NPSD – Spring 2011 AbhiAG Coffee etc. in India

1. NPSD – Spring 2011 AbhiAG Coffee etc. in India

2. Coffee Café Market in India • Cafe Market in India • In 2008, according to Technopak Advisors, the Indian food services market – cafes, full-service restaurants, fast-food outlets/quick-service restaurants was estimated to be $6 billion • Organized players taking 13% of the market • By 2014 this number is expected to increase up to 27%. • Coffee café market : Approx $ 200 Mn USD market, growing at 40% per year (Technopak Advisors) • Current players • Number 1 – Café Coffee Day – 917 outlets, 150 cities and towns • Number 2 – Barista – 210 outlets • Number 3 – Costa – 50 outlets

3. Coffee Café Market in India • Coffee consumption in India is growing at 6% per annum compared to the global 2% plus • Burgeoning market catering to upscale affluent Indians • New culture, is less than a decade old - the majority population is tea drinking • Scale, growth and Innovation is possible • A place to hang out and relax • Various formats – café, lounge, airport, corporate, university kiosks

4. Coffee café market in India Future • Industry estimates : 5000 outlets across locations • CCD – Double it to 2000 outlets by 2014; Investing $ 30 Mn to expand • Barista – Plan to launch 40-45 outlets in next 2 to 3 years • Costa – Plan to reach 500 stores in next 4 years • Entrants : UK’s Coffee Republic, Malta’s Cafe Jubilee and Australia’s Coffee Club Group • Starbucks "At some point in the near future, we will make the right announcement and the right partner in India," chief executive Howard Schultz had told Reuters in April. "We are enthused about India.”

5. Project Idea • Opening a coffee café is a smart decision in India • Focus on • Examining the coffee café service and product which I want to develop in India through the NPSD funnel • Positioning the coffee business • Examining the new café concept funnel only • There are various sub development funnels which will need to be developed for the entire business proposition

6. Organizational Strategy (Start up) • To create an upscale affordable coffee café environment which offers a world-class coffee experience to Indian consumers Activity 1 : Ideation

7. People Teams • Everyone speaks a consistent language of the NPSD Funnel • Defining the concepts in the beginning for cross functional team & deployment • All teams will have someone from each function • Friends picked from various backgrounds • Finance, Marketing, IT, HR, Entrepreneurs, Corporate workers to get a complete flavor • Core NPSD Team • Key partner/s • Me (CE0!) • We will set the rules……. • Referee Group • Friends A,B • Chef on a retainer • Will ensure rules are being followed

8. People Teams • Gate Keeper Group • Friends C, D • External real estate consultant • Chef ( from Referee group) • Gate keepers • NPSD Team + GK Team • Final roll out • External restaurant consultant • Client Set • 100 samples from mixed background • Sampling basis

9. Development and Sub funnels • Each of the functions will also have their own funnels and idea plans • Further sub funnels which will be created simultaneously – Sub NPSD with multiple deployment stages • Construction • Marketing • Media plan • Sales plans & Pricing • Food & Beverages • Staffing pricing • Finances and Working Capital • All sub funnels should be ready by the CFD gate

11. Activity 1 : Ideation

12. Ideation (Highest volume based on broad criteria) Ideation process • Secondary research through online searches • Capturing best coffee chains’ practices in the US • Whom am I targeting • Casual drinker • Morning coffee goers • Couples on dates • Thinkers / Workers • Health and Well being, Sofas, Art gallery, Cakes / Savory, Sodas, Wine, Music, Gourmet Coffee………. Activity 1: Ideation

13. Ideation – Café concept • Define the parameters of the café service aspects • Footfalls, Visibility, Great name • Target audience • Pricing • Store’s vibe • Joint Venture / Exclusive franchise operation • Is my café a disruptive innovation ? Do I want something around kiosks , airport locations, a quick use-and-fold option? • Look at re-engineering from the ideas which come in • Putting ideas back into the Idea bank for other funnels , can be used for future innovations for the same coffee café • Using idea generating processes Activity 1: Ideation

14. Innovation triggers • Spend more mental time in the future A café where coffee can be ordered through a digital interface on the table • Connect the Dots – Putting concepts together Theme of Indian movies with artists focusing on food • Mimic Nature (Eco friendly) Solar energy powered electrical outlets for laptops / phone chargers • Awaken your Childhood consciousness Access to comics and child level access • Change of physical workforce Visit competition cafes, countries for creating ideas • Reverse Engineer Look at popular Indian foods, and alter to meet global tastes • Storyboard ideas Client walk in with the café experience • Mind Map ideas Relaxation – Music, Art Activity 1: Ideation

