UK-based Costa Coffee, the world?s second-largest coffee chain, is betting big on cluster model expansion to penetrate deeper in India. The chain, which started off its Indian operations in 2005, has become more aggressive after being on a slow track and plans to open 200 more coffee shops by 2015-16, taking the number to 300.
Santhosh Unni, CEO, Costa Coffee India, told FE,?Cluster model expansion involves setting up at least 10 coffee shops in span of 18 months in places where we set up our outlets.?
Speaking on the sidelines of opening of Costa Coffee?s first shop in Chennai on Friday, he said that cluster model expansion has been a time-tested one across the world for the company, and makes good business sense as it facilitates easier logistics in terms of food supply. ?In Delhi, where we rolled out our operations first, we have a cluster of 65 outlets and now after the Chennai launch we will be reaching to places like Hyderabad and Kolkata soon. In Chennai, we will have three outlets up and running by April,? Unni said adding that ?we are aiming an 18% growth, year-on-year?.
The coffee chain is looking at establishing large format outlets and also keen to have kiosks set-up across malls, airports and IT establishments.
Currently, coffee alone contributes 70% of the overall business, and the remaining 30% from food items supplied at the outlets. The coffee beans are brewed in-house and the food items are being sourced.
Unni said that the company was in the process of customising the food served at its outlets to suit Indian tastes. ?We want to bring in Indian taste in the food served at the outlets and we are working on it,? he said.
Haryana-based Devyani International, the master franchise for Costa Coffee in India, will be making investments for the expansion.
Virag Joshi, president and CEO, Devyani International, said, ?Every year we will be adding around 50 outlets to our chain and by 2015-16 we will be scaling up our number to 300 from over 100.? Typically, each shop will cost R1 crore and going by that we will be needing R200 crore investment which will be met through a mix of debt and equity,? he said.
Among the world?s fastest growing coffee chain, Costa Coffee plans to triple its global footprint by 2015-16 . Currently it has 2,500 shops across 28 countries.
Andy Marshall, managing director, international markets, Costa Coffee, said,?India is a success story for us and some of our learning here makes for stronger pitch for the company in emerging markets. We want to have a pan India presence and make Costa Coffee, the first choice among customers here.?