Why coffee chains are (still) not profitable in India.
In Oct 2015, before the Coffee Day IPO, I wrote a piece in LinkedIn on why I did not think CCD was a good investment or even profitable, due to fundamental problems the industry faces in India. https://www.linkedin.com/pulse/coffee-day-ipo-worries-indian-qsrs-rahul-deans/?trackingId=3xvqbpePQkyIHi4UtWXbxw%3D%3D I faced some flak for that, from veterans in the industry who argued that India’s rising income meant coffee chains like CCD or Starbucks, who spent a decade understanding and building the market, would now become profitable. I passed up an opportunity to be CEO of one such coffee chain as my view of the industry was too pessimistic for the owners liking – It turned out I was quite right in my assessment. 8 years have passed. CCD continues to be unprofitable, as does Starbucks and everyone else. The point of this article is not to disparage any chain – having run a QSR chain myself, but to point out some problems inherent in the industry. Café coffee day (CCD) is 27 yea...