Barista Lavazza wants a place of its own

Barista Coffee Company, post its integration with Italian coffee roaster Lavazza, is exploring opportunities to own premises for its coffee outlets. At present, all the 230 Barista Lavazza outlets across India are company owned but on rented premises.

It is actively scouting for such properties on the highways for a start, and is also open to own outlets in high street locations. Sanjay Coutinho, COO, Barista Lavazza, told DNA Money, “If the proposition is good, we don’t mind buying the premises. We haven’t yet found such a location but are currently exploring a few opportunities.”

Coutinho said it made sense to own the property on which the company wanted to set up a cafe outlet since a realty owner could suddenly double the rentals making the business unviable.

“On the other hand, the profit & loss account could show notional rentals which will decrease to negligible levels over time, while in the balance sheet the value of the property will increase,” he said.

Barista Lavazza, which plans to open 300 new stores over the next three years, will invest Rs 40 crore per year in setting up new stores and Rs 5 crore in refurbishing the existing ones.

The coffee chain has no plans at present to adopt a franchisee model for its new stores since, according to Coutinho, the Indian market is not ready for it. “We fear that the franchisee would be focused on profit and may cut corners, which could lead to brand dilution,” he said.

Of the current 230 stores, 15 are Creme and the rest Barista Espresso bars. It plans to add 100 new stores in the current fiscal, of which 10 each would be highway and Crème stores and the rest Espresso.

For highway stores, plans are afoot to dot the expressways with two on either side. While one outlet on the Bangalore-Mysore highway has already been set up, another will be launched on September 15 on the New-Delhi-Chandigarh highway at Murthal.

Talks are on with Reliance for setting up highway stores in the former’s A1 Plazas.Barista Lavazza is targeting a 25% increase on its 2008-09 turnover of Rs 150 crore in 2009-10.
Barista was bought by Lavazza, the sixth-largest coffee roaster in the world, in 2007.