Costs and Profit Involved in Starting an Amruttulya Tea Franchise in India

May 10, 2024

India is the world's undisputed cup champion, downing a staggering 1.16 billion kilograms of tea in 2022 alone. This love for chai isn't confined to fancy cafes. The ubiquitous chai stalls on every street corner are a testament to India's deep-rooted tea culture.

Tea is a beverage for everyone, accessible and affordable, from bustling megacities to sleepy villages.

India isn't just a tea-drinking nation; it's a tea-trading powerhouse too. In 2021-22, the country exported a whopping 201 million kgs of tea, showcasing its strong presence on the international tea scene [Indian Trade Portal - Tea Industry].

tea and tea pot

Unveiling Yewale Amruttulya's Tea Legacy and Franchise Growth

The Yewale Amruttulya story begins in Pune in 1983. Their website credits the inspiration for the franchise to the Yewale brothers' late father, Shri Dashrath Bhairu Yewale. He owned a tea stall named "Ganesh Amruttulya," and instilled in his sons the core business values of hard work and honesty that continue to guide the brand.

The brothers started small, setting up their first Yewale Amruttulya outlet near Bharti Vidyapeeth in Pune in 2017. Their commitment to quality, warm service, and a focus on customer satisfaction resonated with Punekars, propelling them to local fame.

Today their brand has grown with a heavily connected network in Maharashtra along with 350 strong branches across the country specially in states like Madhya Pradesh, Gujarat, and Karnataka 

The Concept of Amruttulya Tea Stalls as a Lucrative Business Model

Amruttulya capitalizes on the popularity of tea franchises by offering a comprehensive package to aspiring entrepreneurs.

Affordable Investment: Amruttulya caters to a wider range of investors by having lower franchise fees compared to competitors. This can be particularly attractive to first-time business owners who may have limited capital.

Support and Training: Amruttulya provides extensive training programs for staff and franchise owners on everything from tea preparation to business operations. This training could cover aspects like selecting the right teas, brewing perfect cups consistently, maintaining hygiene standards, managing inventory, marketing the franchise outlet, and providing exceptional customer service.

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Investment Requirements

Initial Franchise Fees and Variations among Different Franchises

An Amruttulya tea franchise has a potential initial franchise fee that ranges from Rs 1,00,000 to Rs 3,00,000 which covers the following:

  • The right to operate under the Yewale Amruttulya brand name
  • Access to their unique tea recipes and brewing methods
  • Initial training for you and your staff
  • Ongoing support from Yewale Amruttulya

Estimated Total Setup Cost including Equipment and Interior Work

In addition to the franchise fee, you'll incur other upfront costs. Here's a general idea:

  • Security Deposit and Rent Advance: Depending on your location, expect to pay a security deposit and a few months advance rent for the shop space.
  • Signage and Branding: Costs associated with creating signage and implementing Yewale Amruttulya's visual identity at your outlet.
  • Furniture and Equipment: Tables, chairs, tea-making equipment (like dispensers and brewers), storage units, and a point-of-sale system.
  • Initial Inventory: Stock of tea leaves, milk, sugar, cups, disposables, and other supplies.
  • Interior Design and Renovation: Minor renovations or cosmetic changes to adapt the space to Yewale Amruttulya's aesthetics (information on the extent of required changes might be available from Yewale Amruttulya).

Hence, keeping all these costs in mind, the total investment required for their tea franchise ranges from Rs.10 Lakh- Rs.11 Lakh with an ROI time frame of 12-14 months.

Space Requirements for the Tea Stall (e.g., 100-300 sq. ft)

An Amruttulya franchise thrives in compact spaces. Their tea stall models are designed to function efficiently within a range of 100-300 sq. ft. This keeps rental costs manageable and allows for a focus on takeaway service.

