Chai Sutta Bar is a famous tea cafe business company from India that has recently become viral because of its way of serving tea. The brand’s goal has become to be a tea drinkers’ place, a store that offers various kinds of tea along with snacks and has a welcoming atmosphere. Chai Sutta Bar has turned into a franchise model for potential owners, who want to start their own tea cafe business.
If you are planning to become part of the franchisees who run the Chai Sutta Bar, it is essential to know the cost implications of the business. This article gives information about the amount required for a franchise Chai Sutta, how to get a franchise and How much ROI can be expected.
What is Chai Sutta Bar?
Chai Sutta Bar is not your ordinary tea café chain restaurant that was opened with the view to sell quality tea products at a cheaper rate via a socially anchored tea bar. The establishment covers tea and coffee, tea-based beverages, sandwiches, cakes, small eats, cookies, confectionery, pastries, and condiments among others.
The idea behind Chai Sutta Bar is not essentially to offer tea, but to build a community of chai lovers. It is relatively young with limited origins but has expanded fast in the recent past to become a popular brand for teas in the Indian market and internationally.
The franchise model is aimed at enabling business people to exploit the increasing market of tea in India together with enjoying the benefits of the right business strategy together with the popularity of the brand. As the brand is established and expanded in cities all over India, Chai Sutta Bar offers a franchise business model where the independent person can manage his tea café under the company’s supervision.
Chai Sutta Bar Franchise Model
Now let’s look at the working structure before enriching the details of the costs that have been associated with the creation of the Chai Sutta Bar franchise. Chai Sutta Bar is business to consumer format, where franchisees handle the operation of each outlet, operation and customer interface. The company offers all the necessary backup in the form of trademarks, training for work on the premises, and product distribution.
Chai Sutta Bar franchisee is required to promote the quality of the product as well as the service quality of the brand. The franchisee can enjoy exclusive recipes, designs, and methods of engaging the customers from Chai Sutta Bar. The overall goal is to achieve a standard format for all outlets so customers can be familiar with the brand and, at the same time, allow the franchisees to manage their outlets individually.
Initial Capital For Chai Sutta Franchise Cost
The cost of opening a Chai Sutta Bar franchise is determined by one of the following factors. The amount required to enter the franchise, to develop physical facilities, equipment, and accessories, other operating overheads and marketing expenses etc., decides the total investment. It is important now to understand these costs in further detail.
1. Franchise Fee
The franchise fee is the consideration paid by the affiliate to the parent company to use the Chai Sutta Bar brand name. This fee is for coverage of licensing of brands and support, as well as training. The cost of acquiring a franchise generally varies between ₹3 lakhs to ₹5 lakhs the outlet’s location and size. The franchise fee is also a nonrefundable fee paid at a time before the partnership is formed.
2. Setup and Infrastructure Cost
The setup and infrastructure costs entail the costs required to set and develop a Chai Sutta Bar restaurant fit for business. This consists of the cost of renting the building, modification of the environment to match the look of the brand and acquiring utensils like tea-making machines, tables, air conditionings, kitchen utensils, and décor among others. The estimate for the outlet’s investment will depend on the location of the outlet, the size of the Chai Sutta Bar café and the general tendencies of the real estate market.
Depending on the scale of the outlet the initial cost of setting up and establishing the outlets varies from ₹10 lakhs to ₹15 lakhs. However, the cost can go up to ₹20 lakhs or more in case the outlet is big and located in a prime location.
3. Equipment and Supplies
However, at Chai Sutta Bar the company provides franchisees with a list of equipment needed to run the business. These include tea brewing machines that provide high brewing standards, glassware, snack preparation areas, refrigeration facilities, and souvenir units. Pricing of this equipment ranges easily between ₹ 5 lakhs to ₹ 8 lakhs per outlet depending on the size of outlet and type.
In addition to that, there will be the cost of the coffee beans or any other products used in the preparation of the drinks and the snacks. These are costs which are usually fixed on a more frequent schedule and which would ordinarily fluctuate with the amount of operation of the outlet.
