Following an 89% year-on-year growth in FY21, Bengaluru-based Chai Point maintained its trajectory with scale surpassing Rs 200 crore in FY23. At the same time, their losses dwindled 17%.
Chai Point’s revenue from operations surged 88.7% to Rs 200 crore in FY23 from Rs 106 crore in FY22, its annual financial statements filed with the Registrar of Companies show.
The 14-year-old company sells a variety of teas, snacks and other beverages with dine-in, takeaway, and online ordering facilities. Sale of these products is the primary source of revenue for Chai Point.
The company currently operates over 180 stores across India including major cities like Mumbai, Chennai, Bengaluru, and Delhi. Chai Point’s 40% income comes from corporates, while retail customers form the remaining contributions.
For the tea and beverage firm, the cost of procurement of materials was the largest cost center which accounted for 31% of the total burn. In line with scale, this cost surged 87% to Rs 86 crore in FY23 from Rs 46 crore in FY22.
Its employee benefits saw an increase of 19.2% to Rs 62 crore during FY23. This includes Rs 5.83 crore as ESOP cost. The advertising and promotion, information technology, legal professional, commission, rent, and other overheads took the total cost up by 43% to Rs 276 crore in FY23 from Rs 193 crore in FY22.
Expense Breakdown
https://thekredible.com/company/chai-point/financials
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https://thekredible.com/company/chai-point/financials
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- Cost of materials consumed
- Employee benefit expense
- Rent and repair
- Commission
- Marketing
- Others
Check TheKredible for a detailed expense breakup.
The modest surge in scale and effective cost mechanism helped Chai Point reduce its losses by 16.67% to Rs 70 crore in FY23 as compared to Rs 84 crore in FY22. Its ROCE and EBITDA margin stood at -85.1% and -18.9% respectively.
FY22-FY23
| FY22 | FY23 |
| EBITDA Margin | -51% | -18.9% |
| Expense/Rupee of ops revenue | ₹1.82 | ₹1.38 |
| ROCE | -81% | -85.1% |
On a unit level, it spent Rs 1.38 to earn a rupee in FY23.
Chai Point has raised over $60 million across rounds. According to the startup data intelligence platform TheKredible, Eight Road Ventures is the largest external stakeholder with 23.36% followed by Paragon Partners and Saama Capital.
Chai Point directly competes with Chaayos which registered a slightly higher revenue and loss of Rs 237 crore and Rs 95 crore in FY23, respectively.
The long runway needed by Chai Point or even Chaayos points to the challenge of cracking the retail business in India. Even as every firm hopes to be the Indian Starbucks, the latter has been the closest to operational breakeven in India, but for its store expansions. What that tells us is the key role of building an aspirational brand to improve margins, something that both Chai Point and Chaayos have struggled to do. While the search for growth has led to an ever expanding menu of offerings, what has been missing is the emergence of these chains as a preferred destination for their users. With reasonably optimised supply chains and employee costs, the possibilities to move into profits through the cost route look bleak, and growth with strong margins seems the only way. For Chai Point, that point still seems some distance away.
