Chai, India’s unofficial national beverage, is a cure for ails, a drink for all seasons and taken very, very seriously in the country. So seriously in fact, that some companies are taking it out of your homes and making it their business to give you the best cuppa you’ve ever had.
One such company is Chaayos. Founded in November 2012 by IIT alumni Nitin Saluja and Raghav Verma, Sunshine Teahouse-owned Chaayos is India’s fastest growing ‘chai café chain’. Operating a chai chain is not everyone’s cup of tea, but this startup does it with panache. Chaayos offers consumers more than 25 varieties of chai, some of them quite new-fangled, in keeping with its tagline ‘Experiments with Chai’, apart from providing snacks to enthusiastic tea lovers.
“It was out there, everybody was drinking chai multiple times a day and there were hardly any good options to drink a great cup of tea outside of home and that’s why we came up with Chaayos and instantly customers started to love us,” says Co-Founder, Chaayos, Nitin Saluja.
The chai chain spotted the right opportunity, the right gap and started brewing its way to the top. They understood what their consumers wanted – a piping hot cup of tea – and made it their business to provide it to them.
Now, at the top of its game, Chaayos is revolutionizing the way Indians drink chai. With over 12,000 customisation options, the brand gives Indians a chance to order their favourites while personalizing their brew, all the while luring and retaining consumers.And it’s not just the middle-age tea drinking Indian that they are attracting.
“Personally, I am of the opinion thatkids in India take to tea at a very early age. This coupled with the fact that chai is a beverage that people drink multiple times a daymakes for a winning proposition for us. Our primary consumer group starts from the age of 21, when people get into their first jobs. Having said this, at our chai cafés, we see a lot of kids from 9th to 12th grade come in and sip a cup of chai,” says Saluja.
The brand also has a rapidly growing home delivery segment, wherein they deliver fresh chai in disposable ketlis, which keep tea hot for an hour-and-a-half.
“As a progressive brand, you need to be where your customer is. As a progressive brand, you need to be able to service your customer whenever your customer needs you. This is the thought that led us to start deliveries. A lot of people thought it was a ridiculous idea since they figured by the time the tea reaches them, it will be cold. But it’s been 2.5 years now and we are still delivering – people want their fix delivered to their homes and offices,” says Saluja.
“Chaayos’ delivery has been as big a hit as the café itself and we now get 20 percent of our revenues from the delivery arm of the business,” he adds.
Brewing the Best
The brand follows standardised processes built for scale from Day 1 of operations. Continuous process improvement to deliver better service time and standardised quality, rigorous training and certification structure, and procurement of raw materials from the best sources in India to ensure a brilliant cup of chai are some things Chaayos religiously follows to ensure that the kitchen maintains food and beverage quality and consistency.
Being a leader of chai cafe market, Chaayos has continuously improved customer experience by investing heavily in product development, technology and service.
The company has recently developed and installed a machine called the Chai Monk in its outlets with an aim to maintain consistency in taste and quality and reduce manual dependence. The Chai Monk will take customised orders and every order will be made fresh following the specific requests of the customer.
“We have been investing very heavily for the past five years into training our executives and this is where, frankly, the majority of our resources go. Training I strongly feel is the name of the game, especially since we need to ensure that our executives follow the right processes. At the end of the day, the chai that a consumer likes should taste the same across outlets,” says Saluja.
Numbers Game
If a customer wants to take you home, then s/he should be able to do just that, is what the management at Chaayos believes.
“We came out with a set of products in early 2014 to retail from Chaayos cafés, Chaayos.com and exclusively on Amazon,” says Saluja.
Having said that, he adds that the brand is taking it slow in as far as expansion is concerned.
“I don’t think we are very keen on growing very fast. We don’t want to spread ourselves too thin so, we take one step at a time. We are 55 stores in 3 cities primarily. We are present in Delhi-NCR, Mumbai and Chandigarh. We have two outlets on highways as well now. The funding we get – and we just raised $2 million from Tiger Global Management in Oct 2017 – is going to be deployed towards opening more outlets. However, we don’t have a fixed expansion target for 2018 yet. We don’t have any revenue targets either. We just continue to focus on same store growth and as long as same stores continue to grow, we are a happy bunch,” he states.
Despite the growth, the brand has been hit by the removal of input tax credit.
“The removal of Input Tax Credit, especially since GST has been reduced from 18 percent to 5percent has certainly put a strain on the overall unit economics. It has now become a cost from what it used to be earlier – a pass-through spend. I am certain the dust will settle over time, but I would be delighted if Input Tax Credit on rentals is brought back,” says Saluja.
Aside from this he is confident that both Chaayos and the Indian foodservice industry are poised for great growth and will be much bigger entities over the next five years.
