India runs on chai. It’s the beverage of choice in the morning, at the office break room, and any roadside shack. Not surprisingly, one of the most discussed ventures for new business owners is branded tea. At the head of all that is the brand MBA Chai Wala, established by a man who dropped out of his MBA program at Ahmedabad’s GNREC, and now sells chai on the street and has created one of the most popular brands in the country.
People who’ve entered MBA Chai Wala franchise cost in a search bar are considering investing in this business. This guide details the real numbers, profit potential, and how it compares to other businesses you can start today, even some of the best franchises to own.
What is MBA Chai Wala?
It began in 2017 as just a single roadside stall, and is now a familiar national brand that is available in dozens of Indian cities. The “MBA” is a tribute to the founder and his hometown (Mr. Billore Ahmedabad), and that is a part of the brand that captivates users: an underdog who turned a heartbreak and a dropped degree into a successful business.
That’s a story that is more important to a franchisee than it sounds. The time and money required to create awareness is much less when customers already know and have a positive association with a name. You’re tapping into an existing fan base, not from scratch.
The company is operating on a franchise-owned, franchise-operated (FOFO) model. Simply put, the brand provides you with the blueprint, recipes, branding, and training, and you take care of the day-to-day operations of your outlet.
MBA Chai Wala Franchise Cost: Breaking Down the Numbers
The straight answer as franchise fees tend to be not quite a single number. The prices vary depending on the model you select, the city, the rent, and the room size. The ranges below are based on published figures from various sources, but can vary greatly, so please check the exact terms directly with the company before committing to a franchise.
The franchise fee is usually from ₹3 lakh to ₹6 lakh per format at a specific time. It is this that makes it possible to use the name, logo, menu and processing system of the MBA Chai Wala.
Total investment made based on model:
- Kiosk model. The smallest and most economical size, ideal for use in malls, corporate parks, colleges and high-traffic areas. The total investment is in the range of Rs.8 lakh – Rs.16 lakh and requires a relatively small space of around 100 to 300 sq. ft.
- Dine-in model. More spacious outlet and seating for a more complete café experience. This increases the investment figures further, typically to ₹20–25 lakh.
- Lounge and highway layouts. Larger, 1,500 sq. ft. and more (highway sites may be several thousand square feet), at an increased investment.
The cost of the money: In addition to the franchise fee itself, the money in your budget is for kitchen equipment, interior/finishing, initial raw materials, one-time marketing/branding for the launch, and working capital. In addition to the initial investment, you’ll have any ongoing monthly responsibilities such as staff wages, rent, utilities, and inventory. Standard licences, FSSAI and GST registration, and local trade licence are also required.
The estimated all-in cost for a small kiosk is typically cited as being around ₹10 lakh or more, depending on the specific details of the project. The cost of a small kiosk can be estimated at around ₹10 lakh or higher, taking into account the working capital required for the project, which may take several months to complete. Don’t count to the penny; leave some money for spare.
What About Profit?
Everyone really cares about this. The gross profit margin of an MBA Chai Wala can be expected to be in the range of 40-50%. The return on investment is expected in around 12-18 months for a well-placed and well-run store. Some of the franchise consultant’s cost breakdowns provide what looks like a nice monthly net profit for a much busier outlet, but these should be considered as a best-case scenario and are not a promise.
Two factors actually determine the results you get:
- Location. Any chai outlet depends on footfall. It’s like a stall in a college versus a street filled with a lot of offices.
- Operations. The outlets that succeed are the ones that are consistent, clean, quick, and cost-controlled.
The good thing about tea products is true repeat demand. People don’t buy chai just once; they buy chai every day, many times over. This inherent frequency is the reason why it’s appealing for one-time purchase companies not to.
Is the MBA chai wala one of the best franchises to have?
When it comes to the best franchises to buy in India, MBA Chai Wala ticks several boxes that savvy franchise owners seek:
- Moderately low to low entry capital for full-service restaurant franchises.
