Here’s how Chai Kings is brewing chai in ‘filter kaapi’ city

In a city where the aroma of filter coffee seems to waft through everywhere, Chai Kings has managed to stir a chai-centric movement of sorts. 

Filter kaapi (as it’s called by the locals) may be deeply intertwined with Chennai’s identity, and the city may be renowned for its ubiquitous coffee houses, but it is chai that’s the preferred beverage for the most part, says Jahabar Sadique, Co-founder and CEO of the Chai Kings network of tea outlets. 

Initially, the founders of Chai Kings—Sadique and Balaji Sadagopan—had planned to launch a coffee product, but their research and observations pointed them in the direction of chai—leading them to start a chai outlet in the city. 

This decision proved right for them, with Chai Kings growing from one outlet in Chennai in 2016 to 50 now. The tea chain, which generated a revenue of Rs 48 crore in the last financial year, serves over 32,000 cups every day. 

“We found that while Chennai residents enjoy filter coffee, they typically limit themselves to just one cup a day. Interestingly, tea is the preferred beverage throughout the rest of the day,” says Sadique. 

Quality time with chai

Creating a dent in Chennai—which is somehow synonymous with filter coffee—and unlocking the true potential of chai in the city was a unique challenge and an exciting opportunity for Sadique and Sadagopan.

While tea shops are dime a dozen in the city, what was lacking was a “good atmosphere” for consuming the beverage in the company of friends and family, says Sadique. 

“Chennai has about 25,000 tea stalls, mostly always packed, but they lack a fancy place popular with the young, which provides a good atmosphere for spending time with family and friends,” he elaborates. 

This gap in the market prompted the founders to pump in Rs 1.4 crore to launch Chai Kings’ flagship outlet in Kilpauk—a well-developed neighbourhood in Chennai—in 2016, with a focus on quality offerings in an appealing ambience. 

Today, Chai Kings’ network has rapidly grown to 56 outlets, with 50 in Chennai alone. Only 6 outlets are outside Chennai–in Hyderabad and Coimbatore. The brand is also present in nine IT parks in Chennai. 

From IT to entrepreneurship

After 12 years in the IT profession, Sadique and Sadagopan felt the urge to step out and start something of their own. Between 2012 and 2016, they dabbled in a variety of franchise businesses—including salons and sub sandwiches. This diverse experience came in handy when they eventually settled down on chai to take their entrepreneurial journey forward. 

The first two years of Chai Kings were slow as the entrepreneurs were still understanding the market dynamics. But, between 2018 and 2020, their business picked up momentum—Chai Kings expanded quickly, adding around 40 outlets to its network.

In 2020, the tea retail chain raised $1 million in funding from Chennai Angels, along with Hyderabad Angels and TiE India Angels. However, the pandemic stalled Chai Kings’ growth for two years; 2020 to mid-2022 was a period of consolidation for the business. 

“Our focus shifted to improving efficiency and profitability, which we achieved,” says Sadique. 

The chai brand is currently witnessing a sales growth of 12% month on month.

For the last couple of years, Chai Kings has been actively scouting for funding to support its expansion plan. However, fundraising has been challenging due to not-so-favourable market conditions.  

“While we can maintain operations profitably without external funding, scaling requires significant capital—around Rs 14 to 18 lakh per new outlet. However, we are now raising and aim to close this round by the end of August,” Sadique says.

Chai Kings plans to raise $2 million to expand to 130 outlets within 18 months, targeting a revenue of Rs 120 crore. Apart from Chennai, it is also eyeing the markets of Coimbatore, Hyderabad, and Bengaluru. 

“In the next four years, our vision is to elevate our brand to a national presence,” says COO Sadagopan. 

Diverse offerings

Over the years, Chai Kings has expanded its offerings from classic tea (including masala chai and ginger chai), black tea, and herbal tea, to specialty infusions like bubble tea, green tea, and iced tea; hot and cold chocolates; and milkshakes. It also offers premium exotic teas like saffron chai and Kashmiri Kahwa. 

The brand now has over 200 products across 8 categories—priced between Rs 30 and Rs 400. 

At a time when competing brands are exploring Indianised novelties such as jaljeera and watermelon teas, Chai Kings has launched bubble tea variants (matcha, mocha, taro), which are immensely popular among children and young adults, inspired by Hong Kong’s traditional recipes. 

Striving for authenticity helps the brand navigate competition and refine its strategy in a diverse market landscape, says Sadique. 

“We aim to cater to a diverse customer base and seasonal demands, ensuring something for everyone throughout the year. This not only attracts a wider audience but also enhances customer loyalty by offering a comprehensive beverage experience.”

In addition to beverages, which contribute about 62% of business, the brand also offers desserts and savouries such as puffs, sandwiches, samosas, and wraps. 

“To ensure profitability, we are diversifying beyond tea, with higher-margin food items priced Rs 100-150—a departure from our initial Rs 25 snacks,” Sadique explains the rationale. 

“Our larger 500-600 square feet stores support this strategic shift to drive revenue,” he adds. 

Despite an expanding menu, tea remains the dominant beverage at Chai Kings, comprising 78% of sales—with ginger chai, masala chai, and dum chai leading the pack. Coffee accounts for 20% of sales, while other beverages make up just 2%. 

To boost the sale of non-tea beverages, Chai Kings plans to use targeted marketing, seasonal promotions, sampling events, and combo deals. 

About 45% of revenue comes from online platforms like Swiggy and Zomato, with the remaining coming from offline sales. 

Though it’s primarily a B2C brand, Chai Kings also caters to corporate orders for daily needs, events, and weekly/monthly meetings. About 6% of revenue comes from B2B transactions. 

Consistent standards

Ensuring consistency and quality across all locations is critical in the F&B business. 

To achieve this, Chai Kings optimises inventory management across outlets with SAP B-One—an ERP application enabling real-time control. This system strives to maintain optimal stock levels, prevent shortages, reduce waste, and accurately predict demand. 

Sadique also underscores the importance of ingredient quality and preparation processes. 

“We’ve centralised sourcing with a single vendor who supplies all materials like milk, tea powder, and sugar to ensure uniformity. 

“Water quality varies significantly by location, so we use a six-stage filtration system to standardise water quality for cleaning, drinking, and chai preparation across all outlets,” he elaborates.

Chai Kings has also opted for company-owned stores to maintain complete control over quality, consistency, and brand integrity. 

Market dynamics 

The Indian tea market was valued at $11,702.3 million in 2024 and is expected to reach $17,934.1 million by 2033, at a CAGR of 4.19%, according to Consumer Market Insights.

The major brands in the market are Tapriwalas, Chaayos, Chai Sutta Bar, Chai Kanth, and Chai Point. 

Chennai is a tough market for food retailers and quick-service restaurants, Sadique points out. 

“Chennai ranks high in food spending, after Delhi and Pune … However, Chennai’s discerning customers demand exceptional value and experiences,” he reasons, adding that Chai Kings’ strategy for the market revolves around authenticity, competitive pricing, quality, diverse range, and accessibility (Chai Kings has 1 outlet for every 8 km.)

He also says association with music shows, sporting tournaments, and neighbourhood walking tours across historical landmarks near its outlets, interspersed with chai tales, help enhance people’s connect with the brand.

“Understanding local dynamics and adapting to local preferences while maintaining consistent brand values is key,” asserts Sadique. 

As it expands beyond Chennai, Chai Kings will hope to carry all these learnings with it. 

(The copy was updated with additional images.)