INDIA – Nearly a decade after its first attempt to open a chain of tea cafes, the Tata group is brewing fresh plans to enter the segment with Tata Cha tea cafes.
On Tuesday, Tata Global Beverages Ltd (TGBL), the world’s second largest tea company, will launch three quick-service restaurant (QSR) formats of Tata Cha — large format stores of between 1,200 and 1,400 sq. ft, a smaller abbreviated format of roughly 700 sq. ft, and kiosks.
It will run four such stores in Bengaluru, and will decide on the next course of action based on how the pilot runs perform over the next 6-8 months or so.
“With disposable incomes increasing, the youth mainly is eating out quite a bit more and it is a growing trend.
And if you look around one of the things that is consumed quite a bit outside is tea but it is consumed in corner shops or bakeries,” said Sushant Dash, regional president for India at TGBL.
In 2008, the firm had experimented with the category with four beverage kiosks named Chai Unchai in Bengaluru. However, the experiment did not work and all four outlets, which were to become a chain of tea cafés, were shuttered within six months.
The Tata Cha café, located in Bengaluru’s upscale Indiranagar area, will sell tea for Rs50 for what the company calls a standard-sized glass.
Tea dunkers like khari biscuits and rusks will start at Rs25 per piece. In its kiosk formats, the firm will also sell tea in smaller 180ml glasses that will start at Rs30.
Dash said Tata Cha’s pricing is quite competitive considering the kind of quality, consistency and environment it will provide customers with.
“Chai Unchai, in terms of what it stood for, was slightly different. It was only the kiosk format. The menu was not as extensive—it was more tea and coffee.
The QSR format has grown quite a bit since then and we have a clear proposition in terms of what we stand for, which is different from the earlier proposition,” Dash said.
Tata Cha’s food menu ranges from snacks such as biscuits, samosas and kababs to main course dishes like butter chicken khichdi and matar kulchas. It will serve 17-18 different types of hot beverages and 15 varieties of cold beverages.
Back in 2008, TGBL’s priorities were also different with more focus on the branded retail business that includes names such as Tata Tea and Tetley.
But now is the right time to look at the QSR side, Dash said. Still, he was quick to caution that they aren’t taking it lightly.
“We need to learn and understand and once we are comfortable we will (think of expansion). I think there’s a lot at stake. This is a great place to be in but we need to be absolutely sure and need to do it right,” he said.
Tata Cha will have to deal with competition from more established tea café chains including Sunshine Teahouse Pvt. Ltd’s Chaayos and Mountain Trail Foods’ Chai Point.
Being cautious is also, probably, necessary at a time when TGBL is looking at restructuring its business and cutting losses to improve efficiency.
That pruning strategy will prove beneficial for the company though, according to Abneesh Roy, senior vice-president at Edelweiss Securities.
“This, in our view, entails twin benefits: it will prune incremental consolidated losses and capital employed not generating desired return; and free up management bandwidth for more productive pursuits,” Roy wrote in a research report.