Coffee Planet — SME Case Study (UAE)

Coffee Planet (Figure 2) is a food chain of street food restaurants that serve Mediterranean food. In 2005, it was established in Abu Dhabi by Kashif Anwar. Its first ever outlet also opened up in Abu Dhabi. As of now, there are 46 Coffee Planet stores in 11 nations. His dream came true when a few Arab investors helped him. Coffee Planet was assured of the growth as the demand was beyond every expectation. The newer Figure 2: Coffee Panet Logo Coffee Planet markets were regarded for expansion. By considering existing economic conditions along with market stability, Coffee Planet made considerable growth in the market.

The company has been capable of entering the coffee industry, which is very competitive, with a huge force as it is regarded as being the new commodity that is introduced within a market. Coffee Planet turned out to be increasingly popular among the locals along with the expatriates of the United Arab Emirates because of the brilliantly delicious coffee and food products. It is among the fastest growing chains of coffee shops in the United Arab Emirates. Coffee Planet is known for having represented the cultural heritage of the United Arab Emirates via its good customer relations, hospitality services, and its coffee and food products.

The mission of Coffee Planet is to provide its consumers with the finest roasted Arabica coffee, perfectly delivered all the time.

Vision Coffee Planet wants to cater to the increasing number of consumers with the 3600 approach to the coffee solutions in the food industry.

Organizational Structure

Coffee Planet has the divisional organizational structure.

Theoretically, within the divisional organizational structure, Coffee Planet has divided into different aspects, which are provided responsibilities on the basis of the requirements of operations. Every division is handling a certain area of operation or a set of strategic objectives.

Among the aims of the divisional organizational structure is supporting the organizational flexibility and autonomy to satisfy the needs of the business in various markets and aspects of the organization. The organizational structure of Coffee Planet has performance-based divisions and function-based groups. Every group is under leadership of senior managers or corporate executives. The functional organizational structure has enabled the Coffee Planet to address fundamental functions within its business.

The groups might be changed as there is a change in its target market and as it grows. The mixture of the local market likewise shows the huge chunk of the revenue of the company. The international markets contribute to the small minority of the revenues of Coffee Planet, although those markets present huge potential for the growth of business on the basis of quick economic development.

BOOK KEEPER Asst. Manager Staff GENERAL MANAGER (Server, Host) Staff (bartenders Barbacks) Staff (Line Cooks Dishes) Asst. Manager Kitchen Manager Figure 3: Leadership of Coffee Planet As mentioned earlier, the Coffee Planet Coffee chain was founded by Kashif Anwar, who was a student at United Arab Emirates University. Apart from her, the other founder and managing director of the Coffee Planet is Robert Jones, who was capable of establishing this business in the United Arab Emirates. They both completed their studies and then opened their restaurant, which is now known around the world. They both are the founders and the managing directors of the company and no other individuals have been given a similar post in the company. They have employed various managers to manage every branch and employees that run their restaurants, but no one has been given executive positions in the company.

The COVID-19 pandemic has affected almost every business in the past year, including the coffee industry.

This is because coffee restaurants were closed and only take away and delivery were allowed. Even though the restaurants have been closed during the lockdowns in this pandemic, Coffee Planet has been doing really well in terms of sales. Its sales have been good because of the takeaways and delivery of food. There has been a decrease in the number of sales of Coffee Planet; however, it managed to maintain its competitive edge in the market and due to its fresh food and quick delivery, the people stuck at home preferred ordering it from home, rather than going out and getting exactly the same thing. There has not been a lot of restructuring done to Coffee Planet during this pandemic, because it had only closed its dine-ins, but delivery and takeaway services were still available to consumers.

Coffee Planet sells sweet and delicious coffee, whose beans are brought from different parts of the world. Due to these ingredients, coffee is a healthy beverage. The coffee can likewise be served with various food items such as sweets, cakes, sandwiches, etc. It serves every product that can be found in a coffee shop, including different types of coffee, tea, hot chocolates, snacks, desserts, cakes, etc.

The business strategy of Coffee Planet uses the mixture of the global and local expansion strategies and leadership. It also uses licensing and franchising to a great extent in its business strategy. In addition, the standardization of services and products is a cornerstone of the business strategy of Coffee Planet.

