Television

'I don’t consider others as competition. They are partners in spreading the coffee culture in India' : Riyaaz Amlani - Mocha CEO

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Coffee culture has grown by leaps and bounds in the country and cafes have become a hotspot for the young and old alike. With more and more outlets of Mocha, Cafe Coffee Day and Barista opening, the competition in the coffee space is getting tougher. In the midst of this, Mocha, which opened its first outlet in India in December 2000, is looking at going international, the first stop being Dubai afterwhich Singapore follows.

Now, with the foreign direct investment (FDI) allowed in the real estate of the retail sector, there will be better scope for companies like Mocha to improve and expand.

Mocha CEO Riyaaz Amlani spoke to Indiantelevision.com's Hetal Adesara on the sidelines of the just concluded KSA Retail Summit in Delhi, about Mocha's future plans, the competition and the growing coffee culture in India.

Excerpts:

How did the concept of Mocha originate and what about others operating in the same segment?



If you believe in yourself and your ideas, there is nothing that can stop you. There is always room for originality. If you come up with a concept that is truly original, implement and execute it well. It will definitely work.

When we started out with our first outlet in December 2000, there were no other players in the coffee space. We were aware of the big boys like Starbucks and other American companies, however. We definitely didn’t want to do a cut and paste job of replicating in India what Starbucks, for example, does abroad. We wanted to do something different and wanted our place to be a culture hub, which is conducive to social interactions. So I’d say we are different from the other players like Café Coffee Day and Barista, which are somewhat based on the Starbucks model.

What would you say is the differentiating factor between the other players and Mocha?



Ours is a fully service restaurant, we’re not just a self-servicing model. We have a wider offering and larger number of footprints. Our average footprints are 3,500 square feet for each outlet. The average number of people who walk in are approximately 800 per day per outlet. In terms of coffee also, we have more variety than just the entry level coffee.

How would the number of footfalls that you get per outlet per day compare with those of the competition?



I don’t consider others competition. I believe they are partners in increasing and spreading the coffee culture in India. We definitely don’t consider them competition also because they are catering to people who want to spend 15-20 minutes, while we cater to people who want to spend an hour or so. It is a different segment within the coffee market that we target.

Because we have a larger footprint concept, we definitely see two to three times more traffic than the other players.

Considering the likes of Barista, Café Coffee Day and Mocha are partnering in pushing the coffee culture in India, what kind of growth do you predict?



Well, it will increase but not exponentially. We are pretty much reaching a point of market saturation with the levels of infiltrations of Café Coffee Days and Baristas. I don’t see room for more players at this point in time with the coffee concept. And, there is definitely going to be a shakedown and at the end of the day, only two or three brands will survive.

When do you think this shakedown is going to happen?



The shakedown is likely to happen when all the big global players like Costa Coffee will enter the market. I personally feel that Café Coffee Day is pretty well placed to counter that kind of competition. I’m not too sure of the other players.

When do you see the big guns from abroad entering the Indian market?



It really depends on the foreign direct investment (FDI) norms and whether the players are given a level playing field or not. But there is going to be a shakedown, that is for sure.

'The shakedown is likely to happen when all the big global players like Costa Coffee will enter the market'

How strong a presence does Mocha have in India today and what is the growth strategy going to be this year?



We are present in four cities namely Delhi, Mumbai, Hyderabad and Ahmedabad. By the end of the year, we want to make our presence felt in Bangalore, Chennai, Kolkata, Pune and Chandigarh. Our growth strategy would be to strengthen presence in the existing cities and at the same time create

awareness of our brand across the country.

So how are you going about creating that national awareness?



What we are doing is, is getting into a city and creating a lot of hype there around the brand. So, for example, in Mumbai, it will generate that buzz for us in nearby cities like Pune. Similarly, in Delhi we would do the same for nearby cities like Chandigarh. So we will be creating a buzz in opinion leading cities. Mumbai is the biggest opinion leading city and then comes Delhi.

Will you be looking at advertising too as a vehicle to create awareness?



No. We are not looking at advertising. I feel that it can be destructive in the case of F&B (food & beverages), unless you’re a single product where you need to increase the market size of your product. In that case, advertising can help. We have a variety of offerings.

Are you looking at having a presence in the international market too?



Yes. We have signed a deal in Dubai and are looking at opening three outlets there, which will be operational by September this year.

And beyond Dubai?



Right now we are looking at a place where we can fly to within three hours. Dubai is again a hub and lots of travel happens. It is also the right place to create a buzz around something new. Though nothing has been finalized till now, we are looking at opening an outlet in Singapore too this year.

What sort of investments has been made considering the fact that Mocha is in a expansion mode?



There is an average investment of about Rs 6.5 million per outlet.

Over the next 18 months or so, what sort of investment are you looking at making in Mocha?



We are growing via the franchisee route, so the investments are largely done by our franchisees. Right now, we are looking at investing in a strong management team to provide better support to the franchisees. We are going to be utilizing the funds to create a better management team and infrastructure in the markets that we are in.

What sorts of revenue are you drawing in at present, and what's the sort of jump that you have witnessed over the past few years?



At the end of the 2005 financial year (ending 31, March, 2006), we should draw around Rs 190 million in terms of revenue. In terms of group revenue, we closed FY 2004 at Rs 80 million. We have been growing year on year at this rate.

Do you think you will be able to maintain this more than double digit growth year or year, or do you see the growth plateauing off?



For us, yes because we are still nascent. We see this kind of growth for the next three to four years.

Are there any immediate plans for changing or extending your model?



We will be looking at an extension of our model for malls because right now Mocha is not a mall model. So, we will be creating a special model to be present in malls.

And what would that model be?



That model will have a limited offering and space. There won’t be a kitchen and it won't be a full service restaurant. Since it will be a brand extension, we will be going by another name, which will be Mocha Express. We’d be doing our pilot project in Mumbai for Mocha Express by the end of this year. After having done that, we’d evaluate how well that does and then decide if we want to scale on that or not.

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