Should you own Cafe Coffee Day Franchise? Alternatives, Cost, & Profit

Are you an aspiring entrepreneur seeking lucrative business opportunities in the Cafe Industry? Does the growth prospect of Cafe businesses in India excite you to find and partner with a renowned cafe house in India?

Or, Have you been searching extensively about the Cafe Coffee Day chain but couldn’t find any relevant information on it? No worries! You have our backing.

If you’ve ever pondered venturing into the Cafe sector, you’ll find yourself inundated with the multitude of options available in India.

As you embark on your exciting journey into the franchising world, you may consider checking out one of India’s popular Tea and Cafe Franchise, which has spread its presence in more than 1750 outlets in its over two and a half decades of operations, but later had to cut down its outlet footprints to 475 outlets.

Yes, you read that right. We are talking about Cafe Coffee Day Franchise, One of India’s most popular and leading coffeehouses, which specializes in serving a diverse range of cuisines and beverages in a casual and relaxed ambiance.

In this comprehensive article, we’ll cover a detailed post on the Cafe Coffee Day Franchise along with its cost, fee, and profit margin, along with step-by-step guidelines to start this franchise, and answer some common questions about the chain.

• Company: Cafe Coffee Day
• Founded: 1996
• Founder: V.G. Siddhartha
• Industry: Coffee and Cafe
• No. of Locations: 469+
• Model: Partnership
• Area served: India & Neighboring countries
• Franchise Fee: NA
• Area Required: 1000 -1500 sq ft

Overview of Cafe Coffee Day Franchise

Cafe Coffee Day, popularly known as CCD, is one of India’s leading and most famous chains of coffee shops that specializes in serving a diverse range of coffees, chillers, snacks, sliders, sandwiches, cakes, cold beverages and more.

The chain is headquartered in Bengaluru, Karnataka, India, and was incorporated in 1996 by its visionary founder, V.G. Siddhartha.

The concept became an instant hit among locals (primarily youths) and was recognized as a place for coffee enthusiasts seeking to spend quality time in a comfortable and inviting atmosphere.

There is no exaggeration in stating that, CCD has certainly played an important role in popularizing café culture in India, which has also opened the door for International cafe chain like Tim Hortons, Pret A Manger, and Starbucks to expand their operations in India as well.

As of 2019, the chain operated over 1750 outlets across the country and a few locations in international markets. Everything was going exceptionally well until then, but post-2019, Café Coffee Day faced various challenges, including financial difficulties and the unfortunate passing of its founder, V.G. Siddhartha, in the same year.

Following the demise of V.G. Siddhartha, his wife, Malavika Hegde, assumed the responsibility of the debt-laden cafe chain. She embarked on a mission to restructure the entire CCD unit and strategically trimmed non-profitable locations across the country.

Currently, the chain operates over 469+ outlets across the country, and it certainly plans to restructure the entire business operations and make it a profitable chain.

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The Journey of Café Coffee Day

The humble beginning of Café Coffee Day started by opening its first outlet on the bustling streets of Bangalore in 1996 to becoming a chain of over 469+ outlets by 2023, Café Coffee Day has certainly redefined the Café culture in India, marking its significant presence in the Cafe industry.

Cafe Coffee Day has grown into a premium coffee chain that not only enjoys a strong presence in India but also caters to international audiences at its international locations.

But, does Cafe Coffee Day offer its franchise?

We’ll explore more in detail in the upcoming sections.

Key Facts on Cafe Coffee Day

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Does Cafe Coffee Day offer franchises?

Unfortunately, Café Coffee Day DOESN’T sell franchises. The franchise has been restructuring the entire CCD business and working hard to create a debt-free enterprise.

However, aspiring entrepreneurs can become part of this chain if they own a commercial or commercially converted/convertible retail space. This model will allow aspirants to partner with CCD and earn along with them on a rental or revenue share basis.

There are certain requirements to partner with CCD, and the lists are outlined in the requirement section.

Why consider partnering with the Cafe Coffee Day Franchise?

Yes, you can partner with CCD, and it will indeed prove to be a lucrative investment opportunity (if executed properly) for Café business enthusiasts. Some of the prominent reasons are mentioned for your reference;

1. Revenue Share Model:
   • Contrary to selling franchises, Café Coffee Day offers an alternative partnership approach. Entrepreneurs can provide a designated commercial retail space, enabling them to earn a healthy profit margin while being exempt from operational expenses and overhead costs.
2. Over Two decades of experience:
   • The chain indeed carries tremendous experience in the Cafe industry, which has not only allowed it to grow exceptionally across the cities but also helped it build a strong brand reputation among its consumers.
3. Diverse range of menus:
   • Being an Indian brand with a widespread network across the country, Cafe Coffee Day has always surprised its customers with its diverse array of food and beverage options at the outlet.
   • It will undoubtedly help the new CCD outlet owner serve a lip-smacking menu to the customers and garner a strong customer base.
4. Sustainable expansion plan:
   • The chain is currently working on making it a positive cash-generating platform, However, Cafe Coffee Day has also planned to expand its presence in the international market and serve its unique range and flavors to a wider audience.
5. Leader in India’s Cafe Industry:
   • Like Barista Café, CCD also impresses its customers with its authentic coffee flavors and other food options, enabling a CCD franchise prospect to leverage the brand’s reputation and existing customer base.