4. Royalty fees alongside continuing costs
Chai Sutta asks for a monthly royalty free. The fee ranges from 5% to 8% of the gross sale every month depending on the formulated contract of the franchise.
Besides the amount payable to the franchisor, other costs include franchise fees, wages for employees, costs of renting premises, costs of utility services, the cost for stock or inventory basal and costs of advertising and promotion. This cost may vary from location to location and also depend on the size of the café. However, in general, one outlet of the Chai Sutta Bar should have an operational cost between ₹2 lakhs to ₹4 lakhs depending on the month considered.
5. Marketing and Promotion
Local marketing and promotion are vital for the success of a new franchise. The parent company offers some marketing support, but franchisees have to promote their outlet through local advertising, social media campaigns, and events. Initial marketing expenses may vary but usually fall between ₹50,000 to ₹1 lakh in the first few months of operation.
The franchisees are also required to pay a small percentage of their monthly revenue into the national marketing fund. This amount is used to promote the brand on a wider level. Usually, this amount ranges between 1% and 2% of the monthly revenue.
Profitability and Return on Investment
One of the key things any franchisee would look out for is potential profitability and the return on investment. Chai Sutta Bar outlets are considered profitable within 12 to 18 months of the operation, assuming the location has a good number of footfalls and proper management. The average monthly revenue at a Chai Sutta Bar outlet can be between ₹8 lakh and ₹12 lakh, according to the size of the café and the demand for tea in the local market.
Operational cost, royalty charges, and all the other cost implications would mean a net profit margin of 15% to 20% in the franchisee’s pocket, implying a possible range of monthly profits between ₹1 lakh to ₹ 2 lakhs based on the volume of sales.
With a good brand presence, loyal customer base, and scaling ability of the operation, a Chai Sutta Bar franchise is likely to return a decent profit after a few years of operations. However, its profitability would still depend on many factors like the location, level of competition, marketing strategies, and the amount of engagement the customers show with the outlet.
Steps to Open a Chai Sutta Bar Franchise
Here are the steps involved in acquiring and setting up a Chai Sutta Bar franchise:
Step 1: Initial Inquiry- Contact Chai Sutta Bar through the official site or customer care service from the website to express your interest in opening a franchise, and provide basic information such as location, business experience, and investment capacity.
Step 2: Franchise Application– Submit the application form along with the documents required with the franchise. Chai Sutta Bar will check your application against their franchise model and decide on your profile as per their model.
Step 3: Franchise Agreement- On approval of the application, you will be given a copy of the signed franchise agreement. In this agreement, terms and conditions are enlisted, such as franchise fees, royalty fees, operating guidelines, etc.
Step 4: Site Selection and Lease Agreement– The next step is to choose a location for your Chai Sutta Bar outlet. The company may assist you in finding a suitable location based on factors such as footfall, proximity to colleges, office areas, and other commercial zones. Once you finalize the location, you will sign a lease agreement.
Step 4: Set up the outlet– You would get permission from the site, set it up and renovate, install equipment and stock up with tea and snacks. Chai Sutta Bar would help you set up by giving you instructions on the design and layout of the outlet.
Step 5: Training and Support- Before opening the outlet, you and your staff will be trained at the Chai Sutta Bar training center. It includes customer service preparation of the product and the operational procedure. The brand gives you some support from time to time, so you do not have any problems.
Step 6: Launch and Marketing- Once the outlet is ready, you will formally launch your Chai Sutta Bar café. The parent company will provide you with strategies for marketing, social media promotions, and events in the locality to attract more customers to the outlet.
After a successful launch, you will handle the daily operations such as managing staff and ensuring product quality, and customer satisfaction. Periodic communication with the Chai Sutta Bar support team will ensure that your business stays on track.
Explore more franchise opportunities by reading our blogs on Pizza Hut Franchise Cost in India, Wow Momo Franchise Cost, and Subway Franchise Cost in India.
