By Alokananda Chakraborty
In the four months that Rajat Agrawal has been CEO of Barista Coffee Company, the organised cafe market in India has seen a bunch of new players throwing their hats into the ring and established players expanding aggressively or rejigging their portfolios to stay in the game. In this interview to Alokananda Chakraborty, Agrawal talks about Barista’s plans to tackle growing competition. Excerpts:
The coffee retail market just got more exciting with the entry of Pret a Manger and Tim Hortons. What is your strategy to keep traffic flowing to Barista?
The café chain market is growing at a healthy CAGR of 8-9% with the market today at Rs 4,500 crore. The coffee wave has just begun in India. The mantra to succeed is consistent guest experience and points of presence. We have worked on creating lasting customer experiences which has kept our loyal set of guests with us across 330 outlets and 100-plus cities. Newer brands are focused on penetrating the larger cities as part of their first phase of expansion; we have already created a large mass for us and are growing upon that at a good pace.
That apart, we have been working hard to increase the wallet share for us through increased points of interactions with our FMCG business and online delivery channel. We are also working on launching our vending business and venturing into specialty coffee through our own roaster which we had set up last year.
Every player is experimenting with the food menu. What is the contribution of food versus beverages to Barista’s overall revenue?
Food averages 25-30% of our sales depending on the store location.
How did the pandemic affect your business? Are the footfalls and sales back to their pre-pandemic levels?
The pandemic did have an impact on the business. In fact, most businesses had to restart operations from zero. We came out stronger as a brand during these times with revenue and cost optimisation. Now, our business is back to pre-pandemic levels. In fact, the business has grown since then; we have opened 100 stores since March 2020, strengthened our existing base, and sales now are fairly above the pre-pandemic levels.
Though Barista is the pioneer of the out-of-home coffee consumption trend in India, the general perception is that Barista has been slow in expansion and in catching up with the changing taste of consumers. What’s your response to that?
We have opened 160-plus stores in the last four years and now stand at 330 operating stores. That is to say we have increased our points of presence and improved market share. We are currently serving in more than 100-plus cities. We hope to be at 500 stores over the next two years. Our growth is a true testimony to our acceptance as a brand and we have also kept track of consumer preferences and modeled our offerings to suit the changing food and beverages environment.
Can you tell us more about your Diners format? How many Diners outlets will we see in the next six months and where will these be located? What is the investment you have earmarked for the project and how are you going about choosing the locations?
Diner is our flagship format which was started in 2017-18, but the last two years of Covid slowed down the pace of growth for our Diners. Currently we have five operating ones and plan to open Diners at strategic places that can support such a format. We are open to exploring Diners wherever we see healthy returns around the format, there is no set number around it, it will be dependent on locations where a Diner format fits better than a café and the returns can be maximised.
You mentioned that Barista is working on launching a vending business and venturing into specialty coffee. Can you tell us a bit more about these new forays?
The vending business model is a good extension of the brand, utilising our strong backend capabilities to create a business segment centered around the B2B category. In the Indian corporate segment, there is a big opportunity for quality coffee players to cater to this market. With the pandemic worries settling down and employees getting back to office, the segment is opening up in a big way and we feel it’s the best time to enter this space.
Specialty coffee worldwide is an interesting segment and contributes about 20% of the café sales in mature international markets. Only a handful of players currently cater to this market; we hope to gain share in this space by leveraging our current network to expand in a phased manner.