In a city where the smell of filter coffee seems to waft everywhere, has managed to spark a kind of chai-centric revolution.
Filter Cape (as locals call it) may be deeply woven into Chennai’s identity and the city may be known for its ubiquitous coffee houses, but chai is its most popular drink, says Jahabar Sadique, co-founder and CEO of the Chai Kings network of tea shops.
Initially, Chai Kings founders Sadique and Balaji Sadagopan planned to launch a coffee product, but their research and observations pointed them towards chai, which led them to open a chai shop in the city.
The decision proved to be the right one for them, with Chai Kings growing from a single outlet in Chennai in 2016 to 50 now. The tea chain, which generated a turnover of Rs 48 crore in the last financial year, serves over 32,000 cups daily.
“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
Making 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.
Although there are dozens of teahouses in the city, Sadique said there was a lack of a ‘good atmosphere’ to enjoy a drink with friends and family.
“Chennai has around 25,000 tea stalls, which are usually always packed, but they lack a posh place that is popular with the youth, which offers a good ambience to spend time with family and friends,” he explains.
This gap in the market prompted the founders to invest Rs 1.4 crore in opening the Chai Kings flagship in Kilpauk, a well-developed neighbourhood in Chennai, in 2016, with a focus on quality products in an attractive ambience.
Today, Chai Kings’ network has grown rapidly to 56 outlets, 50 of which are in Chennai alone. Only 6 outlets are located 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 industry, Sadique and Sadagopan felt the urge to step out and start something of their own. Between 2012 and 2016, they ventured into various franchise businesses, including salons and sub sandwiches. This diverse experience came in handy when they finally chose chai to continue their entrepreneurial journey.
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 gained momentum: Chai Kings expanded rapidly, adding around 40 outlets to its network.
In 2020, the tea 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 company.
“We focused on improving efficiency and profitability, and we achieved that,” says Sadique.
The chai brand is currently achieving 12% month-on-month sales growth.
Over the past few years, Chai Kings has been actively seeking funding to support its expansion plan. However, fundraising has been challenging due to the less than favorable market conditions.
“While we can continue operations profitably without external funding, scaling up requires significant capital – around Rs 14-18 lakh per new outlet. However, we are in the process of raising capital now and aim to close this round by the end of August,” Sadique said.
Chai Kings plans to raise $2 million to expand to 130 outlets within 18 months, targeting a turnover of Rs 120 crore. Besides Chennai, it is also eyeing Coimbatore, Hyderabad and Bengaluru markets.
“In the next four years, our vision is to elevate our brand to a national presence,” said COO Sadagopan.
Diverse offer
Over the years, Chai Kings has expanded its offerings from classic teas (including masala chai and ginger chai), black teas and herbal teas, to specialty infusions such as bubble tea, green tea and iced tea; hot and cold chocolate; and milkshakes. It also offers premium exotic teas such as 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 looking for novelties that are Indian-inspired, such as jaljeera and watermelon tea has launched Chai Kings bubble tea varieties (matcha, mocha, taro), which are hugely popular with children and young adults, inspired by traditional Hong Kong recipes.
By striving for authenticity, the brand can better cope with competition and refine its strategy in a diverse market landscape, says Sadique.
“We strive to meet the needs of a diverse customer base and seasonal demands, and to offer something for everyone all year round. This not only attracts a wider audience, but also increases customer loyalty by providing a comprehensive beverage experience.”
In addition to beverages, which account for approximately 62% of sales, the brand also offers desserts and savoury dishes such as cream puffs, sandwiches, samosas and wraps.
“To ensure profitability, we are diversifying our products beyond tea, with higher margin food products at Rs 100-150, a departure from our original Rs 25 snacks,” Sadique explains the rationale.
“Our larger stores of 46-56 square meters support this strategic shift to increase sales,” he adds.
Despite a growing menu, tea remains the dominant beverage at Chai Kings, accounting for 78% of sales, with ginger chai, masala chai and dum chai leading the way. Coffee accounts for 20% of sales, with other beverages accounting for just 2%.
To boost sales of non-tea beverages, Chai Kings wants to use targeted marketing, seasonal promotions, tastings and combination deals.
About 45% of the turnover comes from online platforms such as And while the rest came from offline sales.
Although primarily a B2C brand, Chai Kings also caters to corporate orders for daily needs, events and weekly/monthly meetings. About 6% of sales come from B2B transactions.
Consistent standards
Ensuring consistency and quality across all locations is critical in the F&B industry.
To achieve this, Chai Kings optimizes inventory management across all branches with SAP B-One, an ERP application that enables real-time control. This system aims to maintain optimal inventory levels, prevent stockouts, reduce waste and accurately forecast demand.
Sadique also emphasises the importance of the quality of the ingredients and the preparation process.
“We have centralised purchasing with one supplier who supplies all materials such as milk, tea powder and sugar to ensure uniformity.
“Water quality varies significantly by location, so we use a six-stage filtration system to standardize water quality for cleaning, drinking and preparing chai across all outlets,” he explains.
Chai Kings has also chosen to keep its stores under its own management, so that it has complete control over quality, consistency and brand integrity.
Market dynamics
According to Consumer Market Insights, the Indian tea market was valued at $11,702.3 million in 2024 and is expected to reach $17,934.1 million by 2033, growing at a compound annual growth rate (CAGR) of 4.19%.
The major brands in the market are Tapriwalas, , , And .
Sadique points out that Chennai is a tough market for supermarkets and fast food restaurants.
“Chennai ranks high in food spend 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, diversity and accessibility (Chai Kings has 1 outlet for every 8 km.)
He also says that the association with music shows, sports tournaments and walking tours of historical sites near the outlets, interspersed with chai stories, helps people develop a stronger bond with the brand.
“It is essential to understand local dynamics and adapt to local preferences, while maintaining consistent brand values,” says Sadique.
Now that Chai Kings is expanding beyond Chennai, they hope to take all these lessons with them.
