October 22, 2024
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Chai Sutta Bar Franchise Cost: A Complete Guide

By Pritee

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Tea tradition in India is rather strong, and chai is not only a drink but it is a tradition and people’s necessity for millions of them. Truly meaning tea, chai cuts across almost all sections of society from hawkers selling from roadside joints to modern coffee shops. In recent years, the café culture has got a boost in India and one of the successful brands to explore this culture is Chai. Considering chai as an original and modernizing it to incorporate a café ambiance as a youthful destination, Chai Sutta Bar Franchise and business opportunity in India has revolutionized tea drinking nationwide.

It is an ideal example to follow for the future owners of new businesses because the tea market is still growing rapidly, and the concept is traditional yet modern and creative. By offering chai in environmentally friendly kulhads or clay cups and by giving the brand a contemporary, sociable look, young people have taken a keen interest. So, if you are planning to start your own tea business, a Chai Sutta franchise is a good start.

The following guide will share with you the Chai Sutta Bar Franchise Cost related to joining this business, the location factors, the advantages of franchising, and everything that you need to know before becoming part of this tea frenzy.

Why is the Chai Business So Popular in India?

The chai business in India thrives for several reasons, making it a lucrative and ever-growing industry:

Cultural Relevance: Tea has a huge place in Indian tradition and culture. It is not only a beverage but a beverage that is taken at home, at the workplace, or just with friends.
Wide Consumer Base: Tea is a product, and it has almost every customer base in an Indian family which makes it a product with a very large market.
Affordable and Accessible: While there are other beverages that target a defined demographic, chai is accessible to the masses, the laborer, as well as the business executive.
Growing Café Culture: As people move towards consuming café style tea, outlets like it also appeal to youth looking for cool places to chill.
Healthier Choice: Since consumers are more conscious of their health, tea which comes in many types, and brands and has many benefits becomes more appealing to the market.

If these factors are increasing demand for chai, it reveals the tea business is very promising for growth and profitability especially for franchised outlets like this.

About Chai Sutta Bar

It was started in 2016 by Anubhav Dubey, has become a familiar face in the beverage industry of India. The brand focuses on its innovation, what is more, popular chai is served in kulchas – clay cups that are traditional to India at reasonable prices, combining the old and the new. From their menu that extends from different varieties of Chai to the environment that it seeks to develop; it’s clear that it aims at the delivery of the product, and the experience of the customers.

This business, its mission is to do more than just sell chai. The brand itself has provided employment to thousands of underprivileged people, especially the potters who make the kulaks by hand. This social impact has indeed given the brand customer loyalty, and a competitive edge over other brands in the market. Currently, ithas expanded to more than 300+ restaurants all over India and is also expanding internationally. Its business model is highly profitable right now.

Explore top Tea Manufacturers in Assam.

Why Choose the Chai Sutta Bar Franchise?

For entrepreneurs looking to start their own business in the food and beverage industry, this business model offers numerous benefits:

Established Brand: It is already established and is preferred by many consumers in India. This recognition goes a long way in cutting down the marketing that may be needed to attract new franchisees since the clients are already familiar with the products and services of the franchise.
Affordable CSB Investment: When comparing it with other franchise business models in F&B, the initial investment at sutta is moderate as compared to some others. This makes it possible for it to be grabbed by many people who desire to become entrepreneurs such as those with limited financial capital.
High-Profit Chai Sutta Bar franchise profit margin: In terms of profit margin, tea as a product has relatively greater margins than most of the food and beverage services. Tea, milk, and sugar are cheap while the selling price enables a much higher profit margin after cutting expenses for franchisees.
Quick Chai Sutta franchise ROI: The strong demand for chai and the brand, makes it possible for franchisees to have a short pay-back period. The organization structures and functional integration also enhance the possibilities of making profits for the brand.
Strong Support from the Franchisor: It gives its franchisees adequate training and support they need in order to help them perform well. This ranges from how to run operations right down to how to advertise products, how to treat customers, and how to sell them.

