Tea is a daily habit in most parts of India. The same can’t be said for coffee.
Cafe Coffee Day can be credited with bringing the café culture to India back in 1993—with its massive café network and nearly 60,000 vending machines serving corporate offices. Soon, cafés became a veritable hangout spot—for both work and play—with a line of café chains, such as Barista and Starbucks, the following suit.
Tall flask or tall order?
Since Chai Point’s flask’s design is what is new and not the materials, the design can be patented. But with minor tweaks, anyone can claim to have made a new flask and go around the patent. “Maybe we could’ve attempted [patenting the flask]. But the standard advice we got was not to go for it,” says Bijral. This means that Chai Point will have to keep improving on the flask to stay ahead of other people or companies that may use flasks similar to Chai Point
Unlike India, though, most cafés in China aren’t designed to cater to people spending long hours in-store.
Luckin started by selling coffee to those who couldn’t leave the desk. Customers could now get their coffee delivered cheaper than before. Similarly, Chai Point focuses on delivering hot tea to its customers through a special flask which manages to keep the tea hot until after it’s delivered. “I think their innovation was the flask,” says Goel.
“Our focus is on customer experience through packaging,” says Bijral. The flasks are stocked like sheets, which have to be assembled before pouring the drink in. They are also designed to withstand rough usage by delivery personnel. Nobody wants cold tea, which is hard to achieve with a 30-minute delivery window, and that’s where the flask helps.
But Chai Point doesn’t stop at flasks. There’s also box, which, unlike coffee machines from Cafe Coffee Day, aren’t bought. The machine itself is not charged. It is the tea or coffee consumed that gets charged. (A lot like the subscription model for the water purifier Livpure, which The Ken wrote about recently.)
What are the charges?
BoxC comes with a maintenance fee of Rs 1500-2000 ($21-28) per month. The machines use only Chai Point branded consumables and promptly rejects all else. Data from the machines gets uploaded to Chai Point servers; this information can also be accessed by office administrators to see how much tea or coffee is being consumed, payment details, etc. BoxC sends out messages if the tea or coffee powder in the machine is running low, and if the machine needs repair or servicing. And since Chai Point charges for the consumables alone, the data ascertain how much a customer needs to be charged.
Cafe Coffee Day’s dispensers are, in comparison, strictly 2000-and-late.
Chai Point doesn’t view tech as a crutch; it sees it as a core strategy. Be it inventory management, its supply chain or even store-to-customer delivery, the company avoids doing things manually as much as is possible.
How is the data passed?
“[Bijral] has always been obsessed that from sourcing to sales, there should be some technology component that drives our information and our data, because that’s the only way to ensure accuracy,” says Ash Lilani, Managing Partner and Co-founder of Saama Capital, an early investor at Chai Point.
Enter SHARK, Chai Point’s proprietary system that tracks orders, payments, and analyses spending habits and spending power. At stores, the system uses facial recognition to initiate payments from the customers’ e-wallets (although many customers decline to use it); it can even provide specific recommendations on the app and sites for particular users, like how an e-commerce page would show recommendations on what to buy based on past behavior. The system also connects every channel of Chai Point’s business and puts them in one place—the cloud.
The company is now starting to roll this out to other brands, claims Bijral, without divulging further details.