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India runs on chai. But who’s building the Starbucks of it?
Think Tank
June 14, 2025
In partnership with
Over 1 billion cups of tea are consumed daily in India.
It’s a habit. A ritual. A reason to pause.
And yet, for decades, “chai” remained a ₹10 roadside affair, never a business anyone took seriously.
Until two UPSC aspirants from Indore turned it into a ₹150 crore empire.
No funding. No fancy stores. Just kulhads, curiosity, and a name no one could forget.
This is the story of Chai Sutta Bar - the biggest and most profitable tea franchise in India, built not by pedigree, but by guts.
Let’s sip in.
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Table of Contents
The Origin Story: Kulhad, Chutzpah & a Curious Name
Back in 2016, Anubhav Dubey and Anand Nayak were like millions of other Indian youth - stuck between exams and expectations. CA, CAT, UPSC… none of them worked out.
But one evening, while riding around Indore, a thought struck them:
Everywhere we go, we see chai. What if we just branded it?
Armed with ₹3 lakh and zero hospitality experience, they opened their first outlet outside a girls hostel. Why?
If the girls come in, the boys will follow.
To make noise, they picked a name that raised eyebrows:
Chai Sutta Bar.
No, it didn’t serve cigarettes. Or alcohol. But it got people talking.
And that was enough.
Built for Bharat: The Anti-Chaayos Strategy
While competitors like Chaayos and Chai Point targeted white-collar metros with ₹100 chai, CSB chose the opposite:
₹10 starting price
No AC cafés or co-working vibes
Kulhads instead of paper cups
Loud, local, unapologetically massy
We are not a brand for the classes, we are for the masses.
And the kulhad wasn’t just for show. It kept the tea warm, tasted better, and created income for over 500 potter families - now producing 4.5 lakh kulhads a day.
CSB didn’t just democratize tea.
It made being desi aspirational again.
The Business Model: Brewing Profit, One Franchise at a Time
When you sell ₹10 tea, profits don’t come from margins, they come from designing the system.
That’s exactly what CSB did.
Instead of chasing venture capital or building high-burn, company-owned cafés, they cracked a repeatable playbook: You grow, we grow.
Core Model: Franchise-Owned, Franchise-Operated (FOFO)
For those who don’t know what a FOFO is, here is a simple explanation:
You (the franchisee) pay to open the shop, you run it, and you keep most of the profits. The main company gives you the brand name, setup help, and charges a small fee.
Think of it like this:
The brand is the recipe. You own the kitchen.
And here’s a detailed breakdown of the CSB FOFO model
Element | Details |
|---|---|
Initial Investment | ₹16–20 lakh |
Franchise Fee | ₹6 lakh |
Setup (interiors, kitchen) | ₹10–14 lakh |
Payback Period | ~14.2 months |
Royalty | 4% of monthly revenue |
Monthly Avg Revenue | ₹5.75 lakh per outlet (avg) |
Net Profit per Franchisee | ₹1.1–1.2 lakh/month (post break-even) |
Revenue Streams for CSB HQ:
Franchise Fees - One-time payment
Royalty - 4% of monthly revenues
Raw Material Margins - Tea mix, kulhads, packaging
Central Vendor Ecosystem - Bulk purchase of perishables, distributed locally
They also take care of:
Full interior setup
Branding and menu standardization
Staff training playbooks
Centralized supply chain for core ingredients and kulhads
The Unit Math
A typical CSB outlet operates like this:
Metric | Amount (₹) |
|---|---|
Monthly Sales | ₹5.75 lakh |
COGS + Ops (rent, salaries, etc.) | ₹3.87 lakh |
Franchise Royalty (4%) | ₹23,000 |
Net Profit (Franchisee) | ₹1.12 lakh |
CSB HQ Income per outlet | ₹23K (royalty) + ₹15–20K (materials margin) |
Empowering First-Time Entrepreneurs
CSB’s model is designed for middle-class franchisees, often people who are first-time business owners. By lowering the entry barrier and ensuring predictable margins, it built a network of hustlers, not just shopkeepers.
We didn’t need one big investor. We needed 400 small believers.
And that’s what they got.
By 2024, CSB had over 485 stores across India and abroad with zero outside funding.
The Real Math Behind Your ₹15 Chai
Selling ₹15 tea sounds unscalable. Until you look at CSB’s menu engineering.
Unit Economics of a Single Kulhad of Chai:
Ingredient | Cost (₹) |
|---|---|
Milk | 3.5 |
Tea Leaves | 0.78 |
Sugar | 0.34 |
Spices | 0.4 |
Kulhad | 1.4 |
Electricity/Misc | 0.8 |
Total Cost | 7.22 |
Selling Price | 15 |
Gross Margin | 7.78 (52%) |
But that’s not the secret.
Combos are.
Tea is the footfall driver. Food is the profit engine.
