Tea ConnectExplorinfg New Options

W20562
TEA CONNECT: EXPLORING NEW OPTIONS
Swati Soni, Sandeep Puri, Shweta Pandey, and Tina Jain wrote this case solely to provide material for class discussion. The authors
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On a warm evening in March 2020, Kishan Jainani, co-founder of Tea Connect, sipped a cup of his favorite
Darjeeling tea and waited for his finance manager to join him. As he waited, he reflected on the January–
February (2020) customer satisfaction report concerning the five café outlets he had across Rajasthan, India.
Jainani’s customer-survey team had found that while the customer ratings were 90 per cent or above across
most parameters, customers still complained about the slow service speed and congested seating areas
during peak business hours. These complaints did not concern him too much, as he and his team had planned
to invest an additional ₹3 million1 in the five Tea Connect outlets to ensure more seating and kitchen space
was available in each café in an effort to help retain footfall and ensure more speedy service.
Tea Connect had ended 2019 with sales revenues of ₹48.1 million and growth of 47 per cent over the
previous year. This was the company’s fifth consecutive year of growth in terms of sales and profitability,
which had increased by 34.3 per cent (see Exhibit 1) despite rising inflation in India adversely affecting the
restaurant business. Jainani’s success had attracted three franchising offers (one each from Jaipur, Jodhpur,
and Mount Abu). All the prospective franchisees were ready to work with him on replicating the Tea
Connect business model. The company’s successful year-end figures, the franchise offers, and the level of
customer support led Jainani to feel very optimistic about his plans to open 20 more cafés and to achieve
sales revenues of ₹200 million by 2022.
Jainani was due to meet with his partner and key contributor, Baldev Lilani, regarding his plans to increase
the brand equity of Tea Connect. The three franchise offers appeared attractive, but Jaipur already had four
company-operated Tea Connect cafés. Jainani was not sure if there was a need for a franchise outlet in the
city or even if it was the right time to explore the franchise route of expansion. He realized that an initial
investment of around ₹2 million would help him to introduce the “Tea Connect” brand of consumer
packaged goods, including bite-sized snacks and instant tea premixes. Still, he was unsure about the most
opportune time and best strategies for the launch. Within the month, Jainani needed to think through the
implications of the restaurant renovation, brand extension, and expansion plans before making his final
recommendation to Lilani. He had enlisted the help of his finance manager to prepare for his meeting with
Lilani so that he could be sure his plans would help to increase customer satisfaction and guarantee a
customer experience that would contribute to his goal of enhancing Tea Connect’s brand equity.
This document is authorized for use only in Prof. Nalin Jain's PGDM-II/ Marketing of Services 2020 at International Management Institute - New Delhi (IMI) from Nov 2020 to Feb 2021.
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TEA CONNECT
The Genesis
Jainani completed his master of business administration (MBA) degree in 2013 and then joined Axis Bank
in Rajasthan, India, as a relationship manager for non-resident Indian (NRI) customers. During his two
years at the bank, his clients were very satisfied with his work and trusted his investment advice. He also
won many awards for his good sales performance. His salary and incentives were good, but he yearned to
start a business of his own and to become a “cafepreneur.”
Through his interactions with NRI clients at the bank, Jainani developed some good relationships. When
he left Axis Bank in 2015 to pursue his dream of starting a café business, his first visits were to some former
NRI clients in Dubai to explore possible financing opportunities. During one of his visits to Dubai, he met
with Baldev Lilani, a former client who had always valued his wealth-creation advice. Lilani, a textile
tycoon who had settled in South Africa, immediately agreed to invest in Jainani’s venture without even
listening to the entire proposal. His trust in Jainani’s idea was so strong that he promised to transfer the
requisite funds into Jainani’s account in India within two weeks.
Jainani began working on different ideas for his café business right away, and he concluded that tea was a
ubiquitous drink that connected different generational cohorts in India, especially in northern India.
Besides, he felt that he owed this business opportunity to his meeting with Lilani, which took place over a
cup of tea, so he settled on the name Tea Connect. He set up Tea Connect as a partnership firm on May 6,
2015, with a ₹2 million investment. Lilani, the silent partner, contributed 70 per cent of that amount,
although they settled on a 50/50 profit-sharing arrangement. Jainani opened his first café in small rented
premises in the busy Mansarovar market area of Jaipur, Rajasthan.
Early Days
Jainani’s MBA degree came in handy in terms of understanding the different service elements of the
restaurant business. After finalizing the location for the first café, he worked on other essential factors with
regard to the services industry, such as the product portfolio, product and service quality, pricing, delivery
system, facility design, service encounter, recruitment and training of kitchen and service staff, information
technology (IT) infrastructure, and capacity and demand planning. He micromanaged every detail in an
effort to offer a good product as well as to provide quality service in a cozy atmosphere. Although the early
