Chai, the Hindi word for tea, is an ancient and customary beverage in India. India is the world's second-largest tea producer. Tea can be enjoyed at any time of day, whether as a morning cup of bed tea or an afternoon post-lunch tea. Setting up a tea stall or starting a tea-selling business is regarded as a lucrative and viable business opportunity. In this article, I will explain How to Start a Tea Shop in India? And you must also know that the Tea Business is Evergreen Profitable Business Idea, which will be in demand forever.
How to start a Tea Shop in India? Evergreen Profitable Business Idea!
Tea franchise businesses can also opt as a startup for first-time business owners, as well as for established businessmen. Setting up a tea stall or starting a franchise business can be rewarding, depending on its physical location and its customer base.
Know How to Start a Tea ‘Chai’ Business in 2023
Find Target Customers
A tea business can be initiated with relatively low investment and cater to customers in metropolitan cities, small towns, and remote villages. Starting a tea business can also be regarded as a small business idea that women entrepreneurs can run and manage. Therefore, business owners must determine the type of customers they want to serve in specific locations or areas.
Starting a Tea Stall or Franchise Business
The investment amount determines whether a business owner opts for a tea stall or a franchise business. Tea stalls can be established with a lower investment than franchises, which require a more significant investment. Franchise business models aid business owners in marketing and selling various tea varieties that can be served from tea bars or counters. Popular tea types include Green Tea, Herbal Tea, Cardamom Tea, Black Tea, Fermented Tea, Iced Tea, Aroma Tea, Kesar Tea, Tandoori Chai, and more.
Components required to start a Tea Stall/Business
To complete the tea-making process, a business owner must have essential equipment, utensils, and raw materials on hand, including tea, tea-making utensils, a kettle, LPG cylinder, stove, serving glasses, glass holders, milk, sugar, water, tea powder/masala, and other related ingredients. Additionally, laborers or workers are necessary to serve or deliver tea to various locations, such as shops, markets, offices, complexes, commercial areas, etc., as per the requirements.
Searching and Finalizing a Location
The location of a tea business determines its success or failure, making it a critical factor for any business. Therefore, it is recommended to conduct thorough research before finalizing a location for a tea stall or franchise business. For a tea stall, a small area may be sufficient, while a tea bar would require approximately 500 sq. ft. of space to place and operate equipment, utensils, and raw materials. Sitting arrangements can be made according to the available space or location.
Legalizing your Tea Business
Below are the licenses and permissions that need to be obtained from the respective authorities to legalize the tea business:
a) Finalizing a Name for your Tea business
Ensure that the chosen name for the business does not match any existing registered company or enterprise in India or maybe in your local municipality. The name should be unique and exclusively related to the tea business.
b) Company Registration
Small to medium-sized tea stall businesses can be registered as a Sole Proprietorship or Partnership Firm, as applicable. If a partner is involved, the business can be registered as a Limited Liability Partnership (LLP) or Private Limited Company, which should be registered under the Registrar of Companies (ROC).
c) GST Registration
As per the GST law defined by the Government of India, obtaining a GST number is mandatory to commence a tea business.
d) MSME/SSI Registration
The Micro-Small and Medium Enterprise (MSME)/ Small Scale Industry (SSI) registration enables registered business entities to avail government schemes and subsidies under specific guidelines mentioned in the MSMED Act, 2006.
e) Obtaining a Trade License
The Trade License is specific to the state where the tea business will be established and operated, and must be obtained accordingly.
f) Getting Food Safety and Standard Authority of India (FSSAI) License
Obtaining an FSSAI License is mandatory for any business entity engaged in the manufacturing, processing, production, or distribution of food items.
Also read: Part-time Business Zero Investment
Tea Business Plan in India
A well-crafted business plan is essential for both tea stall and franchise business owners. The business plan should provide background information and details on the business and related activities, which will assist in obtaining funds or business loans from financial institutions such as public or private sector banks, Non-Banking Financial Companies (NBFCs), Micro Finance Institutions (MFIs), Small Finance Banks (SFBs), and Regional Rural Banks (RRBs) at any point during the course of the business tenure.
