Looking for a Tea Shop Business Plan? We have covered the entire process of how to start a tea shop business in India. In India Tea is also widely known as “Chai”.
Tea is a widely consumed drink in India. According to the Tea Board of India, 64% of the total Indian population drinks tea. Most office workers and daily wage people consume on average 2-5 cups of tea every day.
Tea Shop Business can be established by a new entrepreneur or a well-established business person who wants another source of income. The chai shop can be set up small or big based on the capital invested initially.
Now let’s see the comprehensive information about how to start a tea business in India.
Factors to consider before starting a Tea Business
1. Choosing the Target Customer
Tea Business’s success is highly dependent on the customers that you are targeting. It is important to make a list of customers you want to target.
For example, you may target IT employees, factory workers or Passengers. Most IT people still prefer to drink tea from a tea shop outside their office. They usually consume 2-4 cups of tea every day during work.
Factory workers consume tea on a regular basis, if you know a factory where there is no tea shop you may target these people to scale and improve your Chai business.
You may even choose passengers at the bus stop or railway station but these places most probably will have a tea shop already still you can succeed in your chai shop by providing different tea with better quality and quantity.
2. Choosing the Business Model for the Long Run
While searching for a tea shop business plan it is very important to decide how your business will operate now and in future.
Initially, you will be setting up a single tea shop but it doesn’t mean you are going to stop there. You will plan to scale and open your tea shop in the next location. You can do this in two ways.
- your own outlets
- your franchise outlets
Your own outlets – This model will be totally controlled by your self all the tea shop profits and losses will be beared by you. There will be no third person involved in this model. You will open shops in different locations by investing your own money. This tea shop will also be maintained by you.
Your franchise outlets – In this model, you will be the brand and you will franchise your brand to third party partner. Here the new shop is opened by your franchise partner by investing his money to open a shop by using your brand name. You can collect a certain percentage of profits from sales every month from your franchise partner. But to enter into a franchise model you must make sure your business is already popular.
3. Selecting the right location
Location is very important for the success of the tea business. Choosing locations where there are a lot of people gathering can be a great idea to start a tea shop business.
Highways are a great place to start a tea shop. Today, most Indians love to travel and explore. They constantly look for a proper tea shop where they can stretch and relax while consuming a tasty tea. Even on high way, you must choose a location near a city outer this is because people leaving the city or entering the city may prefer to drink chai at the start or end of their journey.
A company or Factory can be a great location to start a tea shop business as the workers from these places usually prefer to drink tea from outer. setting up a tea business near a factory and offering high-quality tasty tea can help your tea business generate more revenue. These customers have the chance to become your regular customers daily.
Public Places like bus stops, railway stations, government offices, and places of worship can also be great places to start a tea shop business. These places will be visited by hundreds of people every day. setting up a tea shop near these locations and providing quality tea can improve revenue for your tea business
Malls and Food Courts are also a great place to start a chai shop but you must make sure that you have branded your tea business. If you have a branded tea shop and your shop looks cool then customers from the mall will visit your tea shop.
4. Choosing the Right Amount to Invest in Setting Up a Tea Shop
The initial amount that you plan to invest is very important on average in current scenarios it takes 1.5 to 2 lakhs Rupees to setup up a basic tea shop. The amount may be lesser or higher based on your idea.
If you are planning to setup a basic tea shop with no fancy interiors then your initial investment may be lower. But, if you are planning to open a big shop with proper branding and fancy interiors your initial investment may be higher. Your initial investment amount should be based on the following
- shop rent and advance
- Equipment needed for shop
- branding for shop
- designing interiors if needed
now let’s see the legal requirements in India to set up a Chai shop.
Legal Requirements to Setup Tea Shop Business in India
1. Choosing a name for the tea shop
Choosing a name for a tea shop is very important. A proper and attractive name can help your business in the long run. You can register your name and even get a trademark registered for it.
“Chai Kings” for example is a successful brand offering a wide range of teas. Having a name like this can be easily understood by your customers. Make sure your business name suits your service.
It is important to find out whether the name you choose is available legally and whether no one has already registered it before.
We suggest you buy a domain name as soon as you fix your name so that your brand can have the same name online for its website.
2. Tea shop business registration
You may register your tea shop as a sole proprietorship or limited liability partnership or a private limited company based on your desire. If you are planning to run the shop by your self you may choose a sole proprietor or a one-person company (OPC) which offers limited liability.
If you plan to start your tea shop with your business partner you can choose partnership registration. If you want to start a brand and are planning to provide franchises then you can choose private limited registration.
3. GST registration
GST registration is compulsory for starting a tea shop business. Currently, the government of India has set certain limits. Businesses with 20 lakhs turnover annually must have GST registration. Paying tax properly will help the business in the long run and your business will be legally compliance with the tax system of India.