It uses a uniform menu, which is a favorite among its consumers. It is significant to notice that apart from service and product standardization, Coffee Planet considers the traditional preferences and tastes, while developing its menu. The business strategy of Coffee Planet has earned its competitive advantage in the market. This has been possible because of the cheap prices, fresh coffee, taste universality and remaining true to the format of coffee. Its business strategy involves focusing on the traditional food, which earned a huge market share as well as a competitive edge in the market against the international coffee chains.

Who are we?

Business Strategy w h e r e a r e w e n o w ?

W h e r e o w e w a n t t o t o g o ?

H o w w w e k n o w w h e n w e h a e a rr e ?

H o w o w e pl a n t o g e t t h e r e ?

Figure 4: Business Strategy of Coffee Planet Operating Strategy The operating strategy plays a significant role in accomplishing the organizational objectives of the Coffee Planet. By utilizing and implementing these strategies, Coffee Planet maintains and controls each one of its operations. The operating strategy of the Coffee Planet is made by the top management of the company. The operating strategies are applied in every branch of Coffee Planet around the world and these operating strategies are distributed to each one of its branches. Therefore, the company has hired an operations manager for every branch, who controls each activity of operations.

The operating strategy of Coffee Planet emphasizes customer satisfaction and customer importance. The company uses efficient ways of preparing food so that it does not waste any food during preparation. This has enabled the company to be cost efficient and these are the strategies that were implemented successfully to maintain quality of services and products for the consumers. Coffee Planet uses cost leadership and differentiation for improving overall growth of the company. The company aims at maintaining a required level of health quotient and quality of its food products and services. Consequently, the company believes to differentiate itself and its products from others.

Coffee Planet tests its coffee and food items in the United Arab Emirates. That has the multicultural population for avoiding failure within new markets. The market research gives valuable insights, which enable a company to differentiate its products using innovation. Its marketing strategy is effective since it enables it to interact with and involve consumers within its product development, which results in development of its products, which meet the expectations of the customers. Coffee Planet promotes sustainability through support to its franchises.

It provides marketing services for improving sales of franchises. Coffee Planet offers a simple menu, which does not require many alterations. It uses demographic segmentation considering age as a parameter. It has created a marketing strategy that allows the needs of its main market to be met. Coffee Planet considers customer satisfaction as its main objective as a business, and this is what is defined in its marketing strategy. Coffee Planet is consistently attempting to initiate marketing strategy innovation by making catchy slogans, various innovative food products and various technological developments, which assist the company to maintain its uniqueness where its food products and traditional coffee chain is concerned. It promises to give the best quality and healthiest food items to its consumers and to make that happen, it implements various innovative marketing strategies for enabling its consumers into customizing items on the menu, which provide a huge number of choices as well as options to consumers. It also thinks of attracting customers from different ethnic backgrounds and cultures, which leads to consistent modification of food products by bringing in new food items and flavored spices, but it doesn’t make any major changes to the menu.

PRICE PLACE PROMOTION PRODUCT TARGET MARKET Figure 5: Marketing Mix of Coffee Planet

There are a number of business challenges that are likely being faced by Coffee Planet. Firstly, Coffee Planet is probably going to lose its competitive edge because of the imitation of strategy. This challenge arises because it has been realized by the mainstream coffee chains that nutritious and safe food is the future. For example, Gourmet Burger Kitchen and Burger Fuel have already moved to selling nutritious meals. Since more companies are adopting the premium positioning strategy, it would be hard for Coffee Planet to differentiate its products on the basis of quality. Secondly, Coffee Planet might not experience any growth in the days to come. This challenge is attributed to the focused strategy implemented by Coffee Planet. In the future, the vegetarian food market would get saturated because numerous coffee chains would join it to increase revenue. This would result in an increase in competition, which would restrict growth of profits and revenues. Thirdly, in the future, operating costs might increase, which might be due to product customization among others. The cost efficiency could not be achieved in case its products are being regularly modified, which requires a lot of investment. The marketing strategy of the company requires investment for popularizing new products, which increases the operational costs.

Solutions Coffee Planet must embrace the hybrid instead of focused differentiation strategy. The hybrid strategy incorporates maintaining a high quality via differentiation and decreasing operational costs so as to charge affordable prices. This would enable the company to overcome its competition from the companies that are capable of providing nutritious food at lower costs.

