impact other brands in any way. The USP of Gloria Jean’s is its coffee, its food. We’re aligning our food offerings with the Indian tastes. We have in our menu Goanese Zacuti pie, Chicken 65 and Vindaloo; all in pies and rolls. This is the flick we add to the usual menu of grilled chicken and mushroom. We want to be known as a premium brand and want to associate with customers in that fashion.
SB: Why do you think that Citymax has been picked up by Gloria Jean’s Coffees? Tell us something about your training programme.
MT: Citymax brings in the significant expertise of the Landmark Group. With its expertise in retail and understanding of the Indian market besides the availability of finance, Citymax is the perfect choice of Gloria Jean’s to be the master franchisee of the brand. We will start sub franchising too in the near future. In fact Gloria Jean’s work on this model globally. We would like someone with the passion for running a café, who will there at the outlet, certainly not like any corporate franchise. We have training programmes at the company level. The senior management is required to visit Australia for intensive 3-day six-week training programme at the coffee university facility. There is fully live and functioning coffee shop and senior management get all the aspects of the business, from operations, finance to marketing and of course spending lots of time in experiencing coffee making process. Senior management of master franchisees, including CEOs, has to know how to make a good cup of coffee. The same training programme is transferred to the home country, replicating the training facility in Sydney. The training programme is supplemented by very fast on-line programmes. It is customised keeping in mind the preferences of local consumers.
SB: How many retail formats Gloria Jean’s is planning to have in India? What is the usual store size, and the turnaround time? For a café like yours, what are the usual footfalls?
MT: We run the high street model, mall outlets, kiosks and carts. Stand-alone stores are of 1200-1500 sq ft, mall store of 800 – 1500 sq ft; kiosks of 200 sq ft; and a cart is 6X7 ft in size. Depending on the size and layout, a stand-alone store can accommodate 60-70 seats. Usual turnaround for the consumers can be anything between 10 mins-3 hrs. We want our customers to sit here using internet. We have free wi-fi. It’s all about relaxing. Our peak hour is 5-7 in the evening but we have offerings for full meals too. The trend is gradually rising. The usual footfalls in a stand alone outlet are 300-400 people a day. The Basant Lok outlet in New Delhi has very consistent footfalls through out entire week. It is not necessary that the weekend will see better footfalls. Café is a space that a consumer uses regularly. That’s the nature of the coffee business and it’s everywhere.
SB: What sort of designing you implement to ensure the comfort of a customer or guest?
MT: The designing should be warm and comfortable. We are evolving a template which is uniquely Indian with our global design partner ODI Designs and will be using extensively in our services. We may accommodate more space and make the counter space smaller so that Indian consumers can enjoy coffee in a coffee house style.
SB: What is the growth rate registered by Gloria Jean’s in India? Who is your target audience? What are the cities you are targeting?
MT: In the coming years, we will grow rapidly tasting sub franchise model. Gloria Jean's Coffees is looking at reaching 200 outlets only by 2014. Each stand-alone outlet requires an investment of about Rs 50 lakh. Currently we’re at 20. Our target audience is neighbourhood, office goers, a group of housewives. Our typical target segment is anyone between 25-35 yrs of age. Our same store sales is growing at 20 per cent YOY. In the next two-three years, we will be growing at 100-120 per cent given that we’re having a rapid expansion plan. And in the next three-four years, we’re focusing on seven core metros. We’ve national spread with four outlets in Delhi and Mumbai each. We’re in Bangalore, Chennai, Hyderabad and Pune.
SB: What sort of technology Gloria Jean’s implement?
MT: We need very good coffee machines and POS systems. We typically follow hub and spoke system of warehousing and supply model. We have tied up with Skygourmet for national supply of food products. We share our recipe with them and they have kitchens in every city, and for coffee we have central warehousing that supply directly to the store. As we grow, we plan to have warehouses at every city.
SB: Tell us something about your marketing strategy.
MT: Coffee as a business is very unique in its marketing approach. We’re not really so much in above the line, instead within the premises and trade areas, building up awareness through fliers and leaflets and coupons. Once a consumer steps in, he can avail sweep-a-card facility. He/she can punch 10 times and after having ten cups of coffee can get eleventh cup free.
SB: What are the challenging aspects of running a retail business in India?
MT: It takes about 3-4 months for an outlet to take off in full swing after building up awareness. The break even happens only after 3-4 years. But that’s not a challenge. The real challenge is getting a right business model for the Indian consumers. I wish the import duties are bit lower so that we don’t need to give so much of excise duties. As a result, we’re procuring and sourcing locally ensuring that matches global standard. We never compromise on quality.