Challenges in Managing a Chai Sutta Bar Franchise
It’s satisfying to have a Chai Sutta Bar franchise, but several challenges might face the franchisee:
- High Initial Investment: The amount needed as upfront payment is significant due to the charges involved, like franchise fees, setup, and equipment, so significant financial capital will be needed.
- Location Selection: Choosing the right location is necessary. Poor foot traffic due to a bad location could cause lower sales and profitability.
- Maintaining consistency: It is tough to maintain consistency regarding the quality of teas and service across all outlets, especially with a huge customer base.
- Staff management: Skilled staff management maintains smooth operations, which is hard in such a competitive hospitality sector.
- Competition: The market for tea cafés is becoming pretty competitive with the entry of several local and international brands vying for the customers’ attention.
- Operational Costs: Ongoing Costs such as Rental, Utilities and Supplies, with Royalty Paid, should be profitable – careful financial plan.
- Marketing: Local Effective Marketing and publicity to attract maximum customers in a competitively saturated local market.
On the other hand, despite all obstacles, with strategy, dedication and support, there is a surety of success in managing a franchise of Chai Sutta Bar.
Support Provided by Chai Sutta Bar
Chai Sutta Bar offers full support to its franchisees for the smooth running and growth of the business. The company provides the following support to the franchisees:
- Branding and Marketing: Chai Sutta Bar helps franchisees with branding, which means it gives logos, marketing materials, and a well-established brand identity. The company supports national-level marketing campaigns and promotions.
- Site Selection Support: The parent company supports the franchisee in selecting busy locations that would be ideal for a successful tea café, thus maximum footfalls.
- Training Programs: Franchisees and their employees undergo comprehensive training programs on product preparation, customer services, store operations, and inventory management to achieve uniformity and quality in all outlets.
- Operational Support: Chai Sutta Bar supports operations through inventory management, procurement, and supply chain. The company ensures that raw materials are of good quality and at the disposal of franchisees.
- Technology Integration: Franchisees are supported with integrated POS systems and other technologies to ease their daily operations, follow sales, and manage finances appropriately.
- Regular Consultation: The team of Chai Sutta Bar is always there for franchisees for regular consultation and solving the problems that will enhance their performance and troubleshooting.
- Product Innovation: The company continuously innovates and introduces new menu items to keep customers engaged and excited. So, franchisees get the latest updates.
- Quality Control: Regular checks are maintained for the franchise outlets to keep up with the food, beverage, and service standards set by Chai Sutta Bar.
The strong support systems have empowered franchisees not only to be efficient but to operate their business effectively too; they can do so against the competitive tea café market.
Long-Term Benefits of Investing in a Chai Sutta Bar Franchise
With the Chai Sutta Bar franchise, various long-term gains wait for an investor:
- Strong Brand Recognition: The brand itself holds strong recognition from a loyal clientele and provides more consistent footfalls and demand, even in any business.
- Experience-Based Business Model: The franchising model revolves around a successfully replicable model of business practice with operational assistance and a much greater chance for profit.
- Scalability: Franchisees make possible many outlets as their number increases thereby enhancing reach as well as earning.
- Comprehensive Support: Regular support for training, marketing operational issues and innovation for products helps efficiently run the business franchisee.
- Growing Teahouse Culture: Business rides this increasing wave in the demand for tea in a casual place hence assuring sustainability on a long-time scale.
- Flexibility and Autonomy: Business owners get a chance to manage their businesses while utilizing the brand’s strengths and resources to achieve success.
- Higher Profits: At maturity, it is possible that the brand can allow franchisees to enjoy better economies of scale as well as increase profitability.
To sum up, Chai Sutta Bar provides a strong business venture with long-term growth potential and brand strength.