days were difficult, once Jainani had learned the nuances of the business, profit became the norm, and Tea
Connect managed to break even within a year.
The Expansion
By 2016, Jainani sensed the need for a second Tea Connect branch. His customers were attracted to the
concept, product variety, and ambience of Tea Connect, and his original café experienced a daily footfall of
more than 200, which rose to 350 per day during weekends. However, this level of footfall had the unintended
consequence of many customers leaving the café due to the long wait times. To address this loss, increase his
customer base, and divide regular customers between branches, Jainani opened his second café in another of
Jaipur’s posh and busy areas. This new branch was also a success. By 2017, the flow into each of the two
branches was around 250 customers per day, which increased to 400 during weekends and so began to add
pressure. Jainani then launched a third outlet in Ajmer (130 kilometers away from Jaipur). Ajmer, known for
the shrine of Khwaja Muin-ud-din Chishti, which was one of the most prominent Islamic history and heritage
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sites in India. The holy city was also the sacred pilgrimage town of the Jains and so had a golden Jain temple.2
Many international travelers who frequented Tea Connect in Jaipur also visited the Ajmer branch. In 2018,
Jainani opened a fourth Tea Connect branch in Raja Park, Jaipur, to add to his customer base.
In the same year, Jainani opened his first international outlet in the “Indian eating lane” of Al Karama,
Dubai. He opted for Al Karama because it had a large concentration of Indian expatriates and Indian
restaurants. However, the café ran into problems after the manager left Dubai to work at a restaurant in
Sharjah, and Jainani had to shut it down by the end of 2018. He decided to concentrate on growth
opportunities in the local market.
In 2019, Tea Connect launched its fifth branch, this time in Lal Kothi, Jaipur. Tea Connect developed a
good level of patronage, with regular customers visiting all five branches (four in Jaipur and one in Ajmer).
By February 2020, the average footfall at each branch was around 250 customers per day, which increased
to 400 during weekends.
The Marketing Mix at Tea Connect
Product
Tea Connect’s product offerings were based on the initial research conducted by Jainani and his team,
keeping in mind the local flavors and the different types of customers. Tea Connect offered various
products, although its main value proposition was built on people connecting over a cup of tea. It offered
around 20 varieties of tea, with further customization available, including adding more milk or spices as
desired. The cafés offered several additional options, such as milkshakes, mocktails, sandwiches, pakoras,
Maggi, pasta, sizzlers, rolls and wraps, and even desserts. The business also offered other services,
including online bookings for regular and home-delivery orders that took 30 minutes, take-away orders,
free parking, free Wi-Fi, and special arrangements for parties.
Price
Keeping costs under control was the dictum at Tea Connect, and it was reflected seamlessly across all
business operations. Jainani believed in a cost-leadership strategy when it came to pricing, and his products
were usually 10 per cent lower in price than those offered by most major competitors, which allowed Tea
Connect to offer greater value to its customers. The practice of buying in bulk for all the outlets offered an
added advantage in the form of higher bargaining power and good supplier discounts. The better deals
offered by suppliers helped to save costs, which Jainani passed on to customers through low pricing.
Procurement was not merely a process for buying ingredients but a part of the overall business strategy at
Tea Connect. Jainani’s relationships with suppliers were superlative, and he considered them to be as
integral to the company as his employees were.
Place
All the Tea Connect outlets were strategically located in high-footfall zones, namely Lal Kothi, Mansarovar,
Malviya Nagar, Raja Park (all outlets in Jaipur), and Ana Sagar Lake (in Ajmer). These were high-traffic
areas that buzzed with life and activity throughout the day. Jainani’s choices regarding café locations were
made on the basis of their proximity to institutional areas and coaching centers that were teeming with
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students. This helped Tea Connect to attract foot traffic in the form of students during the day and families
toward the evening. The main idea behind choosing these locations was to position Tea Connect as a value
proposition that appealed to different generations. The outlets were not very large in size, although the
effective utilization of space added to their actual capacity. Aside from operating brick and mortar cafés,
Tea Connect also accepted orders online as well as through food delivery and ordering platforms such as
Swiggy, Uber Eats, and Zomato. Being listed on these platforms increased Tea Connect’s visibility and so
helped Jainani to acquire more customers. Customer reviews, feedback, and customer-generated content
further enhanced Tea Connect’s credibility and customer engagement.
Promotion
The traditional media had never appealed to Jainani, as he believed that social media were more versatile,
more flexible, and better connected with his target group, and further, that they better suited his desire to
create user-generated content. Facebook and Instagram were his preferred platforms. The ability to stay
topical was the key advantage social media offered over traditional media. All this came at a very low cost,
but customer engagement was high. Jainani used humor and fun in the promoted posts, which were in sync
with the brand values of Tea Connect.
