Chaayos raises $53m to expand in chai-obsessed India

Tea cafe chain Chaayos has raised $53 million in a Series C funding round led by Alpha Wave Ventures, to go deeper into a market where the consumption of tea has only been growing consistently over the years.

About a decade ago, two IIT Bombay graduates Nitin Saluja and Raghav Verma, started Chaayos to serve two cups of daily ‘chai’ and snacks in a country that obsesses over its tea. According to a report by Statista, the consumption volume of tea in India was about 1.1 billion kilograms during the financial year 2021.

“The latest capital raise will help us deepen our technology investments to further enhance our guest experience and build a ubiquitous brand that is an integral part of Indian society over decades to come,” Saluja said in a statement.

Chaayos is not the only company betting on this market of tea lovers. It competes with the likes of Chai Point, Chai Sutta Bar, Chai Break, MBA Chai Wala, and Tea Trails.

As with other restaurants and food outlets, Chaayos was also hit adversely during the pandemic. According to filings, its revenues dropped 44.8% to Rs 54.85 crore for the financial year ended March 31, 2021 from Rs99.4 crore in FY20. The company’s losses widened to Rs 52.06 crore in FY21 from Rs 51.14 crore in the previous fiscal year.

Operated by Sunshine Teahouse Pvt Ltd, Chaayos had last raised $21.5 million in its Series B round led by San Francisco-based investment firm Think Investments in February 2020. Prior to that, it had raised $12 million from SAIF Partners, Integrated Capital and Singapore-based growth-stage investment firm Pactolus in 2018. According to media reports, the company is valued at $250 million.

With the new funds, Chaayos will enable tech enhancement, hiring, and store expansion.

It runs 190 stores across six cities and plans to add 100 more by end-2022. It claims that its online deliveries now account for 45% of revenues. The round also saw participation from existing investors Elevation Capital, Tiger Global and Think Investments.

Alpha Wave Ventures is also an investor in other F&B companies including Biryani by Kilo and Domino’s Pizza.

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