Mandatory Licenses Needed (Shop Act, Food license, GST)

Operating a Yewale Amruttulya tea stall requires obtaining the following licenses:

  • Shop Act License: Issued by your local municipality, permitting you to run a business from the chosen location.
  • Food Safety and Standards Authority of India (FSSAI) License: Mandatory for any business serving food or beverages in India. The FSSAI license ensures hygiene and quality standards are met.
  • Goods and Services Tax (GST) Registration: If your projected annual turnover exceeds the threshold set by the government, you'll need to register for GST. This allows you to collect and deposit GST on your sales.
tea cup

Operational Costs

Opening your Yewale Amruttulya tea franchise is just the first step. Here's a look at the ongoing operational costs you'll need to factor in:

Breakdown of Kitchen Setup and Equipment Costs

Breakdown of Kitchen Setup and Equipment Costs: While the initial setup cost covers essential equipment, there might be occasional replacements or additions needed. Here's a general idea of the equipment you'll likely use:
Tea dispensers and brewers (costs vary depending on model and capacity)

  • Hot water dispensers
  • Milk storage and dispensing units
  • Storage containers for tea leaves, sugar, and other supplies
  • Cash register or point-of-sale system

Staff Training and Uniforms:

Staff Training: 

While Yewale Amruttulya might provide initial training, you'll likely be responsible for ensuring your staff maintains the brand's high standards for quality and service. This could involve:

  • Developing a training program for new staff members to teach them the proper brewing methods, hygiene protocols, and customer service techniques.
  • Conducting periodic refresher courses for existing staff to ensure consistency in tea preparation and customer interaction.

Uniforms: 

Standardized uniforms with the Yewale Amruttulya branding can add to the professional image of your outlet and contribute to a positive customer experience. Factor in the cost of uniforms and any replacements that might be needed.

Utility and Maintenance Expenses:

Don't forget the ongoing costs associated with keeping your outlet operational:

Electricity: Powering tea-making equipment, lights, and refrigeration units.

Water: For preparing tea and cleaning.

Waste disposal: Costs associated with disposing of used disposables and other waste.

Regular maintenance: Equipment breakdowns are inevitable. Budget for minor repairs and maintenance to keep your equipment functioning smoothly.

Getting Accurate Numbers:

For the most up-to-date information on Yewale Amruttulya's specific requirements regarding raw material suppliers, staff training programs, and any recommended equipment, it's crucial to contact them directly. This will help you create a more accurate budget for the ongoing operational costs of your Yewale Amruttulya tea franchise.

Sales and Profitability

The ultimate question - how much can you earn? While guaranteeing specific figures is difficult due to market fluctuations, here's a breakdown of factors to consider when evaluating the potential sales and profitability of your Yewale Amruttulya tea franchise:

Looking at revenue per customer for Amruttulya’s franchise, the food price for approximately 2 people tends to fall between Rs 10- Rs 50.

Daily and Monthly Sales Projections for Urban and Rural Settings

  • Urban vs. Rural: Sales can significantly differ between urban and rural locations. Urban areas with higher foot traffic and a strong tea-drinking culture can potentially generate higher sales compared to rural areas.
  • Limited Visibility: Unfortunately, specific sales projections for Yewale Amruttulya franchises are not publicly available.
  • Industry Benchmarks: Research average tea stall sales figures in your chosen location to get a rough estimate. Consider factors like nearby competition and foot traffic.

Gross Profit Margin Details

A Yewale Amruttulya franchise works on a revenue-sharing model with the franchisee keeping 90% of the share while the rest goes to the franchisor.

Breakdown of Net Profit after Operational Expenses:

  • Multiple Cost Factors: Remember, gross profit doesn't represent your final earnings. You'll need to factor in operational expenses like:

    • Staff salaries and benefits
    • Rent and utilities
    • Marketing and advertising costs
    • Franchise fees (if applicable)
    • Maintenance and repairs
  • Net Profit Calculation: After calculating your gross profit margin, deduct the total operational expenses to arrive at your estimated net profit. This will represent your actual earnings after accounting for all the costs involved in running your franchise

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cup of tea

Terms and Conditions for Franchise Owners

Owning a Yewale Amruttulya tea franchise comes with a set of guidelines established to ensure brand consistency and franchisee success. Here's a closer look at some key terms and conditions you might encounter:

Duration of the Franchise Agreement and Renewal Conditions:

Agreement Length: Franchise agreements typically have a set term, often ranging from 5 to 10 years. This provides stability for both the franchisor (Yewale Amruttulya) and the franchisee (you).