In addition, Jainani organized regular sales promotions at the cafés (see Exhibit 2). For new customers, Tea
Connect offered discount coupons worth ₹200 off a first order amounting to ₹500 or above, requesting that
the customers write online reviews after their visit. An exclusive 15 per cent discount on kitty parties3 was
introduced to attract women to the cafés. Tea Connect’s “Take a Selfie Campaign” encouraged customers
to take a selfie and tag Tea Connect in their social media posts in return for a 15 per cent discount. The
cafés also ran a “Magic Monday” campaign that offered the vada pav4 and tea combo for ₹49. The campaign
was a successful traffic generator, considering the fact that Mondays were otherwise relatively lean days
for take-aways. “Thirsty Thursday” was the designated day for the live screening of cricket matches and
live music concerts, while all mocktails were available for 50 per cent off. On “Super Saturday,” a 30 per
cent discount was offered on milkshakes and burgers. All these promotions were meticulously designed
with the pattern of customer footfall in mind. Tea Connect also collaborated with an organization for less
privileged children, and any excess food was distributed in different parts of Jaipur and Ajmer.
Physical Evidence
Jainani had always wanted his cafés to be contemporary and affordable places for customers. Tea Connect
could be described as a minimalistic tea lounge with humble décor, sumptuous food, and a colorful, modern,
simple, and innovative ambience. All five outlets had the same kind of atmosphere. The furniture was
aesthetically pleasing, colourful, and comfortable. The tables had rounded corners, which were thoughtfully
designed to avoid sharp edges and to use space efficiently. Plush sofas, engaging music, and the mild aroma
of ginger added warmth to the place. Music that cut across all generations of customers was a regular feature
at Tea Connect. The specially designated and customized area for parties was a talking point and a big draw
among customers who loved to throw parties. Tea Connect’s walls featured fun graffiti, and the art and
artifacts on the walls had a strong connection with tea and tea culture. The retro kettles and modern tea
merchandise beautifully blended tradition with modernity. Jainani had not wanted the place to be too
predictable and, thus, regularly experimented with the ambience. The lighting in the cafés was varied,
sometimes being bright and sometimes somber, to add an element of surprise. The entire ambience was in
sync with the values that prevailed at Tea Connect, thereby helping to differentiate and package the
experience for customers (see Exhibit 3).
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Process
Standardization was a Tea Connect mantra. Tea Connect’s policy included a standardized menu and the use
of the same brands of ingredients across all outlets. Customers enjoyed a standard experience irrespective
of the location they visited. The staff at Tea Connect followed strict company processes and procedures
related to the kitchen (including food preparation, food storage, and food safety), order taking, dining, food
delivery, reservation, payment (online and offline), cleaning, service, and customer management. A café
operations manual was created to ensure the standardization of product quality, taste, and customer
experience across all Tea Connect branches. The operations manual also included a checklist for different
activities, and the entire staff was required to follow it diligently. The manual was renewed once a year
after the performance of the cafés across different parameters had been assessed. All the branches were
audited by a third party to ensure the strict implementation of food-safety norms.
People
Jainani considered his staff to be the most critical part of his organization. As of February 2020, Tea
Connect had 32 employees. All the employees were trained to offer an excellent service experience to all
customers. They were trained in “hard skills” such as using tablets to take orders, taking cash payments,
conducting digital transactions, and learning how to serve different varieties of food products. They were
also trained in “soft skills” in order to offer a superior customer service experience. The company had many
employee-friendly policies. Jainani offered competitive salaries to his employees because he believed that
doing so helped to keep them happy, which in turn led to happy customers. In addition to their salary, his
employees received benefits such as medical insurance, casual leave (10 days per year), and medical leave
(15 days per year). Each café also had a “Star of the Month” award, which involved a cash reward of ₹5,000
for the best employee. Jainani encouraged promotion from within. He was also very particular about
celebrating his employees’ birthdays. The cafés had a very low employee turnover rate. Five employees
who had joined Tea Connect in May 2015 (upon the opening of the first café) were still employed at the
café in February 2020. The high retention rate helped the cafés to offer a good customer experience because
staff members could recognize regular customers and provide personalized service to them.
Customer Experience Management at Tea Connect
Jainani recognized the importance of service delivery and customer experience management in relation to
the café business. According to him, customer loyalty was dependent on an unforgettable experience, and
it was up to the company to be consistent in terms of delivering that experience. He quoted a Deloitte
research study suggesting that a restaurant’s brand went beyond its food, as although “quality, value,
sanitation, location, and staff” were essential elements when customers considered visiting a restaurant, the