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How much does Cafe Coffee Day Franchise Cost?

Though you might be interested in owning a CCD outlet, you’ll be surprised to know that Café Coffee Day doesn’t embrace the franchising model. But worry not; there is still a way to partner with them.

Nevertheless, to partner with the Cafe Coffee Day brand, you’ll need a commercial retail space that can be proposed to CCD brand to open its outlet at the proposed location. The chain primarily operates on the COCO Concept (company-owned and operated) model.

The proposed location will be fully owned and operated by the company itself. However, as an approved partner, you’ll earn a healthy margin, which can either come from a rental charge or a fixed revenue share stream.

In addition to that, If CCD starts offering franchises in the future, then to become an approved Cafe Coffee Day Franchise owner, one MAY need an initial investment of ₹70 lakhs to ₹1 Crore for a minimum floor space ranging between 1000 sq feet to 2000 sq feet.

How much is the Cafe Coffee Day Franchise Fee?(If offered)

There isn’t any specific investment breakdown for Cafe Coffee Day locations. Based on the investment range, a franchise aspirant may be required to pay a franchise fee of at least ₹10 lakh or more (which varies based on the location, size of the business, and model).

Additional Cost for Cafe Coffee Day

Typically, To run and operate a CCD location, one must adhere to their standards and are liable to pay a few additional costs such as a royalty fee, an advertisement fee, a maintenance fee, and a few other investments.

The Cafe Coffee Day chain may demand a royalty fee of 5%, which can potentially reach up to 8%, which would be calculated based on the monthly gross sales.

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How much is Cafe Coffee Day Franchise Profit Margin?

If you’ve been following the Café Coffee Day chain and its growth trajectory, you’re likely aware of its current profitability status.

Though the chain had exhibited immense growth and garnered a strong customer base for its lip-smacking range of cuisine since its establishment, it is important to note that its growth was mainly driven by the enormous debt taken from banks, investors, and more.

Café Coffee Day, which had over 1700+ outlets by 2019, has undergone a substantial contraction and now stands at a total of 469 outlets as of 2023.

The chain primarily operates on a COCO model (company-owned and operated) that allows them to provide an exceptional customer experience while maintaining quality standards.

Instead of offering franchises, Café Coffee Day partners with aspiring entrepreneurs by leasing their commercial property, which in turn offers either a percentage of revenue share (approximately 15–22%) or a rental model.

Let’s dive in further to learn more about its profitability:

Financial statement of Cafe Coffee Day Franchise (Important Section)

1. The revenue of CCD’s parent unit, CDEL’s coffee retail business, posted a revenue of ₹869 Crore in FY23, which was ₹1653 Crore in FY19, showcasing a significant drop in revenue in four years.
2. For the latest quarter, Q4FY23, The Net PAT (profit after taxes) slumped 36% year-on-year (YoY) to ₹ 33 crore.
   • In addition to that, the chain’s net profit was again in RED, which reduced to ₹68 Crore in FY23 from ₹112 crore in FY22. It is also important to know that the net profit for the company was just ₹ 10 Crore in FY19.
3. The share price too took a deep dive and currently trading at 37 (on 11- August-2023).
4. Additionally, despite of its increase in same store sales growth by 27.3%, The average sales per day was still at ₹20,899, as stated in the company’s exchange filing.

Overall, The entire Cafe Coffee Day chain is undergoing into consolidation phase and it will certainly take time for them to recover. The franchise aspirants are advised to perform extensive marketing research and growth analysis before partnering with Cafe Coffee Day.

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What are the requirements to partner with Cafe Coffee Day Franchise?

To become an approved partner, one has to meet the certain requirements, which are listed down for reference:

1. Aspiring entrepreneur should own a commercial or commercially converted/convertible retail space, which can be given to CCD to put their outlet and either earn a fixed income as Rental payment or get a certain percentage of revenue.
2. The retail space should meet the below conditions:
   • At least 1000 – 1500 Square feet of Retail space at Ground Floor.
   • Should have minimum frontage of 25 ft with a plenty of parking space.
3. Interested applicant should have at least have prior knowledge of the Cafe Industry (not mandatory) and should adhere to the company standards.
4. One has to sign the agreement and abide by their instructions.

Should you buy a Cafe Coffee Day Franchise?

Obviously, you can’t buy any of the Cafe Coffee Day location, as they don’t sell franchises. Rather you can become one of their partner by filling up or emailing them with necessary details.

Nevertheless, there are certain elements which one MUSTN’T avoid while considering this as an investment opportunity.