Renewal Process: The agreement might outline the process for renewal after the initial term ends. This could involve meeting certain performance benchmarks or paying a renewal fee.

Exclusive Territory Rights and Restrictions:

Exclusivity: Yewale Amruttulya might grant you exclusive rights to operate a franchise within a specific territory. This prevents them from opening another outlet or authorizing another franchisee in your designated area.

Restrictions: The agreement might outline restrictions on your operations, such as limitations on the products you can sell alongside your tea or limitations on your marketing activities.

Standardized Operations: Yewale Amruttulya has established procedures for tea preparation, customer service, and overall outlet management. You'll be expected to adhere to these guidelines to maintain brand consistency across all franchises. This ensures customers receive the same high-quality tea and service experience at every Yewale Amruttulya outlet.

Support Provided by the Franchisor for Business Growth:

  • Training and Support: Yewale Amruttulya might provide initial training for you and your staff on various aspects, including:some text
    • The intricacies of brewing their unique tea blends.
    • Maintaining hygiene and safety standards.
    • Customer service techniques to deliver a positive customer experience.
    • Operational procedures to ensure smooth business operations.
  • Marketing and Branding Support: The franchisor might offer resources or guidelines to help you promote your local franchise outlet while adhering to the overall Yewale Amruttulya brand identity.

Additional Benefits of Owning a Franchise

While owning a franchise like Yewale Amruttulya offers the potential for profitability and being your own boss, there are additional advantages to consider:

Training Support and No Requirement for Prior Experience:

  • Learning the Ropes: Unlike starting an independent business from scratch, franchises often provide comprehensive training programs. Yewale Amruttulya, for example, trains you and your staff on everything from brewing their signature tea to operating the cash register and providing exceptional customer service. This can be especially beneficial if you have no prior experience in the food and beverage industry.
  • Ongoing Support: The training doesn't necessarily stop after opening day. Many franchisors, including Yewale Amruttulya, might offer ongoing support through field representatives or online resources to help you navigate challenges and ensure smooth operations.

Marketing and IT Support for Establishing the Brand:

  • Leveraging Brand Recognition: Yewale Amruttulya has already established brand recognition and a customer base. You'll benefit from their marketing efforts and brand identity, reducing the burden of building awareness from scratch. They might also provide marketing materials and guidelines to help you promote your local franchise outlet.
  • Streamlined Operations: Franchisors like Yewale Amruttulya have established IT systems for things like point-of-sale transactions or inventory management. This can save you time and resources compared to setting up your own systems from scratch.
  • Faster ROI: Since the brand recognition and operational processes are already established, some franchise businesses boast a potentially shorter period to see a return on your investment.

Community and Employment Opportunities Created by a New Franchise:

Building Connections: Owning a franchise can connect you with a network of other franchisees and the franchisor itself. This can provide valuable support, shared experiences, and a sense of community.

Contributing to the Local Economy: Your new franchise outlet can create employment opportunities in your community, while also becoming a gathering place for people to enjoy a cup of chai.

Conclusion - Brewing Up Your Future with a Tea Franchise?

The world of tea franchises, particularly Amruttulya franchises like Yewale Amruttulya, offers a compelling opportunity for aspiring entrepreneurs. Let's revisit the key takeaways:

  • Capitalizing on a Strong Market: The Indian tea market is thriving, and Amruttulya franchises tap into this popularity.

  • Unique Selling Points: Amruttulya franchises might offer factors like affordable investment options, unique tea experiences, and comprehensive support to make them stand out.

  • Investment Considerations: Understanding the initial investment required, including franchise fees, space requirements, and ongoing operational costs, is crucial.
  • Franchise Agreement: Carefully review the terms and conditions set by Yewale Amruttulya to ensure they align with your expectations.

  • Additional Benefits: Owning a franchise can provide training, marketing support, and a faster path to profitability, along with the satisfaction of creating jobs and contributing to your community.

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