India is the largest producer of tea with a total turnover of around Rs 8,500 cr, growing at a rate of 1-2% annually. Smelling the opportunity, Café Desire, which installs vending machines and supplies beverage mixes, jumped into the fray, knowing well th
ALL of the great achievers throughout history have one thing in common, they have all been desirers. The same holds true for a brand like Café Desire. It desired and dreamt big and has satiated the quench and desires of many, be it customers wanting delectable tea or coffee, or franchisees desirous of good, profitable business. Café Desire is about installing tea and coffee vending machines and supplying the beverage mixes at various places like corporates, software companies, hospitals, educational institutes, hotels, restaurants, resorts and public places like bakeries, canteens, bus stands, railway stations, airports, cinema theatres, malls, etc.
“We want to quench the desire of each coffee and tea lover across India by having our hot beverage vending machines in every nook and cranny,” says Ghouse Mohiuddin, its Managing Director.
What's brewing? A desirable business
Café Desire, the brand that sells more than two lakh cups of coffee and tea daily, was incepted in the year 1999 and has been catering to its connoisseurs since then. However, it didn't brew instant success. It emerged and evolved over a period of time and today, has presence in majority of the cities across 10 states in the country. Since it started, it had a clear focus, to cater to only hot beverage solutions for workplace of any kind, small, medium or large offices through a range of automatic vending machines and beverage mixes, wherein customers can have a hygienic cup of tea/ coffee at just the press of a button, avoiding the hassle of dealing with pantry, gas, pantry boy, milk, coffee, tea and sugar.
Business concept: Small with big benefits
Unlike other retail products, Café Desire has a unique yet lucrative business concept, wherein a customer can utilise the product on contract basis too. The brand does not have a retail cafe model. It offers two options to potential customers, the first is to have vending machine installed at the required place by paying the full cost of vending machine and second, to get the vending machine installed on an yearly service on contract basis.
Based on the contract, a customer needs to pays just Rs 6,000 for one-year contract and the brand installs the vending machine on his premises for one year with the commitment of 12 general services in one year and vending machine breakdown support with free replacement of spare parts all through the year. Around 90% of their installations are on a contract basis.
For Café Desire, quality and hygiene is a major concern. To uphold similar quality across the length and breadth of the country, the complete range of their products is manufactured at their indigenous factory in Hyderabad. Commenting on the same, Mohiuddin states, “Our factory is awarded with HACCP certification (Hazard Analysis Critical Control Point), which talks about the highest standards of hygiene being maintained during the processing of beverage mixes. Recently, we were certified by GMP (Good Manufacturing Process) which makes only factory of its kind in India in the vending industry.”
Besides quality and hygiene, another significant element of the brand's success is its direct technical support to customers. Through this technical support, a customer can dial Café Desire's toll free number for any kind of service-related complaint. Its service staff is well trained and equipped to handle any kind of complaint within the response time of four hours.
What this format needs? The right mix
There are only three important needs of this business, first is sales and marketing of vending machines, second is service of vending machines and third, supply of beverage mixes to the said vending machines. As per Café Desire's business model, the sales, services and marketing of vending machines is taken care of by the company but the supply of beverage mixes is handled by the franchisees.
Sipping franchise success
After operating for about a decade, the brand jumped into franchising in 2006. The franchise model worked wonders for the brand and franchisees too. The aroma of Café Desire is spread across 10 states of the country with 110 franchisees. After witnessing 100% growth in the last financial year, the company plans to have its presence in 15 states by appointing 100 more franchisees by March 2013.
When asked why he chose the franchise model to strengthen business, Mohiuddin says, “Sales and service is handled by the company conveniently through our well-trained staff but supply of beverage mixes to thousands of customers spread across the country on a daily basis was a challenge. We thought if we have a local franchisee who knows the geography of the territory well, then the franchisee can do a better job in timely supplying beverage mixes to the allotted customers.”
A franchisee can make direct invoice to the customers and make his profit on the same day. He does not have to wait for the company to remit the royalty amount, as unlike other franchisors, Café Desire does not charge any royalty from the franchisee. The company has a simple and straight franchise model, wherein the franchisee is supplied the product at X price and he further sells at X plus (Plus is franchisees' assured profit) to the customer directly. His profit is instant, like the brand's instant coffee/tea.
Café Desire is seeking franchisees pan-India. The company prefers people who are from business background, as they want their franchisees to be well versed with the commerce of this business. The potential franchisees are further shortlisted on the basis of their involvement in the services-oriented business and their understanding of the importance of service and how a corporate customer should be handled.
To associate with Cafe Desire, a franchisee can operate from his existing office with a minimum of 200 sq.ft of space along with a minimum investment of Rs 8 lakh spread over a period of one year. The franchisee also has an option to pay in installments for his investment on a monthly basis.
Training and support is one of the significant elements of Café Desire's franchise model. The company does not depend on franchisees, it provides 100% support through its well laid strategy and people. It offers in-house training of sales and services to franchisees' staff. Franchisees are also trained in the nitty-gritty of the vending industry with strong emphasis on the importance of services.
Company operational since: 1999
Year of starting franchising: 2008
Number of franchise units: 110
Total investment: Rs 8 lakh
Area required: Min 200 sq.ft
‘Business Should be Like Addiction’
It was not easy for him to take the aroma of Café Desire pan India. In a candid conversation with TFW, Ghouse Mohiuddin, Managing Director, Café Desire, spills beans about how he brewed up a great business.
What is the USP of your brand?
Our USP is great taste to suit every region, direct technical support, highly reputed certifications and large range. I will not hesitate to say that all these are unlike competition.
What kind of corporate clientele do you cater to?
Our corporate clientele ranges from small, medium, large to super large offices from a staff size starting from 10 to 4,000. We relish doing business with all the major and big names in every industry. If its banking and finance, we are there with the State Bank of India, Axis Bank, etc. If it's bio technology, we are there with GVK Bio, Bharat Biotech, Ocimum, and in case of automobile industry, we cater to Mercedes Benz, BMW, Hyundai, Maruti, Honda, in medical industry, we are there with Apollo, Mediciti, KIMS, Elbit, etc. Same goes for logistics industry, IT, ITEs and many other reputed domestic and international call centres.
How did you turn failure into success?
We became wiser over a period of time and I give complete credit for that to the mistakes which we committed during the initial period. Earlier, we used to ask our franchisee to do sales and service of the vending machines. Then we found that as the franchisee is new to the business, he is little conservative and apprehensive about hiring quality and good staff, and do so bit expensively. So later, the company took a stand and started the sales and service by hiring good talent irrespective of the cost and invested in culture of training and business heads to operate the business. This model helped everybody in the business, right from customer, franchisee, employee and the company.
What is your brand's marketing strategy?
The brand's marketing strategy is more or less the same for all territories but one fundamental difference on which we focus is, working on the regional blends. For instance, the coffee taste we offer is mild in north-east part of India and quite strong in southern parts.
What would be your advice to the aspiring entrepreneurs?
My advice to aspiring entrepreneurs is that building business should be like an addiction, go by your gut, go for a kill. An entrepreneur should be able to do fast-forward thinking and arrange his team and move accordingly and should have specialised knowledge of his particular industry. And of course, there is no journey without an ambitious vision.