The Tea Business Plan should include details related to working capital investment, budgeting, information on employees, including laborers and workers, marketing and advertising strategies (for franchise businesses), equipment and machinery used, and quantity of raw materials required.
FAQs Related to Tea Shop in India
Q. What is the minimum investment required to start a tea business in India?
The minimum investment required to start a tea business in India depends on the type of business you want to start. For a small tea stall, the investment can be as low as Rs. 10,000 to Rs. 50,000. However, for a tea bar or franchise business, the investment can range from Rs. 5 lakhs to Rs. 50 lakhs or more, depending on the location and scale of the business.
Q. Is it necessary to have prior experience in the tea industry to start a tea business?
No, it is not necessary to have prior experience in the tea industry to start a tea business in India. However, having knowledge about the different types of teas and their preparation methods can be helpful. It is also recommended to conduct a thorough research about the tea industry, market demand, and competition before starting the business.
Q. Can women entrepreneurs start a tea business in India?
Yes, women entrepreneurs can start a tea business in India. In fact, starting a tea business can be a good small business idea for women entrepreneurs as it can be managed with low investment and has a good market demand. Additionally, the Government of India also provides various schemes and subsidies to encourage women entrepreneurship in the country.
Q. What types of tea can be served in a tea business?
There are various types of tea that can be served in a tea business, including but not limited to: Green Tea, Herbal Tea, Cardamom Tea, Black Tea, Fermented Tea, Iced Tea, Aroma Tea, Kesar Tea, Tandoori Chai, etc.
Q. How can I get a trade license for my tea business?
To get a trade license for your tea business, you need to follow these steps:
- Contact the local municipal corporation office or the State Industrial Department to get the application form for a trade license.
- Fill the form with all the required details and attach the necessary documents like identity proof, address proof, and proof of business ownership.
- Submit the application form along with the required documents to the concerned department.
- After submission, the department will verify the application and may conduct an inspection of your business premises.
- Once the verification and inspection process is completed, the department will issue the trade license.
Note: The procedure for obtaining a trade license may vary slightly depending on the state and city where your business is located.
Q. What is the procedure for obtaining an FSSAI license for a tea business?
The procedure for obtaining an FSSAI license for a tea business is as follows:
- Visit the official FSSAI website and create an account.
- Fill out the FSSAI application form and provide all the required details such as name, address, type of business, etc.
- Submit the necessary documents such as identity proof, address proof, and proof of business registration.
- Pay the required fees online.
- Once the application is processed and approved, the FSSAI license will be issued.
It is important to note that different types of FSSAI licenses are available depending on the size and nature of the tea business, and it is essential to obtain the appropriate license.
Q. Can I start a tea business from home?
Yes, you can start a small tea business from home with minimal investment. However, it is important to ensure that you comply with all the legal requirements and obtain necessary licenses and permits. You also need to consider factors like space, equipment, and raw materials required for the business. Additionally, marketing and promotion are crucial for attracting customers and growing your business.
Q. Do I need to register my tea business as an MSME?
Registering your tea business as an MSME is not mandatory. However, registering your tea business as an MSME has several benefits, including eligibility for government schemes and subsidies.
Q. What is the procedure for registering a tea business as a Sole Proprietorship or Partnership Firm?
To register a tea business as a Sole Proprietorship or Partnership Firm, you need to follow the below steps:
- Choose a unique name for your business.
- Obtain a PAN card for the proprietor or partners.
- Open a bank account in the name of the business.
- Obtain a GST registration number.
- Obtain any necessary licenses and permits, such as a trade license and FSSAI license.
- Obtain MSME/SSI registration, if applicable.
- Prepare the necessary documents, such as the partnership deed or proprietorship declaration.