most crucial aspect was the restaurant’s ability to deliver “consistently engaging, memorable experiences”
that connected with and drew a customer to the brand.5 He kept customers’ experiences at the core of Tea
Connect’s business strategy. He said,
Superior customer experience and positive interactions at the café create an emotional connection
with customers. This emotional connection is critical for success in our business. Good customer
experience and continuous customer engagement help in increasing customer value, enriching
product offerings, strengthening customer loyalty, acquiring consumer insight, improving cross-
sell opportunities, and improving the product portfolio.
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Jainani regularly visited different places to gather market intelligence. For example, he visited cafés in other
major towns to learn more about contemporary trends and products. He also updated the menu after a visit
to some leading cafés in Bengaluru. Tandoori tea was one item he added to Tea Connect’s menu after taking
cues from other cafés, and it became a real crowd-pleaser. The employees at Tea Connect were also
empowered to offer superior customer service. A weekly meeting encouraged employees to share their
experiences with demanding customers and to discuss the best ways to manage them. Staff members were
encouraged to remember the names of regular customers as well as their product preferences.
Customer Satisfaction Survey
In his pursuit of service excellence, Jainani implemented customer satisfaction surveys. Staff members
requested that customers fill in the customer satisfaction survey forms either online or offline in return for a
10 per cent discount on their next bill (up to a maximum discount of ₹200). Jainani also relied on mystery
shoppers to assess the quality of his cafés.6 The customer satisfaction surveys used a Likert scale7 to capture
customers’ satisfaction levels in relation to different parameters, such as food variety, food quality, service,
cleanliness, ambiance, and value for money. The five cafés did well with regard to most parameters, although
space always seemed to be an issue due to the increased footfall during peak trading hours. This also affected
the service speed (see Exhibit 4). The survey was conducted on a bi-monthly basis, and the staff members at
the outlet with the highest ratings received an additional ₹1000 as prize money for their good performance.
The outlets recorded the mobile numbers of all customers at the time of issuing invoices, which helped the
company to keep track of regular customers as well as of the customer defection8 and churn9 rates.
TEA CAFÉ MARKET IN INDIA
Tea was a quintessential part of most Indians’ morning routine, which made India one of the largest tea-
consuming countries in the world.10 In 2019, India was the world’s second-largest producer of tea, while
the per capita consumption of tea stood at 0.78 kilograms (kg) per year, against 3.2 kg in Turkey, 2.4 kg in
Libya, and 1.68 kg in the United Kingdom.11 The domestic consumption of tea had reached an all-time high
of 1,084 million kg in 2018, up from 1,059 million kg in 2017, indicating 2.36 per cent growth in local tea
consumption.12 The rising rates of chronic illnesses among Indians peaked consumer interest in healthier
products and so represented a good opportunity for tea, a relatively healthy drink option. Additionally, the
new generation of middle-class consumers in India drove value growth as they became more adventurous
in their tea-drinking habits, particularly their increasing acceptance of gourmet teas and blends.13 Recently
emerged chains of tea lounges also helped to re-invent Indian tea culture. The premiumization trend, driven
by rising disposable incomes and lower taxation, made higher-end products more affordable, facilitated
exposure to premium tea through the burgeoning tea lounges, expanded the availability of upmarket retail
products, and increased consumer sophistication.14
According to Jainani, rapid urbanization, rising disposable incomes, the growth in upmarket retail, and
increasing customer sophistication re-invented Indian tea culture, giving it a new out-of-home consumption
format. The mushrooming of branded tea café chains in major cities, as an upgrade to the ubiquitous tea stall,
was perhaps the most likely reason that young entrepreneurs considered teahouses to be cool hangout places
with contemporary atmospheres as well as comprehensive and healthy ranges of teas and accompaniments.15
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MAJOR PLAYERS
Jainani considered certain local and national cafés that were involved in shaping consumer expectations
and perceptions to be the major players in the tea café industry.
Local Players in Jaipur
Among the many local players in the market, ranging from small roadside tea stalls to exotic tea cafés,
Jainani considered Tapri, Chaisa, and Gulab Ji Chai to be important players.
Tapri
Tapri, which was considered to be an outlet for both young people and families, was established in Jaipur
in 2010. It served all types of cuisines and gourmet teas. The café planned to expand into cities such as
Bengaluru, Pune, and Surat.16 In February 2020, it had four branches in Jaipur, and its menu included dishes
such as vada pav, tadka Maggi,17 pasta, mojitos, and many more. The staff was courteous, friendly, and
provided prompt service. Tapri offered free Wi-Fi to its customers, and the average cost for two people was
₹800. The cafés accepted cash, credit cards, and digital payments.18
Chaisa
Chaisa, which was established in 2012, was the second tea café to open in Jaipur. It was among India’s top
ten chai start-ups. Chaisa was inspired by the Rajasthani culture, which used “sa” as a term of respect for
