Krishnan explained that in order to meet sales targets, cafe managers would have to scout for opportunities to make large deals on items such as cookies. “They told us to try to get deals where we have gift options that can sell cookies. We look for posters for events and newspapers to get these bulk orders,” he added.
Manikandan said the company had made billions of billions of rupees (Rs. 4,387.5) on special occasions; He had to pay using his personal credit card. Reddy said the CCD had filed a police case against him for not paying Rs 3.4 lakh (Rs 9,979.50) in arrears. Krishnan still has to pay the company Rs 30,000 (8 438.75) as a result of a salary cut during the sales day.
The biggest problem with CCD that managers talk about is that they introduce items they don’t take, and management puts goals on these objects. For the past two years, CCD has introduced all-day menus at 250 cafes for milkshakes and food items such as burgers, biryani, rolls and rolls. “They don’t have targets for cappuccinos or lats, etc. This is obviously something people buy,” Reddy said. “Nowadays, in any CCD outlet, you don’t see an ad on cappuccino or lats. You can have a cold coffee or a burger, ”he said.
In the March quarter, Coffee Day announced the launch of new desserts and cakes in its food menu.
On May 21, Ken sent a detailed questionnaire to the CCD. By the time the story was published, the company had not responded despite reminders and follow-up calls.
The problem of brewing
With earnings analysts at the March 2018 quarter, Siddhartha is excited about expanding his chain. The company plans to introduce 135 new cafes this fiscal, he told analysts. He said the company was not cutting its debt of Rs 400 crore ($ 60.13 million) because it needed more money to expand. The ownership, he said, would cost an average of Rs. Therefore, the company has to invest approximately Rs 54 crores (12 8.12 million) for the expansion of the cafe.
Asked why the company did not take measures to reduce its debt because it had an adequate annual cash flow of Rs 211 crore ($ 31.72 million), Siddhartha said: “We plan for 135 stores. What is the promise that we do not do better?” We plan on doing what we can and therefore we keep a big chest with us. “
It’s fair to say that CCD’s retail business is growing at a steady clip. In FY18, it grew 12% to Rs 1,590.7 crore ($ 239.1 million). In the previous year, revenues rose 14% to Rs 1,423.4 crore ($ 214 million), up 13.7% from Rs 1,253.6 crore ($ 188.43 million) the previous year. Day-to-day average sales (ASPD) in cafes were encouraging, with an increase of Rs 15,635 (8 228.66) in the March quarter, an increase of 4.94% year over year. The ownership is expected to increase to $ 23,000 ($ 336.38) in three years.
But dig a little deeper and the problematic pattern begins to emerge. Beyond the headline number of opening 135 stores, CCD should try to understand how it will expand its retail presence. Although the company said it had opened 135 caf లోs in FY18, it also closed 95.
Net additions are only 40 cafes, with the store number currently at 1,722.
Cafe Coffee Day Management said this was done to better manage rents. The company wants to refurbish 150 stores this year, including relocating the cafe. “Look, we opened some stores 12-4 years ago with 400 sq ft and rent increased by 15% every year. In some cases the rent went up to Rs. 2 lakh (9 2,925). Siddhartha explained to analysts that the same lease could get 1,200 square feet of property nearby. There are about 200 stores in the 500-square-foot range and they will not be refurbished as they have 50 stores in prime locations, he said.