Chaayos Startup Story - More Than Just a Cup of Tea

Anamika Mahapatra Anamika Mahapatra
May 1, 2022 9 min read
Chaayos Startup Story - More Than Just a Cup of Tea

Chai is much more than a cuppa tea in India. It's something that folks sip to begin their mornings; it is a required beverage to wake you up every morning and a nourishment drink with midday treats. Our generations have dabbled with Tea and its flavours, there's a distinct meaning of a fine balance for every 'chai lover.' Folks sip chai across every home in this nation, regardless of social status; or, to put it differently, a type of brew that is required to keep them going.

Although chai is such a vital and well-known beverage, we have never noticed a well-known label or chain outlet devoted solely to chai. There are over 2000 Starbucks joints in every town, and you couldn't get a lovely and clean cuppa in a cafΓ© with a pleasant atmosphere. Folks had to rely on their homes or any curbside shop to get their favourite cuppa. This is the underlying spark that supports Chaayos.

"This was the key aspect behind Chaayos – to have a spot where you can go get a vibrant clean cuppa made according to your preference with a nice cozy setting," says Nitin Saluja.

About Chaayos
How Was Chaayos Started?
Business Model of Chaayos
Unique Selling Proposition (USP) Of Chaayos
Promotional Strategy of Chaayos
Revenue Model of Chaayos
Competitors of Chaayos
Challenges Faced by Chaayos During Covid-19
Future Plans of Chaayos

About Chaayos

Chaayos is the brainchild of two engineers, Nitin Saluja and Raghav Verma. They worked for the US consultancy firm Opera Solutions. Nitin was a tea connoisseur.

During this time, they both met via a common friend who was also employed by Opera Solutions in the United States. They both discussed the concept and were compelled to put the weirdest idea on the startup's floor. They both resigned and poured their hearts and souls into their startup.

Nitin is in charge of product design and distribution network, while Raghav is in charge of business growth and advertising. They called their company β€œChaayos”, and the first store was established in Gurgaon, in Nov 2012.

It is very easy to think of Chai as an item. Consumers at Chaayos, on the other hand, can choose from 25 flavoured teas that can be customized in 12000 diverse ways! The catchphrase is "Experiments with Tea." Their company believes in the customization of chai with a broad array of flavours. They have introduced a very special chai menu, or you could say they were willing to try something new.

The overall vibe of the stores is another significant aspect they have introduced to their biz. The cafΓ© exemplifies the "Chai lifestyle." The interiors pertain to the very fundamental idea of chai; lamps created by cutting Chai cups, teapots, and Chai samples in a palate that demonstrate the firm's exploratory nature.

Chaayos Interior
Chaayos Interior

How Was Chaayos Started?

Its adventure began by starting its very first shop in DLF Cyber City in Gurgaon, Delhi. They currently operate roughly 16 stores in Mumbai and Delhi. They intend to open 50+ bistros in Bengaluru, Bombay, and Delhi this year. They currently have more than 200 employees and sell approximately 500 orders per day per store.

According to Raghav Verma, the company faces a difficult road ahead. This involves expanding the number of stores, securing a presence in all metropolitan areas, and assembling a strong group of professionals for each dept, such as manufacturing, marketing, and delivery.

The top-selling Chaayos store generated a yearly income of Rs 1 crore. This was the most significant achievement in its business journey.

Number of Stores of Chaayos in India from 2012 to 2018
Number of Stores of Chaayos in India from 2012 to 2018

Business Model of Chaayos

Chaayos' business model is reflected in its unique product, 'Meri wali Chai' which is a combination of quality, flavours, wholesomeness, and variety. It provides various types of tea flavours, including 25 tea types, and over 1000 ways to customize them.

Clients can also choose from a variety of add-on flavours. As a result, it offers personalized tea solutions based on the customer's preferences. It sells bundled snacks and chai mixes in addition to tea.

Its main audience includes both Gen-Z and Gen-Y clients, as tea is popular among both generations. The clientele comes from upper-middle-class and upper-class backgrounds.

Unique Selling Proposition (USP) Of Chaayos

Its USP is a very new and unique flavoured hygienic, customized tea. In addition, the label has other facets of USP, such as:

A Deluxe Outlet Ambience

The ambience inside cafes is both stresses relieving and calming. With appropriate background music, reclining furniture design, etc, the label offers an ideal atmosphere to calm the mind while also working on projects.

Higher Output in Hardly Any Time

It functions on an approach to appreciate and gratify every client of every store, which served as the label's USP in generating high results. Various snacks provided by the company, such as Maggie, Sandwich, Wada pav, etc, have also attributed to its faithful and repeat clients. The label has achieved the rapid accomplishment of its tactic of combining creativity, innovativeness, and exploring with chai that surpassed expectations.

Advanced Response Framework

It has incorporated a well-defined task control program that integrates usual customer reviews, prompt actions on bad reviews, and so on. The team is well-educated and well-trained. P processes are customer-focused.

Diversified Menu

It offers a diverse selection on its menu. Originally serving various flavoured teas, the brand has since augmented to serve a variety of snacks and meals to both Indian and foreign clients. They also use Kulhads to serve chai in an environmentally friendly manner.


