This case study is intended to help students to: analyze the causes of the organizational crisis at Café Coffee Day (CCD); recognize the elements of a successful turnaround; evaluate the strategies adopted by Malavika Hegde in turning around CCD; analyze the role of a leader in changing the fortunes of a company; and explore additional measures Hegde should take to boost CCD’s revenues and regain investor confidence.
The case captures how Malavika Hegde (Hegde), CEO of Café Coffee Day (CCD), is leading the turnaround of one of India’s leading coffee chains amidst significant headwinds and challenging market conditions. After the sudden death of her husband, V.G. Siddhartha, the founder of CCD, Hegde was thrust into a leadership role during a time of crisis for the company. The company faced a significant decline in performance and was confronted with severe financial distress and mounting debt. As of March 31, 2019, CCD was in debt to the tune of INR 70bn. Despite multiple obstacles, she managed to stabilize the company and chart a course for growth. The case explores the role played by Hegde in steering the company through significant challenges, including financial distress and market competition. She demonstrated exceptional resilience and determination, battling a massive debt crisis and public scrutiny. Within a year, she had reduced the debt by half. She stabilized the company by reducing debt, improving revenues and cutting costs. Instead of raising prices and initiating layoffs, she sold off non-essential assets, renegotiated debt with creditors, shut down failing businesses, downsized CCD store count and streamline its operations, introduced new products, digitalized the services and prioritized employee welfare and customer loyalty. Under her leadership, CCD reduced its debt significantly from INR 72bn in 2019 to INR 4.65bn in 2023, showcasing her financial acumen and strategic thinking. Yet, she had a number of challenges moving forward. These included intense competition, managing debt, fighting legal proceedings, maintaining the company’s financial health, adapting to shifting consumer preferences and, ultimately, achieving sustained profitability. The turnaround efforts have yielded mixed results. Though CCD’s financial position has improved, the road to full recovery remains challenging. The coffee chain faces significant hurdles due to growing competition and changing consumer preferences. It remains to be seen whether Hegde can successfully steer CCD toward profitability and ensure that the company maintains its competitive edge in the rapidly evolving Indian coffeehouse industry.
MBA/MS-level and is designed to be a part of the Business Strategy/Leadership curriculum.
Teaching notes are available for educators only.
CSS 11: Strategy.
