c
 


  
 
Group ʹ B04
Y

YY
Barista, after several changes in the ownership structure and high attrition at the top level, is facing
a variety of issues. In light of increasing competition from players such as Cafe Coffee Day and
possible entry of Starbucks, it needs to decide upon its pricing strategy and product mix. It also
needs to decide whether to choose company-owned outlets or adopt the farnchisee route for
expansion apart from deciding on the overseas expansion strategy

 Y
Y
Barista offers not just a product but a complete coffee experience and has positioned itself as a fine
cafe .

Y
 Professionals, working couples, affluent students and families in SEC A and SEC B.
For its target segment, Barista offers:
÷Y A good ambience where they can socialize
÷Y A place at a prime location where they can relax away from the crowd
÷Y A place offering high quality beverages and food accompaniments

Barista͛s product mix constitutes a wide range of products that appeal primarily to traditional coffee
lovers. Food items like cakes, rolls and sandwiches are complimentary to their liquid products, and
project a very classic image of Barista. This product mix should not be changed as it does not collide
with food outlets like Mc Donald͛s and coffee bars and hence we would not lose the exclusivity.

Barista is currently charging higher than its current competitors such as Café Coffee Day. But now
the competition has increased greatly and in order to attract large numbers, it is imperative to make
the menu affordable. Reducing the prices of the products will increase the volumes and the benefit
of economies of scale will come in as a result of increased volumes. Y

Barista should adopt a franchisee route for expansion, setting up Espresso Bars in smaller towns. The
rationale behind this is that it would save significant amount of investments in new outlets and the
real estate. It would also lead to low operational cost. However, Barista͛s total borrowings have gone
up from Rs 5.71 crores to Rs 30.68 crores and cash profits gone down from -4.57 crores to ʹ14.77
crores from 2002 to 2003 and so investment for expansion will increase the financial crunch.Y

Barista should build its presence in tier 2 cities and try to cash in on the middle class income families.
Since Starbucks will target customers in the high-end segment, there is a possibility of losing market
share and thus increasing customer loyalty should be our prime focus. As of today, Barista exists in
over 17 cities, and operates over 100 outlets nationally and with outlets in Sri Lanka and UAE, it
should delay the plans for overseas expansion.

Y
Y
Y
Y
Y
Y
 c
  
  
 
Group ʹ B04
Y
Y

 Y
Y

Y 

Y
Strong brand image High price
Excellent Human Resource High attrition rate in top-level management
Ambience and Decor

 Y 
Y
Expand to other countries Coffee houses such as Coffee Cafe Day
Expand to other cities in India Possible entry of Starbucks
Y
Y
Y
Y
Y


 
Y
Y
÷Y Make the price competitive with Coffee Cafe Day
÷Y Do not change the product mix
÷Y Adopt franchisee route for expansion.
÷Y Set some standards regarding location, interiors etc so that brand is not diluted and the whole
Barista experience remains same
÷Y Launch a compulsory training program for the employees of the franchisee so that the quality
across its outlet remains consistent
÷Y Try to grow its existing joint venture in Sri Lanka and Dubai but put further plans for
international expansion on hold.
÷Y