Mumbai-based Afoozo and Bengaluru-based Cafe Coffee Day (CCD) have won the franchise bid to run and expand the Coffee Board-owned India Coffee House. Currently, with 15 outlets across India, directly operated by the Coffee Board, the proposed public-private model is aimed at giving the India Coffee House a facelift, turning it into a full-service franchise. The Coffee Board invited bids to establish and operate the outlets in July last year.
Confirming the development, the Coffee Board CEO Srivatsa Krishna said that Afoozo and CCD won the bid. "We have just awarded the contracts and currently, we are undertaking location visits and will take four-five months to start working on it."
During the first two years of the pilot phase, the Coffee Board intends to open 50 franchises of India Coffee House on lease. It will also open some outlets at Coffee Board-owned locations.
"Both companies agreed to the same upset price (franchisee fee). Since the tender provides for multiple franchising, we will split the locations," said Krishna. Currently, the board is looking at locations such as IIT, Chennai and IIM, Bangalore, to expand India Coffee House's footprint.
Under the franchisee model, Afoozo and CCD will be permitted to use the Coffee Board's 'India Coffee House' brand name and its trademark. They will also be provided with a complete business system, including branding and communication guidelines. However, no sub-franchising will be allowed according to the terms of the contract. Moving away from the revenue-sharing model, the selected franchisee will follow a 'per location' paying model for an initial period of three years. Further extension can happen on a price mutually agreeable to both parties.
While private companies will run the outlets, the Coffee Board will prescribe product pricing. With the board already fixing the maximum retail sale prices of products as part of the bidding contract, the franchisees will not be at liberty to increase pricing. A 100 ml of Arabica coffee sold at Rs 100 at other coffee shops will be priced at Rs 30, while a mini coffee of 60 ml will be priced at Rs 25.
"People remember India Coffee House for the quality of food and its affordable pricing. We now want to turn it into a business version of CCD," said Krishna .
The board has roped in McCann ad agency to provide a brand facelift and has also mandated a two-year digital campaign starting around Diwali. The contract is likely to be signed soon.