- Apply for registration with the Registrar of Companies (ROC) for a Partnership Firm or Sole Proprietorship registration, as applicable.
- Submit the necessary documents and pay the required fees.
- Obtain the registration certificate.
Q. Is it mandatory to obtain a GST number for a tea business?
Yes, obtaining a GST number is mandatory for a tea business in India as per the GST law defined by the Government of India.
Q. What are the necessary licenses and permits required to start a tea business in India?
The necessary licenses and permits required to start a tea business in India are:
- Trade License: It is a state-specific license that needs to be obtained from the local municipal corporation where the tea business is located.
- FSSAI License: It is mandatory for any business entity engaged in the manufacturing, processing, production, or distribution of food items.
- GST Registration: It is mandatory for businesses with an annual turnover of more than Rs. 40 lakhs (for goods) and Rs. 20 lakhs (for services) to obtain a GST registration.
- MSME Registration: Micro-Small and Medium Enterprise (MSME)/ Small Scale Industry (SSI) registration allows registered businesses to avail of government schemes and subsidies under certain guidelines mentioned under the MSMED Act, 2006.
- Shop and Establishment Act: It is a state-specific license that needs to be obtained from the local municipal corporation where the tea business is located.
- Fire License: It is mandatory for businesses that involve the use of flammable materials like gas stoves or LPG cylinders.
- Signage License: It is a license for the display of the business name and other details outside the shop or establishment.
- Health Trade License: It is a license obtained from the health department of the local municipal corporation for ensuring compliance with hygiene and sanitation guidelines.
Q. What is the ideal location for a tea stall or franchise business?
The ideal location for a tea stall or franchise business can vary depending on several factors such as the target market, competition, accessibility, foot traffic, and nearby facilities. However, some common factors to consider are busy streets, market areas, malls, colleges, bus/railway stations, and office complexes. It is recommended to conduct thorough research and analysis of the potential locations before finalizing.
Q. How can I attract customers to my tea business?
There are several ways to attract customers to your tea business:
- Quality of tea: The most important aspect of any tea business is the quality of tea. Offer high-quality tea that is freshly brewed and prepared using good quality ingredients.
- Variety: Offer a variety of teas such as black tea, green tea, herbal tea, and flavored tea to attract customers with different tastes.
- Ambience: Create a cozy and comfortable ambience in your tea shop with comfortable seating arrangements, soothing music, and a pleasant décor.
- Discounts and offers: Offer discounts and special offers to attract customers. For example, offer a free cup of tea on a customer's first visit or provide a loyalty card that offers discounts after a certain number of visits.
- Social media marketing: Use social media platforms such as Facebook, Instagram, and Twitter to promote your tea business. Post attractive pictures of your tea and engage with your followers to create a buzz about your business.
- Local events: Participate in local events such as fairs and festivals to promote your tea business and attract new customers.
- Partner with other businesses: Partner with local businesses such as bakeries and cafes to offer your tea and gain exposure to new customers.
Q. How can I differentiate my tea business from others in the market?
There are several ways to differentiate your tea business from others in the market, such as:
- Quality: Focus on serving high-quality tea to your customers. You can source premium tea leaves or blends and offer unique flavors or combinations.
- Ambiance: Create a cozy and comfortable ambiance in your tea stall or franchise. You can use warm lighting, soft music, comfortable seating, and attractive decor to make your customers feel welcome and relaxed.
- Personalization: Offer customized tea blends or flavors based on customers' preferences or dietary requirements. You can also personalize the packaging or presentation of your tea products.
- Innovation: Experiment with new and unique tea recipes, such as tea cocktails or tea-infused desserts. You can also offer tea tastings or workshops to educate your customers on different tea varieties and brewing techniques.
- Sustainability: Emphasize eco-friendly practices in your tea business, such as using biodegradable packaging or sourcing tea leaves from ethical and sustainable sources. This can help attract environmentally conscious customers.
