Business Today

Hot Pursuit

K.R. Balasubramanyam        Print Edition: Feb 3, 2013

HATTI KAAPI
LOCATION: Bangalore
BUSINESS: Selling hot filter coffee
FOUNDED IN: November 2009
LED BY: Mahendar U.S.
COOL QUOTIENT: Provides a quick cup of steaming South Indian coffee at Rs 8

In November 2009, a tiny coffee outlet sprang up in Gandhi Bazar, a busy shop-lined street in South Bangalore. Named Hatti Kaapi, it was about twice the size of a paan shop, and did not even have chairs. But business soon grew brisk, thanks largely to an unusual combination it sold - khara bhath (or upma) and a cup of hot filter coffee - for just Rs 12. Standalone hot coffee, at Rs 5 a cup, grew very popular, too.

The Gandhi Bazar shop no longer exists, but the brand is now a 27-outlet chain. There are Hatti Kaapi shops in Bangalore, Mangalore and Hyderabad, at the Bangalore and Hyderabad airports, as well as on the campuses of some information technology companies. Store sizes range from 100 to 250 sq-ft. A cup of coffee now sells at Rs 8 at most outlets, and Rs 15 at the airports. The Bangalore airport outlet recently served a distinguished visitor - Infosys founder N.R. Narayana Murthy.

"We sell between 30,000 and 50,000 cups of coffee a day," says 40-year-old Mahendar U.S., who founded Hatti Kaapi after some years in the coffee bean trade in his hometown Hassan in Karnataka. Hatti Kappi employs about 120 people, and buys its beans from Karnataka's Chikmagalur district. Starting with a modest investment of Rs 1 lakh, it has gradually increased its investment to Rs 2 crore. The chain had a turnover of about Rs 7 crore in 2011/12. Mahendar says they have been profitable, given his low overheads. He adds that Hatti Kaapi plans to add 13 outlets in 2013, including five in Chennai. "In terms of capital expenditure, one airport outlet is equal to five outlets elsewhere," says Balaji A.R, Head of Operations.

Mahendar attributes his business's success to sound advice and strategic inputs from T.S. Lakshmana Swamy, a Hindustan Unilever veteran, who is now part of the Hatti Kaapi team.

Sunalini Menon, coffee expert and founder of Bangalore-based coffee consulting firm Coffeelabs, says Hatti Kaapi follows all the rules for making good filter coffee. "The consumer gets both quality and quantity at a low price," she says. "And they are expanding slowly and cautiously." Mahendar holds up a copy of Business Today (May 16, 2010), whose cover features Cafe Coffee Day founder V.G. Siddhartha . He says he is one of many entrepreneurs inspired by Siddhartha's phenomenal success.

"It is my big desire to have him open one of our outlets," he adds.

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