the elderly. Chaisa also planned to expand into metropolitan cities such as Delhi.19 By February 2020, it
had two branches in Jaipur. Its menu featured a range of options, including vada pav, sandwiches, exotic
pizza, chammak challo20 Maggi, kesar chai, and masala chai. Chaisa also offered free Wi-Fi to its customers.
The average cost for two people was ₹500, and Chaisa accepted cash, credit cards, and digital payments.21
Gulab Ji Chai
Opened in Jaipur in 1947, Gulab Ji Chai was a historic tea outlet. The tea at Gulab Ji Chai was made with
undiluted milk and infused with a secret mix of masalas. It was rated among the best places to visit in Jaipur.
Its clientele included the royal family of Jaipur as well as Bollywood stars. The owner offered a free cup of
tea and a bun maska to around 200–250 homeless people each day.22 In February 2020, it had two branches
in Jaipur. The average cost for two people was ₹100.23 In addition to tea, the menu included Indian dishes
such as soup, samosas,24 kachori,25 tandoori paneer tikka,26 and vegetable rolls.27
National Players
Jainani also followed national players, such as Chai Point and Chaayos, in order to develop ideas for future
strategies.
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Chai Point
Launched in 2010, Chai Point was India’s largest organized chai retailer. It had more than 100 outlets across
major Indian cities such as Bengaluru, Delhi, Gurgaon, Noida, Mumbai, Pune, Hyderabad, and Chennai. It sold
more than 300,000 cups of tea every day. The company also sold its own brand of consumer packaged goods,
Made-For-Chai. These bite-sized snacks were developed following thorough research into the Indian palette.
The product range included multigrain biscuits, mathri, cake rusks, quinoa puffs, gur chana, masala peanuts, and
cornflakes mixture.28 By 2019, the company had raised US$37.5 million29 across seven rounds of funding.30
Chaayos
Established in 2012, Chaayos offered customers 12 add-ons that gave them 12,000 options for making tea.
It also provided dine-in, take-away, and home-delivery options.31 By 2019, the company had raised
US$18.5 million across four rounds of funding. It had 65 outlets in Bengaluru, Chandigarh, Delhi,
Ghaziabad, Gurgaon, Mumbai, Noida, and Gurgaon. The company had outlets in high streets, malls,
business parks, hospitals, educational institutions, metros, and airports. In 2019, online sales accounted for
20 per cent of the overall business.32 Chaayos also sold packaged tea leaves, tea masalas, and premixes via
Amazon India and through its cafés.33
THE WAY FORWARD
New Café or Franchising
Tea Connect had followed company-owned, company-operated (COCO) models so far. As a single entity
operated and managed all the Tea Connect branches, it was easier to offer similar customer experiences and
tastes across all the outlets. Jainani estimated that the initial costs of launching a new outlet at a suitable
location in a tourist city such as Jodhpur or Mount Abu would amount to ₹1.51 million, while the monthly
running expenses would be ₹165,000 (see Exhibit 5). That one new outlet would require sales of ₹1.2
million per month to cover these expenses. Given the growth of tea cafés and the good brand equity of Tea
Connect in adjoining areas, he was positive about the outcome.
Launch of Consumer Packaged Goods
Jainani wanted to launch Tea Connect’s brand of consumer packaged goods in June 2020. He conducted
some research and checked with certain vendors regarding the manufacturing of this range of products,
which included banana chips, garlic bread, multigrain biscuits, cake rusks, fruit cakes, vegetable puffs, and
vegetable patties. He planned to sell the snacks at a maximum retail price of ₹20 per pack, while the instant
tea premixes would be sold in three flavors at a retail price of ₹12 per pack. This pricing strategy was
competitive, with the prices being lower than those of some leading national players. The distribution
strategy involved selling all these products from the five cafés as well as a few selected retail counters in
Jaipur and Ajmer. The retailers would be offered 25 per cent margins to sell the products. Jainani estimated
that an investment of around ₹2 million would be required for the development and launch of these products
with “Tea Connect” as the brand name.
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THE DILEMMA
Tea Connect was at a critical stage of its growth, and the future of the company hinged on the decision
Jainani needed to make in order to increase the brand equity of the company. His choices were crucial to
the achievement of his ambitious goal of making Tea Connect a ₹200 million company by 2022. Jainani
had many options open to him, including renovating the existing restaurants to increase the seating capacity
and kitchen space and so to provide faster service, launching the Tea Connect brand of consumer packaged
goods, and pursuing three franchising offers. He also needed to decide how to renovate without affecting
business; how to extend the brand using the right strategies, keeping in mind the potential challenges; and
whether to expand via the franchise route in Jaipur, Jodhpur, and Mount Abu when already operating five
COCO cafés. First, however, Jainani had to decide whether to explore all three options simultaneously or
whether to choose one as the starting point.
Swati Soni is an associate professor at the Jaipuria Institute of Management, Jaipur, India; Sandeep Puri is an associate
professor at the Asian Institute of Management, Philippines; Shweta Pandey is an associate professorial lecturer at De
La Salle University, Philippines; and Tina Jain is a deputy manager at the Jaipuria Institute of Management, Jaipur, India
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EXHIBIT 1: SELECTED FINANCIALS FOR TEA CONNECT, 2017–2019 (IN MILLION ₹)
2016 2017 2018 2019