Combo | Price | Profit Margin |
|---|---|---|
Chai + Pakoda | ₹70 | ₹34 |
Pasta + Iced Tea | ₹199 | ₹88 |
Coffee + Fries + Sandwich | ₹195 | ₹99 |
Instead of 1,000 customers buying tea (₹8 profit each), 300 customers buying combos (₹50–100 profit each) created 2.5X the net margin with 3X less crowd.
This is how CSB became profitable - even with no high-end pricing
PS: Refer to this video by Think School for a detailed explanation of the unit economics
Desi Tea. Global Ambitions.
By 2022, CSB had entered Dubai and Oman, targeting the massive South Asian diaspora.
But not everything scaled smoothly.
The brand ran into regulatory trouble, just because of its name.
Words like “Sutta” and “Bar” were flagged in the Gulf as references to tobacco and alcohol.
CSB had to clarify and sometimes rebrand to enter global markets.
We never served sutta or alcohol. But we weren’t going to rename ourselves for every border either.
Their bet? Stick to the soul of the brand, but localize the playbook.
And it’s working. With upcoming plans for Canada, UK, and the US.
Challenges Brewing in the Background
For a brand built on ₹10 chai, CSB has come a long way.
But every kulhad of growth came with its own cracks. From being mistaken for a shady joint to keeping a fragile supply chain running at scale, the journey has been anything but smooth.
Scaling quietly is hard. Scaling loudly is harder.
Here’s what CSB has had to navigate while building one of India’s most profitable franchise businesses:
Kulhad Dependency
Kulhads are the heart of the brand, but also its most fragile link.
Break easily in storage and transport
Can’t be reused, unlike glass or plastic
Logistics are costly, especially across 400+ outlets
Yet, they’re non-negotiable: kulhads are what make CSB’s chai feel different
Staff Retention & Training
Most franchisees hire local, untrained workers often with no F&B background.
High churn rate in Tier-2/3 towns
Varying quality of service
CSB built remote SOPs, playbooks, and training modules to standardize operations
They also continue to hire from underprivileged backgrounds including orphans, like their first employee, Manoj, which adds complexity, but builds culture.
Administrative & Perception Hurdles
A name like Chai Sutta Bar grabs attention. Not always the good kind.
Early on, Narcotics officers raided the first outlet, assuming drug activity due to the crowd and name
“Sutta” and “Bar” created licensing delays in conservative or international markets
Rapid success in some locations led landlords to double the rent on nearby shops, just to cash in on the footfall
Ironically, CSB made the chaiwala cool again but sometimes, too cool for the authorities.
Pandemic & Operational Resilience
When COVID hit, footfall vanished overnight. And yet:
CSB lost ₹3 crore in the first half of FY21 , but not a single outlet shut down
HQ absorbed part of the franchisees’ rent, waived margins, and kept all staff on payroll
They even served free chai to police and healthcare workers during the lockdown, a gesture that earned them loyalty far beyond sales.
Chai may be simple. But building a chai business at this scale with no funding, no tech backbone, and a name that sparks controversy is anything but.
And yet, CSB didn’t just survive.
It thrived.
Because what they built wasn’t just a franchise, it was a movement.
Where Chai Sutta Bar Stands Today
From a single outlet in Indore to over 600+ franchises across 370+ Indian cities, CSB has quietly become one of the country’s most aggressively expanding QSR brands.
In 2024–25, the company:
Entered Delhi NCR for the first time, with plans to open 50+ new stores in the region
Expanded internationally to UAE, Oman, and Nepal, with Canada, UK, and US on the radar
Serves 4.5+ lakh kulhads of chai every day, largely through franchise operations
Continues to run 100% bootstrapped - no external funding, no VC backing
Maintains a lean HQ team of ~70 people, supporting hundreds of entrepreneurs across India
Financially, the parent entity reported ₹8.18 crore in revenue (FY24), but this doesn’t reflect the entire ecosystem, since most revenue flows through franchisees. These partners report 35–40% profit margins, with break-even typically in 14–18 months on an investment of ₹16–18 lakh.
The strategy remains clear:
Keep it affordable. Keep it emotional. Keep it desi.
And in 2025, CSB isn’t just selling chai.
It’s scaling a movement.
Lessons For Entrepreneurs
Here’s what the journey of the fitness teaches us:
1. Unit Economics > Vanity Metrics
Know your cost per cup, not just your followers or footfall. CSB didn’t chase virality, it chased margins. Every kulhad had a ₹7.78 profit baked in.
When most startups scale top lines with discounts, CSB scaled only what was sustainable.
2. Don’t Polish the Raw
CSB didn’t clean up the “sutta” or add jazz to the kulhad. They leaned into the
desiness - loud music, earthy cups, massy branding and turned it into a moat. Learning: Trying to be the next Starbucks would’ve erased everything that made them unique.
3. Bootstrap Doesn’t Mean Barebones
They started with ₹3 lakh. But what they lacked in cash, they made up for in clarity.
Every store opened was profitable by design. Every expansion was earned, not bought. While others burned VC money, CSB scaled through conviction, community, and combo meals.
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