Chai Sutta Bar Franchise Cost

So when getting into this, it is vital to know all the costs involved. The investment required to start a single Its outlet depends on the location, size, and type – kiosk or café. However, the general cost components include:

Franchise Fee: The cost required to obtain a this business model is a one-time fee for the franchise, which may vary between INR 6 lakhs to INR 8 lakhs. This fee gives you a license to use the brand name and the business model used in the operation of the brand.
Setup Costs: The cost expected during the establishment of the outlet includes interiors, equipment, furniture, and branding. The basic estimated cost to set up the outlet is approximately onwards INR 12 lakhs to 15 lakhs depending upon the area and size of the outlet.
Royalty Fees: Monthly sales of products and services are required to be remitted by franchisees through a 4% to 5% royalty fee to support brand and marketing and other services from franchisors.
Operational Costs: The fixed operational costs are in the form of hiring costs, power costs, cost of rent, and other miscellaneous expenses which are the cost of raw materials. These costs are dependent on the location and size of the outlet.
Total Investment: Starting this business involves an overall investment that ranges between 16 lakhs to 20 lakhs INR which makes the business on the affordable side for new franchisees.

Space and Location Requirements

The place of business is very crucial in any food and beverage business as is the case of this model. The preferred place should be busy and well-exposed. Preferred locations include:

Commercial Areas: Offices, business districts, and tech parks are the best places where employees look for quick and cheap snacks during their working hours.
Educational Institutions: Tertiary institutions, universities and coaching centers, business institutions, and schools which has a large population of students as well as young working professionals find chai as an affordable beverage.
Malls and Shopping Complexes: These locations provide a lot of traffic as everyone needs to shop sometime during the week-end or holidays therefore increasing sales.
Residential Areas: Busy clusters of streets and houses especially in the populated districts tend to offer constant traffic of customers, especially in the evenings or over the weekend.

Space Requirements:

Size: One standard outlet of the business needs anywhere between 300 – 500 sq ft of area. For kiosk models, perhaps less space will do.
Seating Area: There should be enough space for customers to sit and this makes the environment to be more comfortable than people eating and quickly leaving the joint.
Counter Area: There needs to be a standard counter where the orders are taken and posted, chai is served, and payments are processed.
Kitchen and Storage: It should have area for preparation of chai, small kitchen for tea preparation and reasonable storage of utensils and provisions.

Training and Support from Chai Sutta Bar

Another important benefit that can be obtained when acquiring this business model is proper preparation for further work in the form of training from the franchisor. This allows a non – novice in the food and beverage industry to effectively manage and operate the franchise.

1. Initial Training

It provides thorough training covering various aspects of the business, including:

Product Preparation: Understanding of the recipes of the brand’s chai and snacks that must be followed while preparing them.
Customer Service: Enabling the franchisee and their employees to provide good and quality service that will be demanded by the customers.
Operations: Orientation on how stocks should be managed, operation of the store and the manner in which customer orders are processed.

2. Ongoing Support

In addition to the initial training, it provides continuous support to franchisees through:

Marketing Assistance: Often, franchisees are helped to develop and implement these marketing promotion strategies to target and capture the market place.
Operational Support: The operational problem-solving assistance is provided by the brand’s support team if needed.
New Product Launches: This keeps the franchisees informed of new products on the market and trends that are used to make them remain relevant.

Steps to Start a Chai Sutta Bar Franchise

The process through which it sells franchises involves several steps in order to facilitate the whole process. Here is a step-by-step guide for aspiring franchisees:

1. Research and Application

Research the Market: The need to understand the demand of chai within your selected area and identify competition levels.
Submit an Application: You have to use the contact details available at the official website or write to the franchise team to get your franchise application form.

2. Franchise Agreement

After getting the approval for your application, the legal document between you and the franchisor is called a franchise agreement that includes the agreement fee, franchise royalties, and other obligations.

3. Location Finalization

Consult the management of it in order to choose the right place for your outlet. The brand will also give directions as to where to shoot and where not to shoot.

4. Setup and Training

Start implementing the outlet to reflect the brand culture and practice as required by the company. You will also initially be trained for yourself and your staff.

5. Grand Opening

After the setup and training, you need to seek initial customers through a launch party to widely market your new business.

Profit Margins and Return on Investment (ROI)

One of the key success factors of the this business model is that these outlets have high profit margins, mainly because the cost of raw materials such as tea and snacks is low, and marked up exponentially. Franchisees usually earn between 40% and 50% profit margins.

Key factors influence this profitability:

Location: Business locations that experience a high amount of traffic include commercial regions or regions close to colleges and these help in increasing the number of customers hence increasing the amount of sales made in a shorter amount of time as compared to a location with little traffic.
Operational Efficiency: Controlling costs for operations such as rent, wages, and utility expenditures is particularly important if stores are to maintain very high-profit margins. Efficient operations management improves the capacity of controlling costs hence maintaining profitability.
Marketing: Promoting awareness, initiatives like running promos, discounts, and even the launch of loyalty programs also increase visibility, and improve customer acquisition, and customer loyalty – all of which are crucial for the improvement of sales and profitability.