Net Revenue 17.7 23.7 33.4 49.1
Cost of Sales 5.6 7.3 9.8 13.5
Operating Expenses 7.8 9.6 14.2 22.8
Other Income (Loss)* 0.2 0.2 0.5 0.5
Net Income 4.5 7 9.9 13.3
Notes: *Includes gain (loss) on equity investments, settlement income, benefit (provision) for income taxes, cumulative effect
of changes in accounting principles, and other income. Figures have been changed to maintain confidentiality.
Source: Provided by the company.
EXHIBIT 2: PROMOTIONAL CAMPAIGNS AT TEA CONNECT
EXHIBIT 3: AMBIANCE OF TEA CONNECT
Source: Provided by the company
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EXHIBIT 4: CUSTOMER SATISFACTION REPORT FOR JANUARY–FEBRUARY 2020 (% OF RESPONDENTS)
Strongly Disagree Disagree Neutral Agree Strongly Agree Total

Food Variety
There is a good variety of tea. 0 1 3 12 84 100
There is a good variety of food items. 0 1 3 11 85 100
Food Quality
The order is served accurately. 0 1 3 16 80 100
The food is served fresh. 0 2 5 9 84 100
The dish size is reasonable. 1 3 6 11 79 100
The food is presented properly. 1 2 4 13 80 100
Service
The staff is prompt and courteous. 0 1 5 17 77 100
The service is prompt and fast. 3 5 8 14 70 100
The waiting time is reasonable. 15 19 28 11 27 100
Cleanliness
The restaurant is clean and hygienic. 0 2 4 17 77 100
The tables/cutlery/menu card are clean. 0 2 5 12 81 100
The restroom is clean. 0 2 5 11 82 100
The staff wear clean clothes. 0 3 4 13 80 100
Ambience
The environment is comfortable. 4 7 13 11 65 100
The ambience is appealing. 2 5 9 12 72 100
The seating space is comfortable. 0 2 8 10 80 100
There is sufficient seating. 14 18 15 8 55 100
Others
Tea Connect offers value for money. 1 2 2 11 84 100
You will recommend Tea Connect to others. 1 3 6 5 85 100
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EXHIBIT 5: FINANCIAL COSTS OF CREATING A NEW TEA CONNECT OUTLET/FRANCHISE
Initial Set-Up Costs (in ₹)
Interior Cost of 1,500 Square Feet 100,000

