A Complete Guide on how to Start a Chai Sutta Bar Franchise 2024

For Indians, chai is more than a beverage - it's an emotion. It’s what we reach for first thing in the morning, a tonic of sorts to uplift our mood. Studies reveal that the average Indian drinks 2-3 cups of tea a day. No wonder India is called a tea-drinking nation!

One fine day in 2016, Anubhav Dubey and Anand Nayak decided to cash in on this obsession - and opened the 1st outlet of 'Chai Sutta Bar' (CSB) in Indore, Madhya Pradesh. They soon expanded to other parts of India, and even abroad.

You may be wondering how many franchise of Chai Sutta Bar currently has. Today, Chai Sutta Bar total outlet count has reached 150+ in approximately 70 cities. Before we move on, it’s important to note: despite its name containing the word ‘sutta’ (cigarette), Chai Sutta Bar neither sells cigarettes nor permits smoking on its premises.

Although you can find tea stalls in every corner of the world, Chai Sutta Bar is still growing by leaps and bounds. A major reason for this is that CSBs sell chai in ‘kulhads’ (traditional clay cups). The rich flavor and aroma imparted by kulhads make tea even more enjoyable, thus attracting scores of tea lovers to their stores.

How to Start a Chai Sutta Bar Franchise?

Before you start your own Chai Sutta Bar franchise, it's vital to understand the details of CSB franchise cost, models, required experience, rules and regulations, feasibility and more.

So read on, as we detail all steps & information you need to open a CSB franchise:

Choose a Franchise Model:

Choose from 2 (cutely named!) franchise models: FOFO (Franchise owned Franchise operated) and COCO (Company-owned Company operated). FOFO: CSB charges a fee to rent out its brand name. The company and franchise owner sign an agreement when the brand name is rented. In this case, the franchise investor is the owner and all the expenses are handled by the franchise. COCO: In this, the company itself carries out all major business tasks. The company itself invests the money and the company’s employees also manage the franchise.

Choose an Outlet:

You may be curious about the chai sutta bar business model, CSB offers 3 types of outlets: Kiosk: This is the smallest type of outlet, and offers a limited menu. The seating area is approximately 300 to 400 sq. ft. Medium: Slightly larger than a kiosk and smaller than a mega, the medium outlet has a small seating area and a slightly larger menu. Mega: The largest outlet type, it offers CSB’s complete menu along with a large seating area for chai lovers.

Experience Required:

CSB prefers franchise owners with experience in the Food and Beverage (F&B) industry, thus ensuring they can handle operations without hassle. Additionally, the more experienced you are, the higher your chances are of earning profit. Experience allows you to build strategies and make a business plan that helps your company grow.

However, you can own a chai sutta bar franchise even if you don't have F&B experience. CSB offers training and support to help you get started. It helps you form a plan, and understand the type of business that will be suitable for you.

Pick the Right Location:

Picking the right area to set up your CSB franchise will be a huge factor in its success. The thumb rule is to pick a location where you can get maximum footfall, as this will help you get more customers, and eventually earn more profits.

CSB prefers outlets to be near crowded markets, colleges, offices, railway/bus stations or malls. The required area ranges from 400 to 2000 sq. ft, depending on the type of outlet you choose.

Chai Sutta Bar franchise cost in India

Due to Chai Sutta Bar’s high profit margin (35-40%), an increasing number of people are jumping on to its franchise bandwagon. But before you do the same, know the chai sutta bar franchise cost to make an informed decision:

• Franchise fee: ₹6 lakh
• Commercial space: 300-400 sq. feet (minimum)
• Equipment & machinery: ₹3 lakh
• Interiors & furniture: ₹5 lakh
• Raw materials initial investment: ₹2 lakh
• TOTAL INVESTMENT: ₹16-18 lakh
• Term of franchise: 5 years

If you find it difficult to meet the CSB franchise cost, you can apply for a loan with reasonable terms. There are plenty of business loans and franchise loans available at traditional banks as well as some new age fintech startups. Also, having a credit line may help with working capital requirements and any future expansion plans.

Points to Remember while Starting a franchise of Chai Sutta Bar:

Running a franchise is not hugely different from running a traditional retail business. You just have to ensure that you have the basics covered. Chai Sutta Bar is currently exploding in popularity in urban parts of India amongst the younger generation who have come to revere the authentic taste of Chai with a modern twist. Keep the following points in mind while starting the franchise of Chai Sutta Bar, as they are integral to running a profitable and smooth business.

• Hire 4-5 members to run operations smoothly : Chai Sutta Bar is hugely popular these days, and considering the fact that you’re planning to start a CSB franchise means you’re well aware of the crowd a CSB outlet attracts. Hence, it is imperative to have a couple of hands to help you out with the day-to-day operations as it can become really difficult to manage bigger crowds with a very small team. Remember, no one likes their Chai cold!

• Consider arranging upfront costs through a loan : If you wish to open a Chai Sutta Bar franchise in India and running tight on the funding, it would be wise of you to arrange upfront costs through a loan, as arranging these expenses out-of-pocket could strain your working capital management and operational efficiency.

• Partnerships with online delivery services are important : Considering the world is moving online at a fast pace, and the stiff competition on online food delivery service platforms means you should be prepared to sell online! You can partner-up with a couple of online channels to ensure customer reach and stickiness.

• Prepare a marketing plan to increase profits in real-time : With product being the primary driver, marketing comes close second when it comes to increasing customer reach which subsequently converts to increased sales. It is imperative that you have a solid marketing plan to increase brand and franchise visibility locally, as not all local customers may be aware of a new CSB franchise in their vicinity. You can leverage various marketing strategies like a clever and catchy social media campaign, some traditional ads, partnering up with food delivery apps, among others!

• Rent a commercial property if you have a low budget : All businesses come with uncertainty, investing heavily in buying a real estate space may not be a smart move in most cases while setting up a new business. Renting a commercial property will not only save you from investing heavily with uncertain returns on investments, but will also give you freedom to maneuver to increase profitability

Chai Sutta bar Monthly Income

It is natural to be curious about chai sutta bar monthly income that you can expect - Well no two businesses are same, the same stands true for Chai Sutta Bar as well. There’s no fixed amount that you can confidently consider. Rather, it would be smart to rely on market research and data to understand demand in a particular location and how well can a CSB franchise do. Based on the research, try to estimate daily footfall and average order value to understand estimates on chai sutta bar profit margin are available online, but it also varies on your fixed and variable costs associated with running the franchise. Based on market research and little calculations you should be able to calculate expected chai sutta bar daily income.

Conclusion

When starting a new business, you must prepare a strategy in order to get maximum returns from your investment. As it so happens, a Chai Sutta Bar franchise is one of the most profitable businesses these days. The reason for this, as we discussed in the beginning, is Indians’ ever-growing love for tea!

As CSB continues to expand beyond India, franchise operators will certainly benefit even more from their investment. If you're looking to get started with a CSB franchise and earn sizeable profits, you must be ready with your initial investment.

For a loan to start your Chai Sutta Bar franchise, look no further than indiagold. We offer affordable & risk-free gold loans at your convenience, without the usual endless procedures & paperwork. So reach out to us today at indiagold.co, and get ready to start earning from your new Chai Sutta Bar franchise!