Q. What is the typical profit margin for a tea business?
The profit margin for a tea business can vary depending on various factors such as location, size of the business, quality of tea, pricing strategy, and competition in the market. However, generally, a tea business can expect a profit margin of 20-30%.
Q. How many employees are required to run a tea business?
The number of employees required to run a tea business depends on various factors such as the size of the business, the volume of customers, and the range of products offered. For a small tea stall, one or two employees may be sufficient. However, for a larger tea business such as a tea bar or franchise, multiple employees may be required to handle operations, customer service, and other aspects of the business. Ultimately, the number of employees needed will depend on the specific requirements and goals of the tea business.
Q. What is the shelf life of tea, and how can I store it?
The shelf life of tea varies depending on the type of tea and how it is stored. Generally, tea can last up to 6-12 months if stored properly.
To store tea properly, it should be kept in an airtight container away from moisture, heat, light, and strong odors. Avoid storing tea in the refrigerator or freezer as it can absorb moisture and odors from other foods. It is also recommended to store different types of tea separately to prevent them from blending flavors.
Some types of tea, such as green tea, have a shorter shelf life and may only last up to 3-6 months. It is important to check the expiration date on the tea packaging and consume the tea before the expiration date.
Q. How can I market my tea business?
There are various ways to market your tea business, some of which are:
- Social Media Marketing: Create social media pages for your tea business and share high-quality photos of your teas and tea-related products. Engage with your followers and post regularly to keep them interested.
- Email Marketing: Collect email addresses of your customers and send regular newsletters about your new products and offers.
- Collaborations and Tie-ups: Collaborate with other businesses, cafes or restaurants to serve your tea and increase your brand visibility.
- Referral Marketing: Encourage your existing customers to refer your tea business to their friends and family by offering them discounts or other incentives.
- Events and Tastings: Host tea tasting events and offer samples of your tea to attract potential customers.
- Online Marketplace: List your tea products on online marketplaces like Amazon, Flipkart, etc. to reach a larger audience.
- Packaging and Branding: Create attractive and unique packaging for your teas and other products, with a distinct branding to stand out from the competition.
- Promotions and Discounts: Offer special promotions and discounts to attract new customers and retain existing ones.
Q. What are the challenges of running a tea business in India?
Some of the challenges of running a tea business in India include:
- Competition: The tea business in India is highly competitive, and standing out in the market can be a challenge.
- Fluctuating prices: The prices of tea can fluctuate rapidly due to changes in weather and other factors, which can impact profitability.
- Seasonal demand: Tea consumption tends to vary seasonally, and businesses must be prepared to adjust their offerings to meet changing demand.
- Dependence on suppliers: Tea businesses depend on reliable suppliers for their raw materials, and disruptions in the supply chain can have a significant impact on operations.
- Government regulations: There are various licenses and permits required to start a tea business in India, and navigating the regulatory environment can be challenging.
- Labor costs: The cost of labor in India is rising, which can impact profitability for businesses with significant staffing needs.
- Brand building: Building a strong brand and reputation can take time and resources, and businesses must be prepared to invest in marketing and advertising to achieve success.
Q. What are the growth prospects for a tea business in India?
The growth prospects for a tea business in India are quite promising. The tea industry in India is one of the largest in the world, and India is the second-largest producer of tea after China. With a large domestic market and increasing demand for high-quality tea, there is a lot of potential for growth in the tea business.
Moreover, the increasing popularity of tea among health-conscious consumers, as well as the rise of tea tourism in India, presents new opportunities for entrepreneurs to expand their tea businesses. The government of India is also providing various incentives and subsidies to promote the growth of small businesses, including tea businesses.
Additionally, the growth of e-commerce and digital marketing has opened up new avenues for tea businesses to reach a wider audience and expand their customer base. Overall, the tea business in India has a bright future, and entrepreneurs who are passionate about tea and willing to work hard can expect to see significant growth and success.