It receive ROI between 12 to 18 months of their initial investment. This timeline is more or less affected by aspects such as location, outlet productivity, and the intensity of competition within the region. This should mean that those in the prime areas with good management might enjoy faster returns than those in less favorable areas might take the full 18 months or more to break even.

How to Apply for a Chai Sutta Bar Franchise

Purchasing this franchise is easy to do. Here’s how you can get started:

Visit the Official Website: Visit www.chaisuttabarindia.com and then click on the franchise tab.
Submit an Inquiry Form: To get a quote, complete the online inquiry form with your contact information, the location you want your card to be shipped to, and your financial standing.
Franchise Team Contact: When you send your inquiry, one of the their team members will get back to you to explain what should happen next.
Application Review: Our team will study your application and assess the appropriateness of the place you have suggested.
Franchise Agreement: If approved you will be expected to execute the franchise agreement and make payments for the franchise rights.
Outlet Setup: Coordinate with the team of this business to decide the outlet and make all the preparations to train the members before the launch.

Is Chai Sutta Bar a Profitable Business?

Yes, it is very much a profitable business model owing to the craving people have for chai with low initial investments and an increasingly popular brand identity. The franchise operates in a market with a large customer audience since chai is a popular beverage in India, which many customers of all ages consume. This concept is unique offering cheap, delicious chai and a chilled, trendy setting making it suitable for students, businesspersons, and families. The franchise model is very easy to expand since franchisees reap significant profits and get a good return on investment (ROI) within the shortest time possible.

Essentials such as proper working, minimum sugar, and tested business model have made many franchisees recorded their operation as being viable within the first year of operation. From experience, I have found that the brand has established itself on the promise of providing good quality chai at a reasonable price and therefore has a steady stream of customers that guarantees its sales in various centres.

Pros & Cons

Pros:

Established Brand: The high brand familiarity and customer loyalty make access to customers easy without much effort and time needed to market the foods.
High-Profit Margins: Tea and spices are cheap raw materials thus they are sold at costly prices making franchisees earn high profits and have strong pockets.
Comprehensive Support: A franchise business is well managed due to the training of franchisees as well as providing them with full support most especially in the running of operations, marketing skills as well as The personnel management aspect.
Affordable Investment: Due to the low initial investment and the availability of a relatively large number of opportunities for development, it is suitable for beginning businessmen.
Fast ROI: Franchisees are usually able to get their money back within the first 12 to 18 months because customers are always steady and consistent while operation costs are easily manageable.

Cons:

Limited Menu: The idea of chai is a good phenomenon but it restricts the number of items on the menu and may offend customers who seek the diversity of products.
Intense Competition: The Chai franchise market is already crowded and many new brands are targeting the same audience hence need to stand out is vital.
Royalty Fees: Weekly or monthly royalty fees of 4-5% of revenue can significantly decrease the overall profitability of franchises located in less profitable areas.
Dependent on Location: Highly dependent on the location, wrong locations may lead to slow growth of sales, and therefore, the success of an outlet.
Strict Franchise Guidelines: Franchisees have to work under strict operational procedures and guidelines coupled with brand requirements which limits the extent to which the franchised business may be modified.

Is this Franchise Profitable?

The chai franchise model in India has been very successful largely because of India’s passion for tea. Despite the market size currently standing at billions, chai is still widely consumed like any other beverage with preference being given to young consumers. This steady market ensures that chai franchises such as Chai Sutta Bar have a large market in both the urban and the semi-urban markets.

Another reason why chai franchises are considered to be very profitable is because the cost of the raw materials used, such as tea, milk, and spices is relatively low. These ingredients are cheap but have very good profitability since chai is generally sold at a relatively higher price, especially at outlets like this model that offer consumer engagement with the branded kulhad chai.

The third source of profitability is the fact that one does not need much capital to begin this kind of business. Chai franchises are relatively easy to establish in terms of franchise fees since the initial costs to set up a franchise are comparatively cheaper than say, the fast food, soft drink, or bottled water franchises. Furthermore, franchisors offer full support; from selecting the site to advertising, to help in running the business.

Proper placement and promotion of the chai business allows the franchisee to earn good returns on investment (ROI) in a short span, thus, it should be a good option in the growing market of tea in India.

Why is the Chai Franchise Profitable?

