A lot happens over tea

Amuleek Singh Bijral wants to serve it hot in the café market, but with tea. Nothing can be more paradoxical, considering that while Indians are essentially tea guzzlers, they are splurging more money on coffee and that is evident in the way chains like Café Coffee Day, Barista, and latest entrant Starbucks are thriving in the $290 million café market.

But that did not deter Bijral, who chucked his job with EMC’s security division, RSA, in January 2010, to put in his personal savings of about ₹30 lakh into what would be his new business. To be christened Chai Point, it was the result of Bijral’s desire to do something on his own and exploit a nascent opportunity. “It was really the size of the tea market and the sheer absence of a scalable pan-India brand that got me thinking,” says the 38 year old. What started out as a single outlet in March 2010 in Bengaluru is now a 35-outlet chain with a total of 30 stores in Bengaluru and the rest in Delhi and the National Capital Region. 

The model is fairly simple: 500 sq ft small stores that dispense tea (hot and iced), milkshakes, in addition to snacks such as samosas and sandwiches. Compared with fancy cafes, the prices are quite economical ranging between₹18 to the most expensive one at ₹50. “We are not a lounge but a quick service restaurant with a capacity to seat 15-40 people,” points out Bijral. Tea brings in close to 85% of the revenue of around ₹1.5 crore with an average weekday footfall of  about 500. “On an average, a store recovers its capex costs within 12-15 months of its existence,” he says. Each store has a capex of ₹15-25 lakh, while those in corporate establishments (Tesco in Bengaluru being one) have an outgo of around ₹9 lakh, since a lot of costs are subsidised. 

Not surprising, then, that Bijral’s business caught the investors’ eye. Saama Capital, an India-focused venture capital fund, has invested a little over ₹10 crore for an undisclosed stake in Chai Point, with Bijral and a couple of angel investors retaining a majority stake. “Even in the rest of the world, dedicated tea cafes are not very prominent. In India, the demand is different since we are a chai drinking nation,” says Ash Lilani, managing partner and co-founder of Saama Capital, which has also invested in Snapdeal and Sula Wines.

The funds from Saama Capital will be used in expanding Chai Point’s presence in Bengaluru and Delhi, which has a large IT/ITES population. Other cities on its radar include Pune, Chennai and Hyderabad. Bijral, a Harvard Business School graduate, says the plan is to open six more outlets by the end of May and reach 75 outlets over the next one year. Backing the plan is Lilani, who believes the Indian consumer wants a high quality product that is affordable and accessible. “Chai Point’s business model provides that. Also, its product is good and pricing reasonable, which is why it appeals to a wide audience.” For someone selling security solutions to IT companies not too long ago, Bijral does have a piping hot business in his hands.