It’s 5 pm and the Tea Time tea, juices and snacks outlet near the Sanjeev Reddy Nagar metro station in Hyderabad is bustling with people enjoying their cuppa with some short eats. Tea, served in small, yellow, biodegradable cups, is Rs 12 and while the 180 sq ft outlet offers a variety of teas – from mint and ginger to green tea – shakes and even sugarcane juice, it’s the regular tea that is fast moving. The Tea Time branding is prominent, in the name board, the menu, the photo frames. A large board declares: ‘Spreading the slurp of happiness’, indicating the states the Tea Time franchise has spread to: from Tamil Nadu to Maharashtra, Madhya Pradesh and several other states.
Srinivas Reddy, a former IT professional, who took on the Tea Time franchise in January 2021, says he sells an average of 900-1,400 cups of tea daily. Supplementing tea sales are local snacks like ‘Osmania’ biscuits (a sweet and salty biscuit), onion samosas, veg puffs, which also find many takers at the outlet. Reddy says he even broke on his initial investment of Rs 4.25 lakh on the outlet in nine months and is profitable now.
Like Reddy’s outlet, Hyderabad is dotted with 293 franchises of Tea Time and all of Telangana has 871 outlets. The franchisees have spread to several other states and there are close to 3,000 outlets across 14 states, says Uday Srinivas Tangella, Chairman & Managing Director of Desi Tea Time Pvt Ltd, whose idea it was to franchise the Tea Time brand, retaining control on the look of the store as well as the tea blend. Tea Time may well be the country’s largest tea chain brand.
Uday Srinivas Tangella, Chairman & Managing Director of Desi Tea Time Pvt Ltd
A software engineer, Uday took the much traveled route to study in the US and later worked in Dubai. During his stint in both the countries, he saw branded outlets serving beverages, and pondered over the fact that there was no national brand for tea in India. The few chains in the bigger towns, he says, mostly focused on coffee, whereas tea is more popular. For every cup of coffee, 70 cups of tea are consumed, he points out. It sparked an entrepreneurial urge and Uday returned to India in 2016.
Making the perfect blend
He spent a year trying to perfect a tea blend from various teas such as BOP, BP and tea dust. “I researched for a year to get an ideal blend, understood the procurement process of participating in tea auctions at Kolkata and Guwahati, standardized the tea blend and having done all this homework, I started an outlet in 2017,” recalls Uday. His initial investment was Rs 15 lakh. It was in Rajahmundry in AP that he started his first outlet. Uday’s objective was clear, to sell quality tea priced at Rs 10 and he realized he would have to keep costs under control – which meant cut costs on interiors and rentals while maintaining hygiene. “For most beverage chains, the cost of the outlet interiors to air-conditioning is loaded on to the cup of tea,” says Uday. In Uday’s book, all the frills had to be cut out.
The Rajahmundry outlet was his hothouse to put his ideas into action. The outlet had simple branding, was clean, offered good tea for Rs 10 and simple snacks and consumers kept flocking to the store. One had to stand, gulp down tea and snacks and move on. Soon, Uday opened a few more stores, but then hit upon the idea of appointing franchisees to expand rapidly. Bulk of the franchisees are in the Telangana, AP (723 outlets) and in TN (543) with the franchise network spreading to states such as Karnataka, Maharashtra and even Lucknow, perhaps making it the largest tea chain in the country.
Taking a franchise
Entrepreneurs like Srinivas Reddy, who want to start a Tea Time outlet, invest Rs 4.25 lakh initially, which includes the franchise fee, apart from securing space on their own. Tea Time provides the entire equipment, which includes the deep freezer, refrigerator, blender, stoves, vessels, in addition to all the branding as well as raw material to get started. “To open a store, 82 different components need to be supplied, including spoons and ladles,” adds Uday.
While the franchisee is free to stock locally procured vegetarian snacks, the tea blend and biodegradable cups are provided by the company. Reddy, for instance, buys tea at a fortnightly interval at Rs 395 a kg. The supply, Uday says, is tightly controlled and the master franchises the company has appointed for different regions have to ensure that tea stocks get to any outlet within 24 hours, if replenishment is required. Many aspirants have been rejected if the location is found unsuitable.
Tea Time is procuring and consuming 40 to 50 tonnes of tea a month and Uday expects it will be consuming at least 700 tonnes by the year end. From the auctions at Kolkata and Guwahati, the tea is taken to its warehouse in Rajahmundry to be blended before despatch to franchisees. Revenues for FY 22, Uday expects will be Rs 20 crore and Rs 60 crore next year. Uday also plans to start making and supplying cookies, biscuits and local snacks to the stores – the plan is to generate 25 per cent of revenue through food.
Sudhakar Rao, Branding Director, ICFAI Group, engaged Uday in a leadership conversation a few months ago, as part of an online series that the educational institution was doing with business leaders and entrepreneurs. Rao, having studied the company operations closely, says Tea Time has an agile, cost-effective supply chain which ensures that tea plucked from gardens can reach the stores within three weeks. “The use of ERP, CRM and various digital technologies have streamlined the supply chain. While the storefront and design may be easy to replicate for a competitor, the streamlined processes which run behind the scenes will not be easy to do, ”says Rao, adding that while MNC chains are trying to maximize their profit margins by serving the upper end of the market, Tea Time has disrupted and streamlined the unorganized market, targeting the fortunes at the bottom of the pyramid.
Investors have been beating a path to his door, but Uday says he does not need the money. His model is simple and it’s a cash and carry one, where no credit is given. Master franchisees pay up and collect stocks. Nothing is spent on advertising or marketing and the growth push is through word of mouth. “We do not have debts, we are a zero debt company,” says Uday. His time has come, as well as that of his tea.
April 12, 2022