Kitchen Appliances, Cutlery, Furniture, and Information
750,000
Technology Infrastructure
Rent (Three Months) 450,000
Variable Costs (Three Months) 180,000
Employee Hiring and Training Cost 30,000
Total (Three Months) 1,510,000
Monthly Costs (in ₹)
Estimated Fixed Costs (Monthly)

Employees’ Salaries 60,000
Utilities (Gas, Water, Telecommunications, and
45,000
Electricity Charges)
Estimated Variable Costs (Monthly)
Raw Materials for Cooking 40,000
Maintenance 5,000
Promotional Expenses 10,000
Miscellaneous Expenses 5,000
Total 165,000
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ENDNOTES
1
₹ = INR = Indian rupee; 1₹ = US$0.01 on December 31, 2019. All currency amounts are in INR unless otherwise specified.
2
“Ajmer,” Lonely Planet, accessed February 17, 2020, www.lonelyplanet.com/india/rajasthan/ajmer.
3
“Kitty parties” are women-only rotating savings clubs run by close-knit groups in many Asian countries. The members
contribute a predetermined amount to the pool or “kitty” at every meeting. The collected amount is handed to the host, who
arranges food and activities on the day of the meeting.
4
“Vada pav” is a local Indian fast food.
5
“Serving Up a Great Restaurant Customer Experience: Through the Eyes of Guests,” Deloitte Touche Tohmatsu Limited,
accessed March 13, 2020, https://www2.deloitte.com/us/en/pages/consumer-business/articles/restaurant-customer-
experience-strategy.html.
6
Tea Connect employed secret shoppers to visit different cafés as regular customers and report on the ambience, products,
and service quality.
7
Saul McLeod, “Likert Scale Definition, Examples and Analysis,” Simply Psychology, 2019, accessed May 22, 2020,
www.simplypsychology.org/likert-scale.html.
8
The defection rate is calculated as the percentage of customers who leave a business in a single year.
9
The churn rate is calculated as the number of customers who leave a business in a single year divided by the number of new
customers in the same period.
10
“Chasing Their Dream – The Journey of Tapri,” BW Disrupt, June 6, 2016, accessed February 13, 2020
http://bwdisrupt.businessworld.in/article/Chasing-Their-Dream-The-Journey-of-Tapri-The-Tea-House/06-06-2016-98823/.
11
PS Sundar, “Per Capita Tea Consumption Must Go Up,” The Hindu Business Line, March 28, 2019, accessed January 8,
2020, www.thehindubusinessline.com/economy/agri-business/per-capita-tea-consumption-must-go-up/article26666179.ece.
12
Ghosh Ambarish, “Tea Culture: A Transformation is Brewing in India,” The Statesman, May 17, 2019, accessed January 8,
2020, www.thestatesman.com/business/tea-culture-transformation-brewing-india-1502756133.html.
13
Euromonitor International, “Tea in 2018: Annual Market Overview,” May 2018, accessed January 26, 2020,
www.euromonitor.com/tea-in-2018-annual-market-overview/report.
14
Euromonitor International, “Hot Drinks in India,” December 2019, accessed January 26, 2020, www.euromonitor.com/hot-
drinks-in-india/report.
15
Ibid.
16
“Chasing Their Dream – The Journey of Tapri,” op. cit.
17
“Tadka Maggi” is fried Maggi.
18
“Tapri – The Tea House,” Zomato, accessed February 3, 2020, www.zomato.com/jaipur/tapri-central-c-scheme.
19
“Chaisa – A Rahul Mundra Story (I Am Not Average),” Business Alligators, September 14, 2016, accessed February 3,
2020, www.businessalligators.com/chaisa-rahul-mundra-story-not-average/.
20
The term “chammak challo” is used to refer to a girl who is flashy in appearance.
21
“Chaisa,” Zomato, accessed February 3, 2020, www.zomato.com/jaipur/chaisa-c-scheme.
22
Prerna, “Gulab Ji Chai in Jaipur – Not An Ordinary Tea Stall,” Wanderers Hub, June 26, 2019, accessed February 4, 2020,
www.wanderershub.com/gulab-ji-chai-in-jaipur/.
23
“Gulab Ji Chai,” Zomato, accessed February 4, 2020, www.zomato.com/jaipur/restaurants/gulab-ji-chai.
24
“Samosas” are triangular savory pastries containing spiced vegetables that are fried in ghee or oil.
25
“Kachori” is a spicy Indian snack made of fried dough.
26
“Tandoori paneer tikka” is an Indian snack consisting of barbequed processed cheese.
27
“Gulab Ji Chai Menu,” Zomato, accessed February 4, 2020, www.zomato.com/jaipur/gulab-ji-chai-adarsh-
nagar/menu#tabtop.
28
“About,” Chai Point, accessed February 3, 2020, https://chaipoint.com/about.html.
29
$ = USD = United States dollars.
30
Sindhu Kashyaap, “Seven Years and 65 Stores Later, Chaayos Launches Its First Outlet in Bengaluru,” YourStory Academy,
November 6, 2019, accessed February 4, 2020, https://yourstory.com/2019/11/seven-years-chaayos-tea-startup-delhi-
bengaluru?utm_pageloadtype=scroll.
31
“About Us,” Chaayos, accessed February 4, 2020, www.chaayos.com/about.
32
Kashyaap, op. cit.
33
Soumya Gupta, “Chaayos Plans to Expand Tea Range, Open More Stores in India,” LiveMint, August 2017, accessed
February 8, 2020, www.livemint.com/Companies/fyIID97VbEEHrkmmHATfwJ/Chaayos-plans-to-expand-tea-range-open-
more-stores-in-India.html.

