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Barista to invest Rs 250 cr

12-June-2004
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Barista to invest Rs 250 cr

Coffee retail chain Barista Coffee Company Ltd plans to invest Rs 250 crore over a period of next three years in its operations. The company will drive this expansion now by franchisees. Of the total investment, Rs 200 crore will be raised through franchisees while the rest Rs 50 crore would be invested by the company, Barista Coffee Company’s director-strategy TV Krishnamurthy told FE.

Barista—under the new ownership of the Sterling Group which bought a 65.4 per cent equity stake in the chain from the Turner Morrison group—has already invested Rs 8 crore in the last two months towards streamlining and plugging the ‘quality’ gaps in the retail chain.

“We are currently investing in areas wherever quality issues exist and gaps need to be plugged,” Mr Krishnamurthy said. Towards that the company has started replacing old coffee machines with new ones at some outlets, has reworked its menu and introduced new beverages including imported ones. “We have introduced the latest machines and have imported a new Swiss chocolate drink,” Mr Krishnamurthy said.

The coffee retail chain which has, of late, been struggling with quality issues, has—post Sterling takeover—taken a strategic decision to focus on ‘food’ so as to arrest falling footfalls and traffic in ‘day-time’ and a fast-track focus on franchising to drive expansion in new markets as well as existing markets.

Meanwhile, Barista hopes to kick off its first franchisee operation by August 2004. Initially, the chain plans to focus on the North and the West first, and then move on to other regions. Though the company is yet to finalise its franchisee model, it has however shortlisted two models so far.

According to Mr Krishnamurthy, one of the options Barista is mulling is to appoint individual franchisees who can invest upto Rs 20 lakh per outlet, while the other option is to look at a regional/territory or a master franchisee who can raise an investment of Rs 12 crore and be responsible for about 50 stores in one region or a territory.

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