The company should likewise exploit the new market segments for enhancing its profits and revenues. Coffee Planet can still sustain its brand image through the provision of nutritious and high quality dairy and poultry products for serving consumers who aren’t interested in drinking vegetarian coffee. In general, the use of new market segments would allow Coffee Planet to increase its product line. Consequently, it would serve a lot more consumers as well as increase its share in the market. In addition, Coffee Planet must aim to join the emerging markets in Africa, South America, and Asia instead of the developed countries like the United Kingdom and the United States of America. The developed nations are already home to the biggest coffee chains of the world, having customer loyalty and a strong brand image.

Moreover, the coffee industry within the developed nations experiences slow growth because of the poor recovery of the economy. The emerging markets like China, Russia, Pakistan, and South Africa have low competition as well as huge demand for coffee. Hence, they provide many growth opportunities.

Successful Best Practices

The first best practice of Coffee Planet is that it has stayed committed to its menu. It has kept its coffees as its main thing and focused on it. It did not lose focus from its main item and move on to others. It treats consumers as family and serves them with a lot of respect and care. Due to this, the company has gained a strong customer base.

From the start, the company has focused at providing healthy and nutritious food to its consumers, because it carea about the health of the consumers. Even though it was a small venture surrounded by big and competitive players in the market, it has expanded to other locations to gain market share and give competition to the other coffee chains. They have built a strong team, which has contributed to great success of the company. Apart from that, the company cares about the community as well, that is why it gives university scholarships to deserving candidates, so that they can get quality education, without worrying about anything.

In my point of view, the main failure of the Coffee Planet is that it has not been capable of reaching its full potential.

The company would have grown even more. Before expanding to other countries, it should have focused on gaining more market share in the United Arab Emirates.

It should have opened its franchises at more locations around the United Arab Emirates.

As compared to when Coffee Planet was established in 2007, the company can be considered as among the quickest growing coffee companies in the international coffee market. At first, there was only one outlet of Coffee Planet in Abu Dhabi, but now it is operating in 18 different countries around the world. There are 52 restaurants of Coffee Planet and around 700 franchises selling its products around the world. Coffee Planet has come a long way since 2007 and it has shown a quick growth as compared to any other coffee chain around the world. However, the company has stuck to its menu all this time, apart from some minor changes as per the region it is serving in. The company is fulfilling its vision of becoming the greatest coffee franchise of the region, but there is still a long way to go for Coffee Planet to become the biggest coffee chain in the whole world.

Coffee Planet should target the developing countries, because in those countries, the operational cost for the company would be low as compared to the other developed countries. The expansion to South Asia, Africa, and South American countries would be very beneficial for Coffee Planet. This is because these emerging economies are in need of coffee chains like this. The market in these countries is not yet saturated, which would provide Coffee Planet an opportunity of growing quickly. It has a healthy menu, which can become a source of attraction in these countries, where such healthy coffee has not yet been introduced. The company can use franchising approaches in these countries to expand as well as help them grow. Other foreign countries with different ethnic backgrounds are open to trying out newer things with an open-minded nature that provides the company the opportunity to gain their attention at an alarming rate.

Lesson Learned The case study of Coffee Planet provides a series of

lessons including

¡ A company can start from zero and in a matter of time, it can experience huge growth and reach a global level.

¡ A company should remain dedicated to its core values and no matter what, it should not go against them, as Coffee Planet remained loyal to its menu and did not make alterations that can deviate it from its core objectives.

¡ The coffee industry is a very competitive one for the new entrants.

¡ Introducing a new idea would be more beneficial than copying existing ones.

¡ The business strategy of a company is the core of the company.

In conclusion, Coffee Planet has experienced a quick growth in the past two decades and it is still not slowing down, as it is opening new stores in different countries around the world. This accomplishment is attributed to its business and operating strategy, which includes effective strategies to operate on a day-to-day basis.

The company has expanded to other countries as well, which proved to be very successful for Coffee Planet. The company has been focusing more on providing a healthy and nutritious meal to its consumers, which has been the main reason behind its success in the United Arab Emirates as well as other countries. There are numerous business challenges, which the company would have faced and will face, but through effective strategies, it can tackle all of them and move on with it smoothly.

However, the company should embrace the hybrid strategy, which aims at enhancing quality of product and decreasing the operational costs for improving its competitiveness in every market around the world. It must likewise consider serving the newer markets for increasing its reach as well as for increasing its revenues.