Hatti Kaapi: cheering cuppa

Hatti Kaapi, which sells about 70,000 cups of conventional filter coffee every day, is busy finalising its retail expansion.

Undeterred by the entry of large multinational chains, the Bangalore-based start-up is slowly and surely expanding, one store at a time.

The promoter of the company, US Mahendar, started out as a coffee farm-gate trader and then worked in a coffee-powder manufacturing unit in his hometown Hassan, in Karnataka, before starting Hatti Kaapi.

It all began in 2009, in a 30 sq ft space below the staircase of a building in Gandhi Bazzar in Basavangudi, Bangalore “with an initial investment of ₹1 lakh”.

“The stupendous and overwhelming response by customers, who were satisfied with the taste and quality, propelled us to expand in the city,” says Mahendar. The focus soon shifted to corporate campuses such as Infosys, Wipro, Deloitte, Cisco and subsequently to the Bangalore and Hyderabad airports. The company also has associations with commercial organisations such as the Landmark Group (Auchan hyper market) and Carrefour. “We have clocked ₹2 crore in revenues,” he says.

Hatti Kaapi sells filter coffee at 25 outlets and employs about 120 people. It plans to open five more outlets shortly. The vision is to promote South India’s traditional filter coffee and make Hatti Kaapi an established brand.

“Our focus is to promote filter coffee in neighbourhoods, and at the same time make coffee affordable for people at the bottom of the pyramid,” he says. Hatti Kaapi sells a cup of coffee at ₹8 in corporate campuses such as Infosys, ₹10 in malls and ₹15 at its airport outlets.

As for funding and investment, Mahendar is prudent. “At the moment, we have no plans to raise money externally or to dilute our stake. We are comfortable with bank funding. For our retail expansion, we needed ₹1.5 crore; Indian Overseas Bank has given us 30 per cent and the balance is through internal accruals,” says Mahendar.

“Sustaining at this low price point is the biggest challenge for us,” he adds. “We have raised prices only once since we commenced business five years ago, by ₹3 per cup in corporate campuses and ₹5 in commercial places.”

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