Night Economy Businesses

A snazzy Café Coffee Day (CCD) outlet, something one would typically associate with upwardly-mobile, urban India on the trek up to Vaishno Devi, at the Katra base camp 13 kilometers from the shrine. First-time pilgrims might be surprised by a sight quite removed from the austerity that surrounds any pilgrimage. It is even more surprising is the fact that this CCD outlet is open even in the dead of night, catering to scores of devotees thronging to the shrine.

Katra is not the only place where CCD runs an all-night operation since starting its 24×7 initiative about two and-a-half years ago, 49 of its 575 outlets operate round the clock. Nor is CCD the only brand burning the midnight oil. A string of other food outlets, dial-a-cab services, pharmacies and banks are keeping the night vigil to meet customer needs. Standard Chartered, which has 83 branches across 33 Indian cities, has two day-and-night branches — one each in Chennai and Mumbai — both operational since 2000. Fast food chain Comesum runs 24×7 outlets across cities like Delhi, Bangalore and Kolkata, while Apollo Pharmacy is perhaps the only organized pharma retail chain with all its 700 outlets functioning 24 hours, a concept that it adopted right from day one when it started in 1991 in Chennai and Hyderabad.

Brand marketers are increasingly waking up to the business prospects of the night economy. In other words this is an opportunity of making money when the competition is literally fast asleep. Naturally, 24×7 operations are governed hugely by location — any catchment which is large enough for the operation to make business-sense. CCD’s 24×7 outlets are mostly situated on highways, in airports and near BPO hubs and CCD has 10 round the clock outlets in Goa alone. Standard Chartered wants to open more 24×7 outlets in residential areas, while Apollo Pharmacy plans to add another 300 outlets by the end of this year. It creates a positive brand image.

According to them they are accessible not just geographically but also at different points of time. The service is no different from what’s offered during the day. That’s the beauty of it. The bank’s (Standard Chartered) two 24×7 branches see an eclectic mix of consumers. Businessmen who work late nights and prefer dealing directly with the branch rather than over the internet access the night services. And people attending weddings who keep their jewelry in lockers also patronize the bank late at night, once the wedding is over. The service is a kind of mental security for customers. Even if everyone doesn’t use the services, customers appreciate that it’s there for them.

Apollo Retail Pharmacy, COO says staying open at night is critical, especially during an emergency. Almost every Indian city has had a couple of round-the-clock pharmacies, but Apollo’s concerted effort is a first at using 24×7 as a brand differentiator. A lot of patients come to us even after 2.00 am. In fact, the late-night emergency window is something that even private taxi service Gold Cab wants to capitalize on — the chain plans to start emergency night services for its senior citizen members.

Besides positive brand image, 24×7 operators also get a substantial chunk of the revenues from the business. Managing trustee, Fulora Foundation, which runs Gold Cab, says its day and night revenues are split 50:50. Another taxi brand Meru which started in April 2007 and has a 1,600 taxis running across Mumbai, Delhi and Bangalore on the other hand gets 25% of its revenues for its night time retail taxis, but more than 50% share for its fleet institutional business which caters to corporate companies and BPOs. Not surprisingly, it wants to expand its services and is planning to enter Chennai and Pune this year.

Similarly, Apollo Pharmacy gets 25%- 30% of its sales at night, depending on the area/locality. Coffee outlet Mocha, which is open till 1.30 am in the morning, gets almost 40% of its revenues from sales after 10.30 pm. Therefore they prefer high street locations to malls, which die down by 9.00 pm.

These benefits notwithstanding, brands are aware of the cons that come with night operations. Cost of operations go up as a result of the extended timings by way of added electricity and rental costs, staff wages, security and transport charges for the staff. Cab service providers like Gold Cab and Meru have to incur extra cost of running a 24-hour call centre. There’s a greater need to keep stand by vehicles in case a vehicle breaks down at night, and for other emergency services. Security is another hassle. For example, a lot of drunken people come to Apollo’s outlets asking for sedative drugs like cough syrup. Though it doesn’t keep extra security except in Delhi, the pharmacy takes precautions by downing the collapsible gate or its shutter.

The staff of almost all 24×7 players operate in shifts. StanChart’s bank has to make sure that staff scheduling is done properly and is rotated regularly. Since transactions are less at night, the bank keeps fewer people but it also has to give them additional non-transactional work to keep them busy.

Being open for more than two shifts means the coffee chain has little downtime for cleaning, staff debriefing and maintenance.

The cost of a pharma chain staying open after midnight is about three times more compared to those that shut shop before midnight, and that’s the main reason why most organized pharmacies haven’t gone day & night. Apollo admits that costs are higher, but adds that 80%-90 % of the additional cost is compensated by the night sales.

Despite insisting that CCD’s 24×7 business is “rocking”, Nagraj admits that CCD would never want all of its 575 cafes to be 24×7. They want their presence need-based. Scalability is not an issue from a business point of view. But from a strategic viewpoint it makes no sense. Smaller cities do not need 24×7 branches, and even in the larger cities one or two branches would suffice as long as they are in the correct location .

The bank decides to open a 24×7 branch after studying the customer profile in a particular location. Once you open a 24-hour branch it’s difficult to go back to the normal timings even if there are no transactions at night. You have to stick to the commitment. The scalability of a 24×7 model is at the mercy of the different state and city laws.