Having a GST registration can help tea shop businesses operate interstate and in e-commerce. Failing to acquire GST can lead to severe penalties and legal complications.
4. MSME Registration for Tea Business
MSME [micro, small and medium enterprise] Registration is compulsory for a tea shop business in India. It offers a wide range of benefits to avail certain government schemes and subsidies for your business. Your business must be a registered entity to apply for MSME.
5. Obtaining State Government Trade License
Most state governments provide trade licenses for businesses. You must obtain a trade license in your respective state before opening your tea shop.
6. FSSAI License for Tea Shop
Food Safety and Standards Authority of India [FSSAI] License is compulsory for businesses that operate in the food and beverage industry. Your tea shop should have an FSSAI license to operate without any legal trouble.
Having this license also helps your customers to trust your brand as you are in compliance with FSSAI standards.
Execution and Operation of your Tea Shop
1. Acquiring the required equipment and materials
You will need to buy the basic equipment like the stove, cylinder, kettle, tea brewing machine, tea powder, milk, water, tea cups and other required materials. You can find a wholesale supplier that suits your budget and needs and setup a contract for a regular supply of raw materials.
2. Setting up workers in the tea shop
A tea shop will require a tea master or a staff who can deliver tea. You can train staff initially about your business operations and procedures that you follow in your business.
Training and setting up your staff is very important for you to scale your business to the next level so that you can focus on developing your business since the operations are carried out by your staffs.
3. Planning the menu items to sell in your tea shop
Tea shops don’t only have to sell tea you can sell varieties of beverages or food that can go along with the tea. You can sell coffee, fresh juices, tiffin, samosa, vada and other chat items.
In fact, you can sell different tea varieties to impress your customers and generate more sales by offering them multiple options to choose from. Tea shop business success depends on experimenting with different options to find out what works well. Below is the list of teas that you can serve.
- Masala Chai
- Ginger Tea
- Cardamom Tea
- Cinnamon Tea
- Vanilla Chai
- Chocolate Chai
- Rose Chai
- Mint Tea
- Lemon Tea
- Honey Tea
Here is the list of Other products that you can sell with tea.
- Coffee (various types like filter coffee, espresso, cappuccino, latte)
- Fresh fruit juices (orange, apple, pineapple, watermelon, etc.)
- Sandwiches (grilled cheese, vegetable, chicken, etc.)
- Cookies and biscuits (Ragi biscuits, shortbread, etc.)
- Cakes and slices (carrot cake, chocolate cake, lemon slice, etc.)
- Savory snacks (samosas, vadas, pakoras, spring rolls, etc.)
- Salads (mixed greens, Caesar salad, Greek salad, etc.)
- Wraps and rolls (chicken wrap, falafel wrap, veggie roll, etc.)
- Breakfast items (south Indian or north Indian tiffin )
4. Improving customer experience in the chai shop
The success of the tea shop business is co-dependent on the customer experience as well. Treat your customers well and get feedback about your Tea’s and other products you offer this helps in building reputation and brand trust.
You can design the interiors of the tea shop which can improve the ambience and you can air condition the tea shop if required. All these can improve your brand name overall and can help generate more revenue.
Marketing and Development for the Tea shop business
1. Create a Google business profile
Having a Google business profile is very important these days. This can help users to find your tea shop from online searches and read reviews about your tea shop.
Google business profile offers a wide range of options to set up your tea shop photos, map locations and options to add photos of your tea shop and the products that you offer.
2. Get a website
Having a website can help your business to be open online 24*7 and for 365 days. Choosing the right web designer is important for setting up your website with better design and user experience.
Web design company can help your business to grow online by providing a branded website that suits your Tea shop business overall.
3. Branding for your tea shop
Branding is important for any business. Branding your tea business can help your customers identify your product. Branding also plays a very important role when you set up a franchise business model for the tea business.
4. Marketing a tea shop
You may use traditional marketing strategies like posters or flyers or you can use online digital marketing strategies like SEO, and social media marketing to boost your brand.
Tea Shop Income – Chai business profit
1. Tea shop daily income
In cities like Chennai, Bangalore, Mumbai, Delhi and Hyderabad daily tea shop income range is around 4500-20000 rupees on average. This depends on the location of your tea shop and number of cups sold per day.
2. Tea shop Income Monthly
Monthly Income for Tea shops in major cities can range between 1,00,000 to 3,50,000 rupees. This depends entirely on different factors such as the location of your tea shop, the number of customers served every day and the quality and taste of your tea.
Apart from income the expense also should be calculated for every month based on raw materials, rent, electricity and staff salary.
The tea shop is still a lucrative business in India. All you have to do it to try a unique style for your brand to succeed. Don’t just follow other companies. Introduce new tea types and offer more products so that your brand stays unique.
Hope our Tea shop business plan was helpful to you. Staying confident is very important in the success of the tea shop business in India.