Tea cafe chain Chaayos revenue climbs 75.6% to Rs 237 crore in FY23

Indian tea cafe chain Chaayos marked another year of significant growth, with its revenue soaring to Rs 237 crore in FY23—a 75.6% increase from Rs 135 crore in FY22.

The company, known for its variety of teas and snacks, operates with dine-in, takeaways, and online ordering options. With 200 cafes currently, Chaayos plans to expand to around 400 in the coming years.

Spiraling costs amidst expansion

Chaayos's expansion has led to a notable rise in expenditure. The cost of materials, which makes up a quarter of their total outlay, jumped by 62.3% to Rs 86 crore in FY23. Employee benefits also saw a significant hike of 53%, amounting to Rs 78 crore.

Additional expenses, including rent for new cafes, marketing, and legal fees, contributed to a 65.4% increase in total costs, reaching Rs 349 crore.

Losses widen despite growth

Despite the revenue surge, Chaayos witnessed its losses widen by 33.8% to Rs 95 crore in FY23, up from Rs 71 crore in FY22.

However, the company showed some positive signs, with improvements in Return on Capital Employed (ROCE) and EBITDA margin, which stood at -29% and -27%, respectively. On a unit level, Chaayos spent Rs 1.47 to earn a rupee.

Financial health check

At the close of FY23, Chaayos had a healthy cash and bank balance of Rs 183 crore. The total current assets, including receivables and investments, were reported at Rs 266 crore, showcasing the company's robust financial standing despite the increased losses.

The company's financial performance indicates aggressive growth and expansion strategies, albeit with mounting losses. Chaayos's journey reflects the challenges of scaling up in a competitive market while maintaining cost efficiencies. The company's future plans to double its presence suggest a continued trajectory of growth and investment in the brand's footprint.

Leveraging AI technology

Chaayos, a popular tea cafe in India, is using new AI technology to serve its customers better. According to the startup, the tech has helped them keep 20% more customers coming back and raised their earnings by 14% right after they started using it.

Notaby, It has put screens in cafes for ordering, an app to order without touching anything, and even a way for customers to check in and pay with their face.