Café Coffee Day (CCD) CEO Malavika Hegde has been both praised and slammed over the company’s slow growth of Rs 250 crore in FY21 and FY22. Some call her farsighted, determined, and resilient, while others criticize her approach as the CEO.
Once India’s leading coffee chain, Cafe Coffee Day, faced its biggest challenge when its founder and the then Managing Director, V.G. Siddhartha, tragically passed away in 2019. Several marketing pundits anticipated an exit from the market following the staggering debts and lack of prominent leadership. Most thought the corporation would not manage to recover from its existing condition.
CCD founder’s Tragic Demise
Siddhartha committed suicide by jumping off to the Netravat River near Mangalore. According to a typewritten note, reportedly found after his demise, Siddhartha took this extreme step following his overwhelming debts and his failure to create the “right profitable business model.” He also shared that the extreme pressure from the lenders, private equity partners, and the harassment from the Income Tax Department had made his life unbearable. He expressed his grievances by saying that his intention was “never to cheat or mislead anybody, I have failed as an entrepreneur.”
Malavika Takes Charge as CCD CEO
Without leaving much room for speculation regarding the company leadership, Malavika Hegde, the widow of Siddhartha, addressed all realities and showed radical honesty by taking charge of the sinking ship in December 2020. She is the daughter of the former Chief Minister of Kerala SM Krishna. She has a degree in engineering and has been associated with the coffee business since 2008. She was appointed as a non-executive director of the company in 2013.
Malvika took office at the most unprecedented time, burdened with the multiple responsibilities to take the company out of the debt mountain of whooping Rs 7000 crore, make the company profitable, and retain the trust of her employees.
However, as a thoughtful leader, Malavika issued a letter to her 25,000 employees to win their trust, to assure them of her commitment to the future of the company, and to assure them that the Coffee Day story was “worth preserving”. She also communicated in the letter assuring that she would significantly reduce the company's debts to a manageable level by selling a few more investments and assets.
Malavika took a courageous approach to save her company from the verge of bankruptcy. She decided to:
Positive Outcomes of Malavika’s Approach
Fast forward three years since taking office, Malavika’s resilience, determination, and leadership have driven CCD towards the light and instilled in employees’ and investors’ confidence. The company’s overall debt has been reduced by over Rs 6,000 crore, with the current debt standing at Rs 465.25 as of March 31, 2023. Following the reduction of debts, CCD stock soared by 56% on January 14, 2023. Once the sinking ship, now has been profitable for the last two consecutive years, with a net profit of Rs 100 crore and Rs 125 crore in 2021 and 2022 respectively. As compared to Rs 2,000 crore in 2020, the revenue has also increased by Rs 250 crore, making it to Rs 2,250 in 2023.
Criticisms of Malavika
However, Malavika’s success in turning CCD into a profitable venture came with its fair share of criticisms as well. She has been blamed by some marketing experts for focusing more on debt reductions and not on growth. According to reports, CCD had 1,752 outlets in FY19, but the figures drastically dropped to just 469 outlets across the country in FY23.
CCD has also experienced stark competition in the market from competitors like Starbucks, Barista, and Costa Coffee among others, leading to a substantial decrease in the market share by 7% with the current share reduced to 18%.
Malavika has also been criticized for not being innovative enough. She has been accused of being slow to introduce new products and services, and her branding has been said to be backdated as well. Some experts, who are still doubtful regarding her leadership qualities, commented that she is still far away from making CCD a sustainable company.
Current Market Strength
Currently, CCD owns 572 cafes along with 332 CCD Value Express kiosks spread out over the nation. It is a “substantial business” with more than 36,000 vending machines providing coffee to CCD customers.
Malavika, so far, has been an example of strategic leadership. Moving on from her loss, she has dedicated her efforts to fulfilling her husband’s vision. It is too early to comment on how they will behave in the future, but for now, it can be assured that, against all odds, CCD is not going to exit.
How did Malavika Hegde try to overcome the heavy debt amount?
Malavika took a courageous approach to save her company from the verge of bankruptcy. She decided to cut costs, improve operational efficiency, diversify revenue streams, and renegotiate company debts.
How many cafes and kiosks does CCD own in India?
CCD owns 572 cafes along with 332 CCD Value Express kiosks spread out over the nation.
How much debt does CCD have at present?
The company’s overall debt has been reduced by over Rs 6,000 crore, with the current debt standing at Rs 465.25 as of March 31, 2023.
Who are the competitors of CCD?
A few cafe coffee day competitors are Starbucks, Costa Coffee, and Barista.