Wide Customer Base: Chai is a drink that many people of all ages drink; children in school, working adults, and even the elderly. The universality of the product guarantees customer traffic all day round, which makes this business venture stable and constant.
Affordable Product: Chai is an easily available product and it is consumed very often by many people because it is cheap. The low-cost advantage also implies that the customer is more likely to return often to purchase the product hence constant sales.
Scalable Business Model: Chai franchises are very easy to grow if the right marketing and location strategies are employed. Due to the simplicity of the product and the operational model, it is easy to expand the business and create opportunities for franchises to expand their business in different regions.
High-Profit Margins: The total cost of making chai is however low especially when one has made bulk purchases of the ingredients. It enables one to make very good returns on investment even when setting a lower price for the product. Besides, profitability is enhanced by extra revenues in snacks and associated products.
Low Setup and Operational Costs: Commonly, the chai franchise is relatively easy to launch, and it does not demand much money from the prospective businessman. Such overhead costs involve the least number of employees that may be needed hence low initial investments on equipment and machinery resulting in quick returns on investment.
Strong Brand Support: The franchisor offers the franchisees the image, experience, and marketing concepts or plans associated with the franchisor’s business. This assistance minimizes the various dangers that accompany the initiation of a business from the raw stage, thus guaranteeing profitability as soon as possible.

What is the Turnover of Chai Sutta Bar?

It is emerging as one of the country’s most rapidly growing chai franchises has done remarkably well for itself financially. Over the years, the brand has grown very quickly, due to its association with chai which is a strong part of India’s culture, and because it sells a very cheap product. It has almost established its outlets in various cities and the annual turnover of the franchise has crossed INR 100 crores.

The brand is unique where Lipton combined the brand with a young casual outlook and served the chai in eco-friendly kulhaads. Also, simplicity and flexibility of the company’s conception let the franchise owners gain a profit and increase the total income. Such a turn of events shows that people appreciate it’s offerings and trust the business approach it uses in the context of a rather saturated beverage industry.

Who Are the Competitors of it?

CSB competes in a volatile environment with several other major players in the chai market. Notable competitors include:

Chaayos: Chaayos is India’s largest chai café chain serving a comprehensive variety of chai products based on consumer preference in a café setting. Its concentration on customization and special and technology hub based ordering system gives it a modern outlook which is why it stands tall with CSB.
Chai Point: Chai chain similar to that of Starbucks is Chai Point which has a large number of stores and has presence through delivery and corporate affiliations. Its concentration of selling good quality of chai with snacks and the strategic use of technology especially in deliveries would make it a major contender in the market.
Teabox: Leveraging the concept of a luxury brand, Teabox primarily targets a relatively small and mostly upmarket tea drinking segment that seeks to consume quality gourmet teas. It has a different market orientation than CSB and its premium brands are aimed at a slightly different, more upmarket segment which offers indirect competition.
Tpot Café: They are also from Delhi; similar to CSB, they provide chai and snack but in a café environment. The diverse tea collection and the company’s attempts to create a friendly atmosphere for consumers put Tpot in direct rivalry with CSB’s city-based chai selection.

Conclusion

Therefore, this concept is the best business model for the persons interested in the tea industry of India. When coupled with its already established brand image in the market and having a product that has the potential to appeal to just about anyone, it forms a very good platform for a brand to build its success on. These investment requirments are low while the return on investment is high, factors that make the franchise perfect for experienced businessmen and novices in the business world.

Business model scalability also means that expansion is possible, and the support that the franchisor provides for the franchisee prepares him for the difficulties of operating the business. Marketing support to day-to-day operations, Chai Sutta Bar franchise cost and business model their partners for the long haul.

Since the tea market continues to expand in India and due to the concept of it, opening a franchise means earning good profits and being in the right business and market.

FAQs

1. What is the cost attached behind this business model?

The cost of investment that is required for franchising a this model is about INR 16 lakhs to INR 20 lakhs including the cost of franchise fee along with cost of establishment and operational cost.

2. What is the royalty fee for this franchise?

it receives a royalty fee of between 4% and 5% of the monthly turnover of the store.

3. How many months would it take for an individual to break even after investing on it?

It take almost 12- 18 months time to break-even based on the location and its operational status.

4. What assistance does Chai Sutta Bar provide to its franchisees?

It offers initial training, operational support, marketing assistance and continuously follow up support throughout the franchisee process.

5. Is this business profitable?

Yes it is a very profitable business because the initial investment made is low, chai is a demanding product and it is able to make high profits.

6. Who is the CEO of Chai Sutta Bar?

Anubhav Dubey is the CEO as well as the co-founder of Sutta Bar. He, with his team, has worked hard for the brand to become popular in the tea market instantly. To provide a good quality chai at reasonable prices Anubhav has targeted chai lovers and positioned it as the go-to brand.