Hot business: Tapping beans for a tasty profit

LAHORE: Considered as “fuel” in their daily routine, coffee has become the way of life for many in Pakistan. The rapidly expanding coffee culture has paved the way for various foreign and local coffee shops to invest and take advantage of this lucrative market.

Coffee shops and cafes have now become a common feature of the country’s urban centres and are the preferred “hangouts”.

While the market has been ripe for investment, increased competition also means businesses need to maintain their quality to retain the customers.

Coffee Planet Chief Executive Officer Kashif Anwar has been part of this sector for the last two years but still struggles for profits. The reason is not low sales or lack of investment.

“Majority are not aware of what high-quality coffee tastes like,” Anwar said. “There are several global standards that need to be followed.”

Coffee Planet – a franchise of Dubai-based Roaster – started its operation in Pakistan in 2012. The Pakistani chain is operating under the cover of FAS corporations and has invested around Rs70 million for its 4 outlets – two in Lahore and two in Islamabad – to date.

According to Anwar, majority of the coffee outlets in the country fail to acknowledge the various types of coffees. “People stick to a couple of types and know relatively little about the wide range available.”

To run the business more efficiently, coffee shops have to offer other beverage categories, snacks and other food items. “Coffee shops are rapidly growing but the actual coffee culture will take time to form a consumer base.”

The sales of such coffee shops, according to an estimate, are growing in between 20-26% annually. The surprising bit is actual coffee sales constitute less than 50% of the total. Anwar said Coffee Planet witnesses the same trend.

Anwar has to follow specific standards of their parent company, adding that it pushes their cost higher than their competitors as he pinpointed a reason behind the lack of huge profits.

Anwar said the machinery is costly and skilled labour is hard to find. “We have to take the help of foreigners to train our local staff to provide a unique taste in all of our products,” Anwar said.

But despite the low profits, the future strategy Anwar has is quite aggressive. They are looking to launch two more shops in Lahore and Islamabad, whereas another eight coffee shops are planned in other cities. The approximate cost of a coffee shop, according to Anwar, is Rs15 million.

the writer is a staff correspodent