15. Innovation triggers • Cross Pollinate Get ideas from catering units, flight services, upscale restaurants and cafes • Look outside in, Inside-out, above and below Can I differentiate from outside, ceiling experience, exits? • Think upstream and downstream What are my vendors doing? Where are my clients coming from? • Use global advances in innovation Mobile Payments • Take the International Perspective Look at it from the US perspective - how would it be? • Ask, “ Why not?” Why can delivery not be done? • Invite Radical thinking Can I be open 24 hours? Can I have a vending machine in the café? Activity 1: Ideation

16. Ideation process 100 ideas at the end of the ideation process Activity 1: Ideation

17. Ideation Screen • If it’s a must have , will have it in the first ideation screen itself (Highest volume based on broad criteria) • Can the stores which are set up work from a rented location? • Appeal group , Men & Women, Ages 18 to 50 • All Indians • Scalability across 30 cities in India • Time to go to the market : 1 year from finalization • Use the Product Matrix Chart ( Ratings 1 to 100) • NPSD team approaches referees • 7 ideas at the end of the ideation process Activity 1: Ideation

18. Activity 2 : Elimination

19. Surface Evaluation (Filtering ideas based on specific criteria) Expansion and Surface Evaluation • NPSD team works on 7 ideas • Research, mixing of ideas • Check with associates, vendors • Add elements, essential features, ex. Separate washrooms?! • Present ideas to Referees Activity 2 : Elimination

20. Surface Evaluation Screen • Competitive scenario • Government regulation on retail investment – foreign investment • Total investment capped at $ 5 Mn including external sources • Range of cultures from New Delhi to Bangalore • Pay back period of 3 years 3 ideas at the end of the surface evaluation process Activity 2 : Elimination

21. Detailed Evaluation • Having just one idea on detailed criteria! • Evaluate all 3 options • Detailed competitive study • Retail specs / store sizes • Return on Investment • Construction and Design feasibility Activity 2 : Elimination

22. Detailed Evaluation Screen • Year 1 : $ 0.5 Mn Revenue • Workable across India • 10 elements of innovation • Detailed café models • Define the different cafes’ value proposition on X and Y Axis • Financial inputs • Critical not to have a moving target : Referees responsibility 1 idea at the end of the detailed evaluation process Activity 2 : Elimination

23. Activity 3 : Development

24. Cross Functional Development (CFD) • Allocating responsibilities for Finance / Hiring / marketing? • Finance : Investments required • Legal and Regulation support • Structure to set it up – what kind of company • Facilities requirements • Mock up, 3D visualization plan, having the ideation in place, ensuring the space and flow • Parallel testing with the 100 people group on aspects as-and when ready Activity 3 : Development

25. Cross Functional Development Gate • Monitoring by gatekeepers • The gate is shut – onus on NPD team to get gatekeepers to open • Check financials • Ensure plan is in place • Regulations are met • Details are specified • HAVE to ensure that all criteria and loop holes are plugged Activity 3 : Development

26. Testing • Simulation for the actual interiors for the café and softer aspects of the store • Actual sampling and test run for 2 weeks – unannounced to the public but has all areas covered • Recruit test groups • Have a profile of super users (massive café visitors) • Focus Groups on their feedback • Scientific feedback mechanism through MR practices • Be open for insights, errors and changes • Tests at homes / external locations Activity 3: Development

27. Testing Gate • Have pre-set results which are expected • 20 locations available at 110% of the total rental cost • Satisfaction of 8 on 10 for each individual parameter Activity 3: Development

28. Deployment & Deployment Gate Deployment • Timelines and rollout for store design • Overall systems design ready for billing, staffing • Rent agreements signed • Working capital is available • Designers, Architects, Real Estate consultants in sync Deployment Gate • Ensure everything is at a six sigma level Activity 3: Development

29. Development and Sub funnels • Each of the functions will also have their own funnels and idea plans – options on marketing / operations • Further sub funnels which will be created simultaneously – Sub NPSD • Will have multiple deployment stages because construction, marketing, launch, actual client walk ins, sales, food, pricing will be different deployment stages

30. Launch • Important to ensure that the other sub funnels are also converging at the same time • Delay or move ahead based on other functions’ status • Ensure all cross functions are working well • Go ahead with the actual launch as planned Activity 3: Development

31. Post Launch Review (PLR) Gate Launch • Monitoring of all essential inputs • Staffing • Store hours • Food & Beverage Post Launch Review • Continue with other product development teams on new products and service • Marketing team to continue benchmarking competition and best practices • Retail missions to explore expansion cities and locations • Research and feedback teams to check on client experiences Activity 3: Development

32. Thank You!