Conclusion
Therefore, investment in the franchise of a Chai Sutta Bar becomes an exciting and worthy business opportunity at least considering how the popularity of tea cafes keeps rising in the Indian sub-continent. Overall, the typical investments range from ₹ 20 lakhs to ₹ 30 lakhs for starting the Chai Sutta Bar, including its franchise fee, set-up expenditure, and various other equipment expenditures. Even with high initial investments, profitability through good demand rates can make an otherwise insignificant amount into gold in high-demand areas.
A strong brand, proven business model, and broad customer appeal all put franchisees in the best possible position to be successful. Still, just like any business, the success of a franchise depends on various factors like location, management, and customers’ interest in that business. Evaluating costs, potential return on investment, and franchise requirements carefully will make it easier to determine if Chai Sutta Bar is a good investment for you.
FAQs
What is the investment required to begin a franchise of Chai Sutta Bar?
The overall investment in opening a Chai Sutta Bar franchise is around ₹ 20 lakh to ₹ 30 lakh. This includes a fee for the franchise, setting up costs, equipment, and other things necessary for the launching of the business.
How much is the franchise fee for Chai Sutta Bar?
The franchisee has to pay ₹ 3 lakh to ₹ 5 lakhs as Chai Sutta Bar franchise fee, although it depends from place to location and outlet. The size.
What is included in the Franchise Fee?
Franchise pays for the licensed brand, backhand support service, training, and right under the brand Chai Sutta Bar name for operations.
Are the royalties charged too?
Yes, Chai Sutta Bar charges royalty fees based on the monthly revenue of the franchise outlet. Normally, the royalty fee is 5% to 8% of the monthly sales.
What are the ongoing costs associated with running a franchise?
Ongoing costs include operational expenses such as rent, utilities, employee salaries, inventory replenishment, and royalty fees. Marketing expenses are also an ongoing cost for promoting the business locally.
What is the expected ROI for a Chai Sutta Bar franchise?
The return on investment (ROI) for a Chai Sutta Bar franchise can typically be expected within 12 to 18 months, depending on location, footfall, and management. A successful outlet can generate a net profit of 15% to 20% of the monthly revenue.
What support does Chai Sutta Bar provide to franchisees?
Chai Sutta Bar offers ample support, encompassing branding and marketing, choice of site selection, operational training, product supply, quality control, and continuous advice for franchisee development.
Do I need experience in the food and beverage industry to open a franchise?
While previous experience in the food and beverage industry is beneficial, it is not required. Chai Sutta Bar provides thorough training to the franchisees and their employees to ensure a hassle-free process.
Can I open multiple Chai Sutta Bar franchises?
Yes, Chai Sutta Bar allows multi-unit franchising. If you happen to be successful with one of the outlets, there is a likelihood of opening other franchises, which will be put to the decision of the Company.
Is location support available for Chai Sutta franchise?
Yes, Chai Sutta Bar helps locate the correct venue based on conditions such as population density, customers, and competition in the area; the location will be based on the required standards of the brand.
What is the expected break-even time for a Chai Sutta Bar franchise?
Usually, the break-even period comes between 12 to 18 months depending upon the location of the place or management and, of course, customer engagement.
Is financing available to buy Chai Sutta franchise?
Chai Sutta Bar neither provides direct finances nor offers direct financing, a franchisee to open a chain of Chai Sutta but they can meet the initial amount from banks/financial institutions with the help of business loans or any other relevant source.
Is it possible to operate the franchise from a small town or a rural area?
Yes, you can run a Chai Sutta Bar franchise in a small town or rural area, but you need to assess the local demand for tea cafés and have a significant customer base.
How much space is required for a Chai Sutta Bar franchise?
A Chai Sutta Bar outlet usually needs 300 to 1,000 square feet of space according to location and type of outlet. It requires enough seating and room for the customers.
In the Chai Sutta Bar franchise package, what is included?
The franchise package will include brand licensing, training, operational support, marketing materials, consultation on an ongoing basis, and access to the company’s product supply chain. Assistance with site setup and product innovation is also provided to franchisees.
