The Case Of The Tea Bar Chain

Growtist, the business detective, has always felt excited while entering a tea bar (such as Chaayos) but a bit dis-satisfied upon leaving it. The price feels to be a bit on the higher side, and the tea does not taste that well. Surprisingly, he has never had this feeling at a Barista or a Cafe Coffee Day–despite having to pay 20-30% higher there!

He wonders: Is it really a good idea to do with tea what Howard Schultz did with coffee?

Can you connect the 2 dots (based on first-principles) below and judge?

1. The value

2. The cost

Do tea bars, in their current form, make a good business idea?

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Growtist's view.

A tea bar may be 20-30% cheaper than a coffee bar. But, it offers me a tea that is inferior (or, at best, similar) to a home-made one. But, a coffee bar offers me a coffee that tastes much better that a home-made coffee.

So, an India customer may visit a tea bar for a few times, due to the ‘intrigue/curiosity’ factor. But, will gradually get dis-satisfied with the value-proposition, and hence will switch to the coffee bar.

In order to do well, the tea bar chains will have to alter their business model–esp. their value proposition. Great ambience but inferior taste will not work–at least for a tea bar and esp. when a coffee bar is next to it having a much better value-proposition.