CCD starts giving out outlets as co-working spaces: Is the model scalable?

Café Coffee Day (CCD) recently announced its partnership with asset-light co-working platform myHQ to provide its spaces as workspaces during certain slots. But is this alliance signaling something more than just capitalising on each other’s resources? 

Though the trend of millennials working out of cafes is itself not new, CCD, which incidentally has the widest footprint among coffee shops in the country, is one of the first to make it more formal. Despite the humble beginnings of this experiment (they have opened up 10 out of their 1,752 cafes for those who book through the myHQ app), both sides say this is an area that is set to grow. 

“The role of the cafes has evolved over the time. We foresee an opportunity of another occasion with the rise of convenient, comfortable, flexi co-working spaces with the new age economy. Our strong network pan India promises great accessibility and can be a great choice for informal flexi working spaces,” says Suneet Yadav, president, marketing, CCD. He adds that the company will “assess all other potential relevant avenues to build on flexi co-working spaces at Cafe Coffee Day.” 

Vinayak Agarawal, one of the co-founders of myHQ — which exclusively focuses on spaces such as pubs and cafes which has unused inventory and converts them into exclusive work zones — says by working on a revenue sharing model, they help the supply partners in many ways. This includes increasing their occupancy during off-peak hours, generate additional revenues and build a long-term customer base. 

Agarawal adds that myHQ aims to aim to contribute to the profits of the space that they expect to go up because of the footfall they bring. “We will try to generate a revenue of about Rs 60,000-1 lakh at each outlet every month within two to three months of going live with an outlet. Since the space already has an operational cost (with or without the partnership), the additional revenue generated from coworking directly impacts the bottom line/profits.” 

Experts agree that optimising real-estate via the co-working route is a good strategy for any restaurant or café as this means maximum utilisation of existing resources with an aggressively creative twist. They also say that it is an imperative now for some as “rising real estate rentals, diminishing brand-loyalty among millennials and rising operating costs in metros have been brewing trouble for innumerable cafes operating all across India.” 

While CCD itself wasn’t very forthcoming about the long-term strategy, Anuj Kejriwal, MD & CEO, Anarock, believes that competition could have something to do with the move. “For instance, rentals — as a percentage of operating costs — have more than doubled in the last few years eating away almost 15-20 per cent of their overall revenue on an average — in prime locales, they can go as high as 25 per cent. To make matters worse, rise of tea bars such as Chai Point and Chaayos are also eating into the traditional coffee-led café segment.” 

But why aren’t others trying to enter the space? The question is best addressed to someone who is a bit of a veteran in this doubling up game: Riyaz Amlani, the CEO and MD of Impresario Entertainment & Hospitality, which has a host of brands under its umbrella including Social which has been offering co-working seats for nearly the past five and a half years. And his reply has the term “ecosystem” as the operative word. 

“It’s not that simple that one says that ‘well I have a café and fast internet, you come here and work’. One has to create value for it even beyond the infrastructure, you have to be able to create an ecosystem: Say, a writer wants to meet a photographer, you are able connect them both, organise workshops, mentorship sessions. It needs an incubator kind of a vibe.” 

Morning Fresh, Boat, Under 25, IVM Podcasts, BingeDaily and Urban Clap — these are some of the brands which had their beginnings in one of the Social outlets. And as he digs into the past, Amlani he also answers some questions on the beginning of the trend – at least in India. 

“So, earlier people used to use cafes for meetings and slowly they started lingering around after their meetings, some of them would sit with their laptops and start working. So this is a trend that we were seeing any which way. But there was always this sense of awkwardness, unease that ‘am I occupying space. Should I order one more coffee’,” he says. 

“We always saw the potential that cafes could double up as work spaces and all we did was to make it official. We told those interested that we would provide them high-speed internet, printers, scanners, meeting rooms,” he adds. Today, 6,000 people using Social Works as their work space, says the company. 

On the trend itself he says that start-ups with a head count of around five to six use these spaces and once the headcount goes up, they move to more formalised spaces or take up their own offices. Anarock’s Kejriwal also acknowledges the roles of these cafes as enablers for the likes of WeWorks and CoWrks, the dedicated co-working platforms. He, also talks about the challenges in the conversion of cafes into workplaces even during several hours of the day. 

Agarawal from myHQ, says they also have a tie up with cafe partners include Socials, IHOP, The Beer Café, FLYP Café, Zorambo, Stop my Starvation, etc but a big player such as CCD with its wide footprint and brand presence will also help elevate “the cafe-culture that contributed to the widespread work-cafe phenomenon today". 

Apart from infrastructure, how can a cafe which has taken a plunge into formalising the co-working arrangments scale up operations? Pinakiranjan Mishra, partner and leader, consumer products and retail for EY India, says that first of all it has to identify the right sets of outlets which are big enough to absorb the footfall. "Because you have to ensure that the core crowd which is coming for leisure or chit chat doesn't get impacted by the official crowd. Because if they find the tables gone often, they might look for other options. However, data can play a role here by predicting the footfall. Second, they can carve out designated zones like some chains are doing for birthday parties etc." 

Kejriwal lists some challenges also in achieving the transition at scale. “For many cafes, transforming into co-working hubs will require additional space – and scaling up is not always feasible. The success of this new formula also depends on the location of the property. which must be prime. Then there will be challenges of investments in swankiness, parking issues, the hassles of getting additional permits for co-working etc.” 

Sip & work

• Appreciating rentals and tea chains eating into the coffee-led segments have also led players to look for newer avenues for optimisation and revenues

• After scaling up, most founders move to formal co-working providers or take proper offices but do keep coming back to stay in touch with the community, that sparks a chain reaction