Country’s largest coffee chain Cafe Coffee Day (CCD), with 1,650 outlets, commands such a lead over its competitors that the number of outlets it has is more over times the number of all the other coffee chain stores put together. Amid news that the parent company, Amalgamated Bean Coffee Trading (ABCTL), is planning to take CCD public, CEO?Venu Madhav, says the move is not borne out of compulsion, but an evolution that every company goes through. Madhav, who has been with ABCTL for 18 years, tells Darlington Jose Hector and Anand J?about the next phase in the company’s growth cycle and strategies to counter competition. Excerpts:

Can you throw some light on your IPO plans?

As of now we are not talking much about it. Things change, markets change and you never know. IPO is an evolution any company will go through it at some point. It is not a compulsion, but an evolution.

Has the entry of foreign players like Starbucks led you to this thought? Previously, CCD had said that it was not short of funds.

Competition will not influence our decision to go public. If that happens, that would be more of an inward-looking decision. When you go public, you create a benchmark and employees get stock options.

Starbucks has opened stores here but the initial euphoria has died down. What is the sense of competition that you are getting?

The biggest thing about their entry is that the awareness is going up and the industry is getting a lot of publicity and consumer adoption is going up. What we are offering is not any different from what a global chain is offering. The market is still in nascent stage so there is no such worry that someone else will undercut our growth. What has helped us is that we were ahead of the curve, as we knew the market. We got good properties on low rentals, low running cost because of sheer dispersion and our own furniture at our outlets, which have all helped us do better. Everyone in the industry has now introduced value-for-money full meal options as well as snacks priced at R30-40.

How has CCD evolved since 2000? How is the consumer changing?

If you are not moving with the times, you are out of business. We are continuously evaluating global trends. Earlier we used to concentrate a lot on coffee, but then non-coffee beverages are also gaining prominence. Then came a situation when food items were becoming integral to the experience. We constantly keep a watch on real estate to find the new areas and micro-markets developing in the big cities. In most micro-markets of Bangalore, we were the first to open a cafe or a quick-service restaurant. Once you are ahead of the curve in identifying markets, you grow with the curve. For people who have moved beyond the regular CCD, we have launched Lounge, where people come for business meetings, a relaxed environment and so on. At each stage we are anticipating change.

So, what is the next big change? Is it a new format?

It might not be a new format. A pub or a club format will not be a big-volume business. Regular customers account for 40-50% of our clientele and they come more than once a week. We are opening 150 outlets every year and that gives us a 10% growth apart from same store growth. We won’t try new things just because we don’t have anything else to do.

What is your biggest constraint for growth?

Getting the right kind of customer-facing employees is the biggest challenge for the industry. A lot of players are chasing the same good people and attrition rate is very high.

Where will your next stage of growth come from?

The top seven cities will still give us maximum growth. A metro micro-market is still a bigger market for us than a Mysore or a Coimbatore. Highways are going to be a high growth area.