From one outlet in Indore to more than 200 outlets across India: the story of Chai Sutta Bar

Hailing from a typical Indian middle-class family, Anubhav Dubey and Anand Nayak were busy preparing for competitive exams. However, destiny had other plans and the duo turned entrepreneurs with Chai Sutta Bar.

Saturday November 27, 2021 , 4 min Read

Like any middle-class family, the parents of Anubhav Dubey and Anand Nayak urged them to explore options like CA, CAT, MBA, UPSC, and others while sketching out their career trajectory.

However, none of them worked out. After failing to make a mark in these competitive exams, the duo returned to the entrepreneurial dreams they had been “harbouring for a long time”.

“We would fill our bikes with 50 litres of petrol and roam the streets for ideas when we realised that the demand for chai is everywhere,” Anubhav tells SMBStory.

After water, tea is the most consumed beverage across the world. And, according to an IBEF report, India ranks second in tea production.

This was the tipping point for the duo. Seeing “chai anywhere and everywhere”, the two friends decided to start a tea-cafe chain in Indore in 2016 with an initial capital of Rs 30 lakh.

They decided to give their chain an unusual name: Chai Sutta Bar.

Talking about the initial days of the business, Anubhav says he deployed multiple strategies to grab eyeballs.

“We built the first outlet outside a girls hostel because we knew that once the girls start coming in, pulling the boys would not be difficult. They would automatically come in,” he says.

Additionally, Anand and Anubhav would often talk loudly about “Chai Sutta Bar” in crowded places. “We both have a lot of friends. We would urge them to sit at our outlet so it looked like we are doing very well.”

From one outlet in 2016, the young entrepreneurs have come a long way. Over the years, CSB has scaled to more than 200 outlets in 100 cities in India. Of these, 195 are franchisee models and five are owned by the company.

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Differentiation

Anubhav says price and the way they serve their product has become their point of differentiation.

“We are not a brand for the classes but for the masses,” he says, adding that unlike brands like Chaayos, Chai Point, and many others, Chai Sutta Bar’s tea starts at Rs 10. Other brands offer tea starting at Rs 100 or Rs 120, which does not make it affordable for everyone.

He adds that the tea is served in kulhads (small cups made of clay). The company now sources about three lakh kulhads every day from 500 potter families. The business started with simple chai served in kulhad, and gradually added other flavours such as Adrak Chai, Chocolate Chai, Masala Chai, Elaichi Chai, Tulsi Chai, Kesar Chai, etc to their menu.

CSB also introduced eatables such as sandwiches, pasta, noodles, burgers, and more. Commenting on the diversification, Anubhav says, “While tea is our core, we expanded to food categories because the margins are good.”

CSB has a centralised supply chain, with the master kitchen in Indore, and sources the ingredients locally.

The cumulative sales from all outlets stand at Rs 100 crore, Anubhav claims.

Taking an Indian brand abroad

While CSB has a sizable presence in the Indian market, January 2022 will mark the second anniversary of its first overseas outlet, located in Dubai.

Anand and Anubhav were serious about their global plans once their brand was established in the Indian market. They decided to begin with the Middle East market, with Dubai and then Oman. “Our target audience includes Indians, Bangladeshis, and Pakistanis who are regular consumers of tea.”

But just when the founders were planning to penetrate deeper in India and abroad, the COVID-19 pandemic struck, bringing everything to a grinding halt.

Anubhav describes the first few months of the pandemic as “unimaginable.” With outlets shut, fixed costs like rent and salaries piling up, CSB incurred losses amounting to Rs 3 crore in the first two quarters of FY21.

He says the team used this time to create a lot of content about the company. The YouTube channel of Chai Sutta Bar grew to 26,000 subscribers and has numerous videos on the art of making tea, the journey of the company, and more.

“We served tea to healthcare workers and police officials for free,” Anubhav says. As the country opened up, so did the prospects of the company.

Anubhav is optimistic about the future, and plans to open outlets in the US, the UK, and Canada while continuing to strengthen CSB’s presence across India.

But while the demand for tea is huge in India, CSB has a tough task ahead - sustaining in a market that is dominated heavily by organised as well as unorganised players.