NEW DELHI: Barista’s first CEO could be back in charge of India’s oldest coffee chain. Ravi Deol’s UK-based food services company Indian Hospitality Corp (IHC) is conducting a review of the chain preparatory to its possible purchase from Italy’s Lavazza Spa, according to two people familiar with the development.Deol was Barista’s first chief executive when the Turner Morrison-founded company kicked off the specialty cafe culture in India in 2000, setting up 128 stores in India and three in Sri Lanka in his three-year term. The two sides seem to be stuck over the price though. Lavazza is looking to sell the 180-outlet chain for upwards of Rs 80 crore, but IHC considers that too steep, said one of the persons cited above. A Lavazza spokesperson declined to comment on a potential deal or the ongoing due diligence exercise.Deol told ET that IHC is constantly looking for consumer-led investment opportunities in India, but he added, “Barista may not be one of them”. When asked whether this amounted to a denial that they were in talks, he texted back: “As I said we keep getting various proposals. There is no view on Barista yet.”Lavazza bought Barista in 2007 along with the Fresh & Honest coffee-vending machine business from serial entrepreneur C Sivasankaran’s Sterling Infotech Group for $125 million. With around 180 outlets, Barista is currently India’s second-largest coffee chain in terms of number of stores behind Café Coffee Day. The cafe market in the country is estimated at close to Rs 1,400 crore and is expected to grow at 13-14 per cent a year over the next five years, but the business is struggling amid a sluggish economy and a market that’s not quite taken off.Barista wasn’t able to leverage its first-mover advantage either, with ownership changing hands at least thrice; the Tatas briefly owned the company before selling it to Sivasankaran.Growing competition from Café Coffee Day, which is the leader in terms of outlets, UK chain Costa Coffee and lately Dunkin Donuts and Starbucks have made things even more difficult for Barista. To be sure, cafes are finding it difficult to gain traction in India where a coffee-drinking culture is yet to take root.Incumbents and new entrants such as Starbucks, which has set up a network of about 20 stores in a little over a year, are trying to go beyond just coffee and are focusing on ambience and food to make up for the lack of a ready market for a cup that costs Rs 100 and more. But café chains, already struggling with high rentals at prime locations, are finding it difficult to make the upgrades necessary to compete.At Gurgaon’s Ambience mall or New Delhi’s Select Citywalk, for instance, Starbucks is more upscale, has better positioning and a bigger crowd than its rivals, regardless of the coffee quality. ET reported earlier this month that Costa Coffee may end its exclusive franchise arrangement with Devyani International after the Indian partner declined to make more investments in the business that is yet to turn profitable.Costa Coffee operates over 100 stores in the country and has reported around Rs 100 crore in revenue with positive EBITDA levels in the year ended December 2013. Cafe Coffee Day, which operates around 1,400 stores nationwide, clocked retail revenue of Rs 810 crore for the year ended March 2013. Lavazza has been looking for strategic investors or even an outright buyer for the chain since last year as it’s not been able to turn things around. However, the Italian firm is not keen on divesting the fresh coffee vending business operating under the Fresh & Honest and Lavazza brands, said the two persons cited above.Two years ago, Deol-promoted IHC, along with two partners, paid $350 million to acquire UK-based sandwich, quiche and pastry maker Adelie Food Holdings. Deol said Adelie is the largest “food-to-go” chain in the UK and that he plans to bring the concept to India as well. This could tie in with a possible purchase of Barista.“For Deol, the acquisition of Barista would give him access to a retail channel for his other business, Adelie Foods, through which he could also drive synergies and leverage both businesses. The hitch could be valuation,” said one of the persons cited above, a Barista insider, adding that Lavazza is keen to seal the deal by April.Lavazza wants to make sure that it doesn’t lose out on its investment. “Barista may have lost to competitors, but it still has brand equity... Their strategy is to at least recover their investments through the deal,” said one of the persons cited above.