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Can VG Siddhartha continue to sit pretty?

Cafe Coffee Day has built a vast franchise, but it now needs to create a sustainable customer experience

Soumik Kar

It might not exactly be a battle zone, but the historic south Mumbai neighbourhood of Fort recently witnessed a quiet retail war. Not very far from the Bombay High Court runs a busy street that leads to US coffee chain Starbucks’ first Mumbai store. Situated near Horniman Circle, a stone’s throw from the Bombay Stock Exchange, the store experienced quite a crowd when it first opened. Along the usually crowded street leading up to it are a dozen other shops that jostle for attention, among which is a store that has shut down and whose signboard reads ‘The Lounge’.

It’s not unusual to see a shut store in Mumbai’s many alleys and bylanes, but what’s interesting about this closed outlet is that it used to be run by one of India’s oldest and largest coffee chains — Café Coffee Day (CCD). The story goes back to October 2012, when Tata Starbucks, an equal-stake joint venture between Tata Global Beverages and Starbucks Corporation, opened its first store in India in the aforementioned locality. CCD, owned by VG Siddhartha, wanted to take the fight to the enemy camp. The Lounge was one such format aimed at countering the sophisticated look and feel of Starbucks.

The nearly 2,000 sq ft outlet clearly was no match for the global coffee giant’s maiden store. While business picked up for the new store, customers deserted CCD’s The Lounge, eventually leading to its closure sometime in mid-2014. Although Starbucks is a relative newbie on the Indian café circuit, its brand recall and growing presence — over 75 outlets in two years — is giving customers who grew up with CCD a chance to switch loyalties.

Take Ratnesh Jain, 18, a college student who keeps track of every penny he spends. Depending on how much time he has on his hands and the location that is most convenient to him, Jain picks either a CCD or Starbucks outlet to meet-up, although he says he clearly prefers Starbucks, a departure from his choice in the past. “It’s difficult to match the service and ambience of Starbucks. Not just that, Starbucks delivers value for money in terms of a better menu with larger and more delicious helpings, as compared with CCD,” reveals Jain while sitting at a CCD store in upmarket Colaba.

Jain goes on to explain, “For a very small portion of a Dark Fantasy cake, CCD charges about ₹1


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