This is one huge news: Indian hotel chain, OYO Homes & Hotels, is looking to buy a stake in the Indian coffee chain, Cafe Coffee Day. In this venture, OYO has teamed up with British private equity firm Apax Partners.
CCD, a popular coffee brand amongst young and old alike, has recently been through a lot, and we think that this move by OYO might bring back its old glory.
Why is OYO planning to buy a stake in the coffee outlet chain? Let’s find out!
OYO And Apax To Buy Stake In CCD
As per reports, OYO and APAX have already signed nondisclosure agreements (NDAs) with CCD’s registered firm, Coffee Day Enterprises Limited (CDEL), and are discussing buying a stake in CCD. In addition to OYO and Apax, KKR, TPG Capital and Bain Capital have also signed agreements with CDEL and are looking to buy CCD.
Sources close to the development have revealed that all the bids are being gauged and CDEL’s board has already started negotiating with a minimum of two of the bidders, “There have been five bids and all are being evaluated, but we will get some clarity only after a few days. There is a lot to consider for the company (CDEL) as all these people (potential investors) have different plans for CCD.”
Some major players were approached by CDEL, but they have not shown any interest in participating in the bidding. Tata Group, which operates the Starbucks franchise in India, the Jatia family, which runs the McDonald’s chain in west and south India, Coca-Cola, which runs the Costa Coffee brand, and ITC have preferred to not participate in the bidding.
CCD had to shut down 500 outlets since April, which was followed by the untimely loss of their founder, V.G. Siddhartha, and this is estimated to boost the divestment efforts that the coffee outlet has been attempting.
Here’s How OYO Plans To Disrupt The Food Industry By Buying CCD
OYO plans to expand the cafe business for a while, and that CCD is a recognized name in India with outlets in more than 200 cities of India will definitely do a lot for OYO’s plans for the coffee outlet.
As per sources, OYO might be segregating 1600 outlets of CCD in different categories, “Those in prime locations could have one brand name, while those in the smaller towns could be re-branded ‘CCD Lite’ or something similar.”
Among all the bidders, OYO is the only which has its presence in the food industry. It was in August 2019 that OYO had unveiled its own coffee chain, The French Press, and OYO also runs two cloud kitchens, Adraq and O’Biryani. After this, OYO wanting to expand its business in the food industry, especially in coffee comes as no surprise.
However, OYO has recently reported a loss of Rs 2384 crore, or Rs 6.5 crore per day. Moreover, in the last seven months, more than 500 hotels across 100 cities have quit Oyo Rooms, citing the deep discounts that the startup offers. Given the way OYO is facing losses in its own vertical, we hope that this investment would turn out to be better for the hotel chain.