Coffee has become a fashion statement

But there were a couple of shortcomings. We are a guest-focused company. So we decided to sit back, reduce the number of outlets so they could be managed better. We wanted to consolidate the entire business. Far-flung outlets that could not be serviced properly were shut down. We would grow only when we were certain of our training, our product and service.

Over the last year-and-a-half, we have worked all these things out and we can now get back to business and start growing again. From a little less than a 100 outlets, we now have about 135. We are targeting a three-digit figure by March, almost Rs 100 crone. And we'll definitely break - even before the end of the (financial) year.

How have all the changes at the top in the last three years affected Barista the brand?

It is better for us now. We're more focused; we're getting more money for expansion. The Sterling Group has a lot of interest and experience in F&B retailing across the globe. They knew Barista has promise and it would be worthwhile to invest.

Coming to your plans of expanding south, people there know their coffee. Are you tweaking the product?

The kind of coffee that people in south India are exposed to is different from the one we're selling. They're exposed to homemade filter coffee. What we offer is the Italian espresso coffee. The process is completely different, the taste is completely different.

However, it's not just coffee that we sell; it is the experience. I can't simply give you coffee and charge a premium-there has to be something more. This is what is helping the business proposition look easy.

Last month, the focus was a little more on the northern sector but the previous three months the accent was the south. Bangalore, Hyderabad, etc are not actually weak; they have fewer outlets than the city's requirements. So, we are focusing on that region. A city like Bangalore can take about 400 outlets and run profitably.

Why did you feel the need to launch a separate brand, Barista Crème, for your premium line-up?

Over a period, the expectation of a guest from a brand slowly goes up. Maybe, he goes up in life and sees that there is no coffee shop on the street equivalent to those at a three-star or a five-star hotel. This gives us an opportunity to take the brand forward, to offer people the next level of experience.

With this thought we opened Barista Crème. It is a premium store, over a larger area with plush interiors, comfort seating, table service, new range of products. We tweaked every possible element associated with the Barista brand. We've increased the size of the offerings. If at an Espresso, a beverage is 300 ml, at Barista Crème it is 400 ml. But here we'll charge 10% more. It is still value-for-money.

Each Crème is like two or three Baristas in terms of revenue, and that is huge. In a year's time we want Crèmes to contribute 50% to our revenue. We've opened the first in Delhi. We wanted to see how it performs because we're charging more. But the feedback we got surpassed our expectations.

Our intention is very clear now. We want to focus on Crèmes. It's a format people have liked. We would love to open one Crème per month. If initially we thought of opening about eight-nine Crèmes, we'll now talk of doubling that. We have started looking for more locations especially in metros and mini-metros. We are definitely looking at Bangalore. We just opened (a Crème outlet) in Hyderabad and it is doing very well

Barista has done very little advertising compared to the Pizza Huts and McDonald's. How do you justify the strategy given that you are trying to attract the same audience?

Different formats have a different promise. How many times have you asked a friend to meet up at McDonald's or Pizza Hut? Every business has its own model. They're not meant to be hang-out places. They're meant to be eating-out places. The moment you think of a Pizza Hut, you don't think of a beverage. In a café format you actually go to meet friends over a cup of coffee. Maybe the coffee is not driving you. But the need to meet your friends is what is driving you there.

But competition is multiplying. You think your strategy will survive the test?

The more the number of players, the better. All the players put together today don't cater to even 10% of the market. The size of the chain format would be Rs 250-300 crore now, growing at 10-12%. There's scope for everybody. Today, we have 135 outlets. That's okay for a south Delhi. We are talking of the whole country-two-tier cities, highways and corporate parks. The opportunities are unlimited.

Let's be specific. Consider your rival in the same space - Café Coffee Day. The latter has been really aggressive in opening up new outlets and signing up partnerships...

It is not lack of aggression on our part. It is a business policy. When I talk of Barista, I talk of an experience. It's a different world-there's music, a guitar to enjoy, chess to play with your friends. The reason why Barista is not going for the kiosk format-at railway stations, weddings, small offices, etc-is that we'll be able to offer only a cup of coffee in such a place. The Barista philosophy does not allow that.

To sum up, what does it take for gourmet coffee chain to beat competition? How do you survive?

Stick to your core offering. The moment you dilute your offering you're out of the market. But if I give you the best espresso, I'm in business. It is much better to charge the customer a premium, if required, but give the best 100% Italiano coffee. That is the core. We'll always stick to the core.

Financial express