1. The Cafe Coffee Day’s locations have been shorten drastically to mere 469 cafes across in India. However, it was primarily done to reduce the gigantic debt.
2. Since the demise of its founder, V.G. Siddhartha, the chain still hasn’t recovered from its debt. However, its parent company has planned to divest a few of its assets.
3. Another Red Flag
   • The Securities and Exchange Board of India (SEBI) levied a fine of ₹26 crore in January 2023 to the firm.
     • It was noted that the ₹3,535 Crore were diverted to the promoters from the seven subsidiaries of Coffee Day Enterprises to Mysore Amalgamated Coffee Estates Ltd.

Considering all these statements, one may get enough insight about the company’s background, growth prospects, and its future. However, We’ll not certainly recommended to buy this franchise. You can always do your analysis and proceed with necessary steps.

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Is Cafe Coffee Day filing for bankruptcy?

Well, the problem for CCD hasn’t over it. The chain has been going through difficulties and planning all the measure to turn into a positive cash generating firm.

It was recently reported that, on July 24, one of the lenders (IndusInd Bank) of Coffee Day Enterprises, parent company of Coffee Day Global has filed an petition to recover its ₹94 Crore.

The Bengaluru bench of the National Company Law Tribunal (NCLT) has also passed an order and the chain is currently awaiting a formal order from the NCLT.

It’s also important to note that the company has stated its intention to take the necessary actions in this case. However, the future remains uncertain, and the challenges for Coffee Day are far from over.

What are the Alternatives to Cafe Coffee Day Franchise?

Now, you might wonder what could be other possible cafe options to get started with.

Here you go.

Barista Franchise

Barista can be considered as a viable alternatives to the the CCD. The chain was started four year later to the foundation of CCD in 2000. Since then it has certainly grown into a chain of 350+ outlets across the country.

It has also planned to expand to other cities in near future to reach to a total store count to 500 stores. For an aspiring candidates, The Barista is accepting its franchise applicant who is passionate about the Cafe industry and is capable of investing at least ₹15 lakhs to ₹80 lakhs.

The chain also enjoys an immense customer support and may certainly grow in near future.

Read more: Is Barista Franchise Worth Investment? Cost, Review, Profit, Alternatives

Tim Hortons Franchise

How can you overlook Timmie’s Or Tim Hortons when searching for a cafe franchise in India? Well, Like other coffeehouses originated in India, Tim Hortons has also experienced unprecedented growth since its entry into the Indian market.

The chain has gigantic presence of over 5300+ restaurants across the globe, which is widely recognized for its freshly brewed coffee, donuts, cookies, burgers, and other fast-food items.

Nevertheless, If you are capable of investing at least ₹70 lakh to ₹17 Crore, have a perfect location to set up an outlet, and possess extensive experience in operating an international chain, there couldn’t be a better choice than Tim Hortons.

Read More: How to Start A Tim Hortons Franchise in India – Cost, Fee, & Profit – Tim Hortons

How to Get Cafe Coffee Day Franchise?

As mentioned earlier, Café Coffee Day doesn’t follow a traditional approach for store expansion. Instead, they choose to partner with applicants who own commercial retail spaces in high footfall markets.

We have already mentioned the requirements of CCD franchise prospects; To learn more, you can navigate from here.

To become an approved Cafe Coffee Day Franchise owner, follow the given steps;

1. You need to compose a professionally written email, containing the following details and send them at bd@cafecoffeeday.com:
   
   • Name(s) of one or all the owners of the retail space.
   • Postal Residential Address, Contact Numbers and email id of the owner/owners
   • Postal Address of the Retail Space
   • Retail Space Area (square feet)
   • Frontage of the Retail Space
   • Photographs of your location
   • Demographics of the catchment area

Official Details

Final Takeaway – Conclusion

Undoubtedly, Café Coffee Day is one of the popular coffeehouse that carries over two decade of legacy in the Cafe Industry. However, After the demise of its founder, Cafe Coffee Day has experienced immense difficulties.

The chain, which once had over 1700 outlets in operation, had to reduce to a mere 469 cafes in Q1FY23. The main reason behind this decision was to reduce the external gigantic debt and turn the business into a profitable venture.

The Bottom Line:

Despite all its measures, the chain’s financial situation does not look promising currently. With a reduced number of cafes, recurring losses year-on-year, and mounting pressure from investors and lenders, the chain will certainly face more challenges in expanding and operating its existing location

In addition to that, Café Coffee Day doesn’t embrace the traditional franchise model. Instead, one can partner with them on a COCO Model if they have the required commercial rental space that can be offered to CCD for setting up their outlet.

For aspiring candidates, we’ll advise to wait at least 1-2 years and let me chain produce a positive cash flow and get rid of its debt.

However, an extensive market research and company’s business model analysis is certainly expected to be performed from the aspirants, which will provide additional help in making a informed decision.

Good Luck!! Happy Franchising!!

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