Chaiiwala is taking the world by storm, one cup of tea at a time. We talk to Mustafa Ismail, co-director of the tea and Indian street food brand, about the franchise’s rapid global growth, overtaking Starbucks as the go-to hot drinks option, and more
GF: How did Chaiiwala evolve into its latest offering?
MI: The brand started three and a half years ago in the U.K. with a small store. However, we had the vision to grow it to a big global business even from that one, tiny, eight-seater store.
Chai (tea) in the U.K. is a lost culture. As it is a time-consuming process, people don’t make it at home anymore. We wanted to tap into this and bring back our legacy.
My grandfather was a chaiwala (tea seller) on the streets of Delhi in his early years. A secret family recipe has been passed down through the generations, and traditionally within our family, it’s the men who make the tea.
So my partners, Sohail Alimohamed and Muhummed Ibrahim, and I decided to open Chaiiwala and bring our family legacy to the forefront. Essentially, my grandfather was a tea seller in India, who then migrated to Malawi and from there he migrated to the U.K. It’s gone full circle with us starting to sell tea in the U.K., and now taking it back to India.
The tea itself is exactly the same family recipe. The only variant is that we use English milk as opposed to the desi (local/Indian) milk you get at home. The spices come from India, even our tea is from Assam (a North Eastern Indian state).
Our brand is an East and West fusion. For instance, we have gone autumnal with our chai flavors, such as an apple pie or pumpkin pie chai. We are fusing the East and the West with the traditional flavors of the karak chai (spiced/masala tea). Our stores are very similar to what you would find at a Starbucks or Costa, but with a wider selection of food offerings which are all desi street food but with a Western twist.
GF: How would you describe your current role?
MI: The other two directors and I are essentially running and growing the brand. We are the cleaners, cooks, project developers, merchandisers, warehouse workers and delivery drivers. The three of us started three and a half years ago and now in the U.K. we have a team of 70 people, but we are involved in every aspect of the business.
My personal favorite part of the job is developing the brand and taking it to new heights. At the moment, we have sold 140 units in the U.K. So, my main goal is to go out there and get these stores open.
GF: What excites you most about the world of franchising?
MI: We always knew we wanted to grow the brand, but to open company-owned stores requires a lot of investment, which we did not have. We don’t have a penny of debt on the company and have not sold a penny’s worth of equity. It is fully owned by us without any debt. To open more company-owned stores would have required us to take on finance, which would have meant our business model changing. This would have had an effect on its growth. It may have grown faster but it would not have grown the way we wanted it to as there would have been external influences on how the brand would be shaped. So, we decided to franchise. This way we maintain control over how the brand evolves. What are some of the most unexpected challenges you faced when franchising the business? One of the biggest lessons we learned was to make sure you select
the right quality of franchisee. There are a lot of people with money to invest, but they are not necessarily the correct parties for your business. You need to find people that have the same drive and ambition, who want to grow your business rather than those that just have money to throw in as an investment.
GF: What is your franchisee selection process?
MI: We are very selective. Firstly, the basics have to be there. They have to have the finances to open the store, without that we can’t proceed. Secondly, we have to see whether they have food and beverage experience. If they don’t, it isn’t necessarily a no but it is always good to have some sort of food experience so they know what can be expected of them. Thirdly, we only take on multi-unit franchisees who can open a minimum of three stores. The last thing, when we meet them face-to-face, it is just whether we get on, because we class our franchisees as partners.
We call our franchisees our partners because although when they sign on to open and invest in a store, it is still essentially ours. We have to make sure that everybody we are partnered with has the same intentions and ambitions for the brand.
GF: What are some of the biggest milestones for Chaiiwala?
MI: We opened our first store three and a half years ago and the second within the end of year one. We then set ourselves a target of opening five stores a year, and smashed that, because last year alone we opened 12 sites.
This year we have 22 locations open already and have 10 more to build in the U.K. and by January, they will be open, too. This works out to one store every two to three weeks.
We are also improving our capabilities at the head office, distribution-wise and development-wise to meet the growing demand. We are fast-growing nationally but are also looking to grow internationally. We have our IP secured for a majority of the nations that we want to enter. Our next biggest markets are India and the Middle East, which will be in the early part of next year.
“There are a lot of people with money to invest, but they are not necessarily the correct parties for your business”
By the end of this year, we will have 30 locations and by the end of next year, we should be at 55 to 60 stores. If we don’t, then it will be considered an unsuccessful year, as we will have sold 140 franchises, not locations. We only have 12 active partners and they are all multi-unit operators. It is about finding the right sites and opening them.
GF: How are you working with Franchise India to bring Chaiiwala to India?
MI: We use them as a brokerage to help us select the right master franchisee, and we are close to signing a deal with a master franchise partner for India. However, we are not going to give away the territory as a whole.
The area is still open but we have a deal for the Delhi NCR area. It is a 50-store deal for Delhi NCR over the next five years, which is a conservative estimate. We are looking for master franchisees and area developers for the remainder of India, too, but are not signing on anybody just yet. We want to make sure that once we have opened a few outlets in India and our profile becomes stronger, we know we will get the right partners coming to us.
GF: Chaiiwala has a distinct point of differentiation in the U.K., how will it stand out in India?
MI: We don’t consider anyone as competition. At the moment, we are a global chai brand. When we are in the U.K., we are the only chai brand, same with America.
When we come to the Middle East and India, we are Chaiiwala of London. We are a chai brand coming from the West but we are giving the population of India something they enjoy. When you look to the West for their coffee culture, you see Starbucks. As Indians, that is not for our palate. We may go for coffee once a day but we will drink chai six times a day. For us, it is about tapping into this state. We always say: ‘We are exactly your palate. Don’t force yourself to have a Starbucks, when you can have a Chaiiwala of London.’
GF: How many stores do you want to open in Asia in the next five years?
MI: In the next five years, we will have over 200 outlets across Asia, and that is not being ambitious, it is based on the deals we have done.
In the West, we have England and Scotland covered. Our first outlets are opening in the middle of next year in Paris. We are also looking to enter Canada and the U.S. towards the end of next year, once approvals have b Ited.
In the Middle East, we have franchisees approaching us from the Emirates and the U.A.E., but we haven’t selected any partners from these areas yet. We met with the Sheikh of Sharjah to secure licenses and deals there because they love the brand but it is not something that they can grow. So, we are looking at forming relationships through them with other parties for the Emirates. We also have Saudi Arabia’s IP going through and have meetings set up for Kuwait and Qatar.
ABOUT THE AUTHOR
Amanda Peters is a staff writer for Global Franchise and What Franchise.