- Founder’s viral story and social media presence create strong brand recognition.
- Simple, standardized operations. Pre-packed menus and ready-mixed spices eliminate the need for a trained chef, and also minimize the headaches surrounding employee changes.
Evergreen demand for the core product.
However, none of the franchises are entirely secure. There is intense competition from local tea stalls, rent and royalty payments can eat into profits, and sales are lower in some areas when the weather is cold. Decide which franchises are best to own based on your investment, your location, and your management experience, not the “typical” entrepreneur.
Where does it fit into the most profitable businesses?
The food and beverage industry is always one of the most profitable industries for small business entrepreneurs, due to high demand and low cost of units. In particular, the profit margin on tea is quite high, and the customer is a regular one.
While the most profitable always has a caveat: volume and discipline are key to profitability! A simple chai kiosk in the right place can provide a better return than a more elaborate business in the wrong place. The most successful companies are not the sexiest; they are the businesses that have predictable demand, manageable costs, and a rapid inventory cycle. A branded tea outlet which fits the profile quite well.
Top 10 Most Successful Businesses to Start in India
If you’re still considering your options, here’s a quick rundown of the types of businesses that always appear in the top 10 list of successful businesses to start, and most of them have the same low overhead / high demand characteristics that make chai shops appealing:
- Food and drink establishments. Tea and coffee kiosks, cloud kitchens, and fast-food snacks.
- Franchise businesses. Brands that have an established demand base and support system.
- Digital marketing & content services. Low start-up cost & increasing demand.
- E-commerce and dropshipping. Connect with customers across the country without a brick-and-mortar location.
- Health, wellness, fitness. Gym, Yoga, healthy meal prep.
- Education and tutoring. Coaching and skill courses, edtech.
- Beauty and personal care. Salon, cosmetics, grooming services.
- Home services. On-demand Cleaning, repair, and maintenance.
- Handmade and D2C products. Fruit and vegetables in packaging to handmade products sold online.
- Event and hospitality services. Events in the catering, travel, and planning sector.
What holds all these factors together is repeat demand, low startup costs, and scalability. MBA Chai Wala falls somewhere between the first two.
Women in Business: Chai as an Accessible Entry Point.
One of the less flashy assets of a franchise like this is how easy it is to get into: that’s particularly important for women entrepreneurs, who are starting businesses while also having other responsibilities that go unmet by traditional financing.
The chai kiosk is a relatively low-capital entry: requiring a small amount of space, a small team, and a business model where training and systems can be incorporated into the kiosk since they’re built into it, so no experience in the industry is required. A set franchise removes much of the guesswork for women entrepreneurs who want to try their hand at the food and beverage market or those who wish to expand into a bigger business.
The trend of women entrepreneurship in India has been on the rise for years, with a special emphasis on first-time entrepreneurs with special startup loans, self-help groups, and Government schemes. These are some of the ingredients of a franchise’s ready-made playbook, and they go hand in hand with certain aspects of business ownership that can be daunting to novices. This is not some kind of wild shot in the dark.
The Bottom Line
Typically, the cost of the franchise for the MBA Chai Wala starts at approximately ₹8 – 10 lakh for a kiosk and goes up to approximately ₹25 lakh for a complete dine-in outlet with a franchise fee of approximately ₹3 – 6 lakh. You get an identifiable brand, it’s easy to use, and it’s used every day.
Is this the correct thing to do? It depends on your capital, where you are based, and how involved you’d like to be. If you are looking around for the best franchises to invest in and the most profitable businesses in the F&B industry in India, then a branded chai outlet is an excellent choice as long as you invest in it with realistic numbers, a sound location, and a disciplined team. Before signing anything, get the official cost sheet, check all the numbers, and if possible, talk to some of the current franchisees about their workday.
Note: The data contained in this article is based on publicly available franchise listings and may differ from source to source and year to year. Please check any costs and terms with MBA Chai Wala before investing.
