The Mumbai-based startup that raised Rs 1.25 crore in seed funding claims to have perfected the tea-making processes.
Imagine that perfect cup of tea at your local tea stall every morning – nothing better to drive away the lethargy and kickstart the day. Now imagine going back and being served with something that is far from perfect – Mumbai-based tea venture Haazri took on this very premise to build a business around.
The founders - Karan Shinghal, Arjun Midha and Dhruv Agarwal – have come up with a unique recipe, and process so that your tea tastes the same, every time.
"We provide an alternative to roadside vendors and tea-vending machines by bringing fresh, hygienic, standardised and affordable tea options right to the office," says 23-year-old Dhruv.
And their venture seems to have not only impressed Mumbai’s tea-crazy office goers, but also investors. Haazri recently raised Rs 1.25 crore in a seed round from Artha Venture Fund, and plans to use the funds to open 25 outlets over the next 18 months, develop an innovative product line, and build a strong team.
Started in April 2016 in Malad, Haazri’s tea is priced at Rs 20 a cup, and the team claims it uses a standardised recipe across its five outlets, using tea leaves sourced from Dibrugarh. The company, the team says, prepares tea in batches of 2.5 litres. "We do not make a single cup ever. Each time 2.5 litres of tea is prepared, and the process takes 20 minutes each time, to maintain consistency," says Dhruv.
Karan, Arjun and Dhruv are friends from Doon School, Dehradun and while Karan and Dhruv studied BBA, Arjun studied Economics and Statistics at Xavier's College, Mumbai.
"After a lot of market research and brainstorming, we decided to develop a franchise of tea selling outlets that would provide freshly brewed tea directly to corporate workers at an affordable price," said Dhruv.
Karan helps with the finance and point of sale, Dhruv manages HR and business development. Arjun, who was then working with E&Y, joined the team to help with operations and logistics.
The major challenge the founders faced was high rental costs in Mumbai. To beat that, they worked on a revenue-sharing model. Four of Haazri's outlets are located at Peninsula Business Park, Naman Midtown and Indiabulls Finance Centre in Lower Parel, and Sagar Tech Plaza in Saki Naka. Haazri's is also exploring partnerships with cinemas, hospitals and colleges. Its latest pilot project is at Namaha Hospital in Kandivali.
Haazri's key clients include Hardcastle Restaurants India, Trilegal, ParksonsCartamundi, YES Bank and Glowderma.
The company has a 12-product menu and prices range between Rs 20 and Rs 60. "Our menu also includes snacks like Lonavala corn pakoda, Indore ka poha and Punjabi masala sandwich," says Dhruv.
Future plans, competition
Success, however, did not come to the founders at first go. Their first high-street retail model shut down within six months of inception as costs mounted. "While that particular model was not successful, we consider those initial six months as a valuable learning experience," said Dhruv.
In India, tea makes up over 79 percent of the non-alcoholic beverage market, and is valued at more than $30 billion. There are several Indian startups in the tea-selling space such as Chaayos, Cha Bar and Chai Point. On Thursday, Chaayos raised an $12 million in funding from SAIF Partners, Integrated Capital and Pacatolus.
The bootstrapped company saw its founders investing Rs 15 lakh initially and most of these funds were used for the first store in Malad.
“Haazri is creating a new category of low capex restaurants that provides affordable, hygienic and standardised food options for the common man. I am excited to add Haazri to the Artha portfolio and foresee a bright and exciting future for them," said Anirudh Damani, Managing Partner of Artha Venture Fund
Cost and revenue
Haazri's fixed costs include utilities, maintenance and employee benefits and these add up to around Rs 50,000 per store. Other costs include rent and raw materials, which are variable.
Haazri’s average revenue was around Rs 95,000 per month in the first six months of its inception. After setting up the corporate model, the company crossed Rs 2 lakh in monthly revenues. In the second year of operations, the revenue grew to Rs 4 lakh for March 2018.
"Currently, we are selling over 1,800 cups of tea to over 40 corporate clients daily, and more than 1,000 cups to corporate employees," says Dhruv. He claims the company has a customer retention rate of 70 percent.
"As Haazri gains scale and recognition, the perception of cutting chai being only a street product will change," says a hopeful Dhruv.