Tea Trails: Brewing up a profitable business
Sanjeev Subramonian Potti, Co-founder and CEO, Tea Trails, strongly believes that in a country like India where tea consumption is second only to China, there is a huge scope for concepts like tea cafés.
Tea café chains have lately seen a boom in business with a number of retail outlets blooming across the country. Bringing in the right mix of tea varieties combined with good food and ambience, sipping a cup of tea is not only elevating the taste buds of tea lovers, but has also become a chic place to hang out.
Culturally a tea drinking country, the entry of café chains in the organised tea market highlights the latent potential of the market. After all, India accounts for a fourth of the global tea production and over a 10th of exports as per data by the Tea Board of India. Yet ironically, Indians consume a lot less tea, considering that the global average spending is $1.5 per capita consumption in cups as compared to $ 5.7 to the rest of the world in 2017, as per a Euromonitor report.
Sensing an opportunity in this domain, two passionate tea lovers, Kavita and Uday Mathur, founded Tea Trails in November 2013 to tap this latent demand. This idea for a tea café chain germinated after two years given their shared passion for the brew coupled with the sagacity about prospects in this business.
“We strongly believed that in a country like India where consumption of tea is second only to China, there is a huge scope of business for a concept like ours,” reminisced Sanjeev Subramonian Potti, Co-founder and CEO, Tea Trails. After two years of rigorous R&D, the concept turned into reality when the first Tea Trails Café started operations at Viviana Mall in Thane in December 2013.
The model of offering a curated range of hand-picked teas from around the world along with suitable accompaniments gained ground and today Tea Trails is a chain of cafés with a presence in 10 cities. Over the years, seeing Tea Trails’ progress, the promoters received of the
While Tea Trails was funded by its promoters initially, in 2015 it raised around INR 7 crore in seed funding from a group of High Net Worth Individuals (HNI) led by Anil Matai, former CEO of Pharmaceuticals of Novartis India Limited; Vikram Tandon, Regional Head, Middle East at Back Office Associates; and Shyam Sundar R, Partner at CPM Consulting. This was used by the company for expanding its presence across the country.
BLAZING A TRAIL
After launching its first outlet in Viviana Mall, Thane in 2013, Tea Trails slowly expanded its network to other metros through company-owned outlets and franchisee outlets. After structure was well received in the metro and tier II cities for its unique approach. Its business model and standard operating process gave it the flexibility to expand universally with more parties showing interest to open franchisee outlets.
Tea Trails currently operates 32 outlets in 10 cities across India including five company-owned outlets, while the rest are operated through its franchisee network. “Our organization is focused on building our café network through franchisee outlets. Hence, we built our organisation, systems and process to support the network. We plan to open company-owned flagship outlets in strategic locations and selected towns to showcase the concept. Tea Trails is a chain of premium cafés in terms of experience, however our menu offerings offer value for money,” Sanjeev added.
As an organisation, Tea Trails has been constantly innovating in terms of product offerings. Apart from expanding its outlet network, the brand also serves its customers through food delivery platforms like Zomato, Swiggy, Uber Eats and Food Panda, thereby opening new horizons for its prospects in the food services industry.
Over time, Tea Trails’ online and offline campaigns caught the attention of investors who wanted to start a business in this category. These leads were contacted by the franchising team who took them through a qualification process. Once the prospect was qualified as a franchisee partner, other commercials and business requirements were discussed. Once the agreement was and the property was identified, the project kick started.
“As a franchisor, we are committed to bring out the best in all our franchisees from time to time. Our management continuously researches on products, technology and other market developments, which helps us excel in our operations. Training is another area where our organization continuously strives hard to excel. Going forward, we foresee technology playing a major role in taking these business aspects to the next level,” Sanjeev stated.
Tea Trails has taken four main measures as a franchisor to maintain consistency in its end products.
STARTING SOMETHING NEW
Tea Trails plans to add another 50-60 outlets every year for the next two years and take its current network to 150 outlets by 2020-end. “When we started the tea café concept in 2012-13 we were the pioneers and category creators. Lately, the market has expanded rapidly with great consumer acceptance and new entrants entering the fray,” Sanjeev stated.
Tea Trails has been growing at CAGR of over 30% year-on-year. The primary growth engine drivers has been the franchise network expansion strategy, which allows the organization to operate an asset-light business model. He further added, “We are the only brand in our segment that gives an aspiring entrepreneur opportunity to start his/her own Tea Cafe. We have three formats with different investment range to suit our investors. This helps us to reach out to more like minded investors and help them start their own business. We run campaigns online as well as offline to attract these investors who want to start a business in this category.”
In a country where coffee-drinking culture has gained popularity, Tea Trails is making an attempt to educate consumers to look at chai as a chic option. They are not just not serving a cup of hot tea, but are giving customers an extravagant experience a its outlets.