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TEA CONNECT: EXPLORING NEW OPTIONS

Copyright © 2020, Ivey Business School Foundation Version: 2020-07-06

The Marketing Mix at Tea Connect

Customer Experience Management at Tea Connect

Customer Satisfaction Survey

TEA CAFÉ MARKET IN INDIA

Local Players in Jaipur

THE WAY FORWARD

New Café or Franchising

Launch of Consumer Packaged Goods

EXHIBIT 1: SELECTED FINANCIALS FOR TEA CONNECT, 2017–2019 (IN MILLION ₹)

2016 2017 2018 2019

EXHIBIT 2: PROMOTIONAL CAMPAIGNS AT TEA CONNECT

Source: Provided by the company.

EXHIBIT 3: AMBIANCE OF TEA CONNECT

Source: Provided by the company

EXHIBIT 4: CUSTOMER SATISFACTION REPORT FOR JANUARY–FEBRUARY 2020 (% OF RESPONDENTS)

Strongly Disagree Disagree Neutral Agree Strongly Agree Total

Source: Provided by the company.

EXHIBIT 5: FINANCIAL COSTS OF CREATING A NEW TEA CONNECT OUTLET/FRANCHISE

Initial Set-Up Costs (in ₹)

Interior Cost of 1,500 Square Feet 100,000

Monthly Costs (in ₹)

Estimated Fixed Costs (Monthly)

Source: Provided by the company.

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