But We are All Coffee Drinkers, Right?

Tamil Nadu. Chennai. Images of strong Kumbakkonam degree coffee smells wafting in the air, spiraling out of shining “kaapi tumblers” are strongly associated with the Southernmost state of India, and its capital, Chennai.

“We were quite confident about launching Chai retail outlets in a coffee capital like Chennai,” says Jahabar Sadique, co-founder and CEO of Chai Kings, with over 50 outlets in Chennai, one each in Hyderabad and Coimbatore, and growing.

He and his co-founder, Balaji Sadagopan, have been involved in entrepreneurial ventures since 2012. “We both were good corporate profiles, growing well and handling large teams and complex projects, but our hearts were in doing something on our own.”

Both of them began with a hair salon, Green Trends, that they grew into four outlets, followed by a Toni and Guy, and even a Subway. “Subway franchising was a great learning experience,” Sadique recalls, “they had every element of running a store down to the last detail and delivered phenomenal learning to every franchise owner — we had to meet stringent benchmarks and achieve a good scorecard.”

That learning propelled the duo to start thinking of their own brand. “We started to explore the food business, but the labor and margins turned us off. We veered around to the café business, and went around India and even to Dubai to check out the business models, seek ideas, and inspiration.”

They hired a small team to begin work on branding, marketing, and developing a brand when they noticed all their team members took a tea break twice-a-day. “Not coffee, they drank tea. In Chennai. A cup of tea was their usual break,” laughs Sadique. This observation led to pivot and explore the tea stall business with a micro lens. “We drank tea at almost every imaginable place, and were surprised to find how prevalent it is in Tamil Nadu, the holy capital of coffee.”

In 2016, they began the launch of Chai Kings (the Kings, a hat tip to the Chennai Super Kings) and opened a pilot store in Chennai (where else?) From that flagship store, Chai Kings quickly grew to 3 within the year, and is now at about 50, with three in Hyderabad and four in Coimbatore.

“We knew people would balk at drinking a Rs 100 cup of tea, and had to keep the price highly competitive, while delivering a great product experience,” says Sadique. The idea attracted the Chennai Angels, who chipped in with Rs 2 crores. “That infusion helped us ramp up, and expand the range of products,” he continues. Another $1M infusion followed that has helped the brand gain immense status.

Were it not for the pandemic havoc in 2020, the company was on path to open a 100 stores between Tamil Nadu and Hyderabad, and eye Bengaluru for some pilot stores.

“There is a wealth of knowledge and helpful information in the Retail Association in Chennai,” says Sadique. “Finance? That’s a tough one.” Despite running a profitable business, the duo found it very difficult to raise loans from banks. Most of them would lend only based on collateral, and encouraged zero risk.

Despite all the hurdles, Chai Kings is batting like CSK—hitting sixes and fours with elegant swagger. A cup of chai to go along, anyone?

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