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Promotional Strategy of Chaayos

The advertising tactic of Chaayos involves both offline and online promotional tactics. For virtual advertisements, the brand makes good use of digital marketing tools such as social media and e-mail marketing. Buyers near stores or walk-ins are the focus of its offline marketing plan. Its loyalty program is for satisfied clients, and this advert applies to all stores.

Online

It is utilizing an online media forum for its promotions, i.e. brand visibility and customer acquisition to improve customer care. This is also their strongest asset, as they manage client queries swiftly and effectively. The following are some of the online platforms that the firm uses for promotions:

Facebook

With over 32,000 fans and supporters, its Facebook page which was initiated in 2012, is now the absolute forum for its marketing events. Chaayos uses this platform to connect with its audiences by allowing them to share ideas, recommendations, tales, etc in an open chat forum. The label also promotes its activities on this virtual media site.

Instagram

It communicates with its customers and fans via Instagram. With over 22k Instagram fans, they're using this online media tool for a variety of adverts. It frequently posts pics of various famous visitors or celebs who visit their stores, as well as styles and displays e-cards for festive purposes.

Chaayos Instagram
Chaayos Instagram

Twitter

It also has a Twitter following. The label deals with customer inquiries on this app daily. It also serves its users with e-coupons for new tea varieties, and supporters or clients can create their customized tea with Chaayos tea packs and tell their stories on Twitter. The company launched a Twitter hashtag called Experiments with Chai that has increased its clientele in Chaayos stores by 25%.

Chaayos Twitter
Chaayos Twitter

Youtube

It makes good use of YouTube for promotions. To connect with people, brand innovators share their insights and progress stories regularly via short video clips on the channel.

Offline:

Aside from the aforementioned, Chaayos also conducts promotions with fitness centers and supermarkets.

Revenue Model of Chaayos

Its channels generate the major revenue, accounting for 80 percent of total income. Within a quarter of the company's launch, each store begins to profit. That year, the company's sales increased by 30%, which includes total sales of chai and nibbles, i.e. about 4-4.5 lakh cups, i.e. approximately 2 lakh units. It made Rs. 52 crores in income in FY 2018.

The label also makes money by serving chai on demand, which accts for 20% of total earnings. They also supply approximately 300 boxes of bundled chai blends weighing 100 gms each. The cost for each box is Rs. 200.

Competitors of Chaayos

Its direct rivals are Chai Point and Chaipatty. The company's competitiveness over its rivals is based on its deluxe ambience of stores, efficient delivery, better results in a shorter timeframe, fully personalized products, and a diverse menu for both Regional and Global tastes.

Challenges Faced by Chaayos During Covid-19

Eateries are struggling financially due to low foot traffic and rising rents. Few are working on a revenue-sharing rental contract; instead, some are returning to the local shops. Many people prefer food delivery because buyer complacency is lower in this case.

These difficulties have not spared Chaayos. The shops were closed for the entire span of the quarantine, and in-store sales are still marginal. However, the online ordering biz has restored to 40 percent of pre-COVID levels. Regardless of the difficulties, it has kept its stores open.

Rent agreements have played a significant role in keeping it stable. Well before the pandemic, 40–45 percent of its shops had a revenue-sharing agreement for lease, which was beneficial in this scenario. Even where there's no income sharing contract, Chaayos has requested exemptions because the landlords don't have several bidders for these spots in the present situation.

Furthermore, it has devised a variety of ideas to relaunch the company. It has created an online delivery app to help people in pre-ordering and thus avoid long lines. Because of the strong tech involved, they've been able to easily transform into contactless operations.

Future Plans of Chaayos

Within the next three years, it intends to grow from 90 to 300 cafes. Expansion, on the other hand, can be difficult to manage in the food industry. Many companies experience lower client satisfaction as their retail footprints expand due to inconsistency or poor service. Chaayos, on the other hand, has invested in new tech to assure that uniformity is not a concern.

The Chai Monk and Pronto ensure that the rules are abided so that my green tea tastes the same in Delhi as it does in Mumbai. The inclusion of personalization allows the start-up to provide choices tailored to the native palate.

It has taken a clustered method to expand to strike a balance between size and profits. That is, it initially opens storefronts in one town before expanding to another. This allows it to benefit from some synergies. Because it uses a central kitchen framework, having several coffee shops in the same town lowers its COGS. Furthermore, having numerous places in the same town allows it to build a strong corporate image. As a result, it has a low acquisition cost of Rupees 180–200, which is quickly recouped on the 1st order.

As Chaayos expands, it may be willing to minimize its COGS even further. COGS accounted for 25% of its costs. Starbucks' market share is estimated to be around 15%. Strategic alliance and size have worked perfectly for Starbucks and may work likewise for Chaayos.


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Conclusion

Despite enjoying countless choices, tea is the all-time favourite of a large group of Indians. Chaayos' efficacy is based on its creative brand and advertising strategies.

It is one such trailblazer among millions of others about how folks began with an idea. Acted on it and turned it into a profitable business venture. Yours might be the next tale. Keep striving; you might come up with something as you sip your chai.

FAQs

Who is the founder of Chaayos?

Nitin Saluja and Raghav Verma are the founders of Chaayos.

When was Chaayos started in India?

Chaayos was founded in 2012 by Nitin Saluja and Raghav Verma.

What is special about Chaayos?

Chaayos has many chai flavours, the company experiments with different chai flavours. Also, it offers a unique ambience in its cafes to its customers which is calming and stress relieving.

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