F&BosA chai café franchise in India nets roughly 11–16% of sales in our estimates, or about ₹40,500 to ₹1.35 lakh a month across three formats, after an assumed 4% royalty and before owner salary, loan EMI and tax. A cup of chai can earn 67–78% gross margin, but kiosks need high volume, and rent can swallow the profit. Confirm every brand figure directly.
Chai looks like the perfect franchise: cheap ingredients, daily habit, a young crowd. Brochures and portals often quote high margins and quick payback, usually without saying what rent or cups per day they assume. This guide looks at Chai Sutta Bar, MBA Chai Wala and Chaayos-style formats and shows the maths for yourself. For café economics more widely, see our guide to café profit margins in India.
All figures on this page are F&Bos estimates for planning, not audited results or guarantees. Net is shown before owner salary, loan EMI and income tax. Check them against quotes for your own location.
What the brands are reported to charge
We couldn't find official franchise disclosure documents. Treat this as a starting point for your questions, and confirm every number with the brand.
| Brand | Reported investment | Reported royalty | Our confidence |
|---|---|---|---|
| Chai Sutta Bar | Approx. ₹16–30 lakh, by format | About 4% of net sales in most sources | Low: third-party figures conflict, and one lists far less |
| MBA Chai Wala | No reliable figure found | No reliable figure found | Ask the brand |
| Chaayos | No reliable figure found, and we could not confirm it currently sells franchises | No reliable figure found | Ask the brand |
Beware of anyone asking for a "booking amount" before you've seen a written agreement. Check you're dealing with the brand itself, and ask for references from three working franchisees, including one that's more than two years old.
Gross margin by product
These are our estimates, based on typical café prices and ingredient costs in 2026.
| Item | Approx. cost | Typical price | Gross margin | What to know |
|---|---|---|---|---|
| Regular chai | ₹5–9 | ₹15–40 | 67–78% | Volume product; margin in rupees is small |
| Kulhad chai | ₹8–13 | ₹25–50 | 68–74% | Kulhad adds cost and allows a higher price |
| Flavoured or iced chai | ₹14–28 | ₹60–120 | 77% | Higher bill with little extra labour |
| Maggi, sandwich or snack | ₹18–40 | ₹50–120 | 64–67% | Brings up the average bill |
| Bottled drinks (resale) | ₹14–30 | ₹20–40 | 25–30% | Convenient, but low margin |
Chai earns well in percentage terms and little in rupees. At ₹20 a cup and ₹6 of cost, each cup gives ₹14 of gross margin. A kiosk would need about 214 cups a day just to cover ₹90,000 a month of rent, staff and electricity. That's why snacks matter: they double the bill without doubling the queue.
Monthly P&L for three formats
These assume brand-supplied tea premix within ingredient cost and a 4% royalty; replace these with the terms you're quoted. Our rent assumptions are estimates of ₹60–150 per sq ft a month for neighbourhood and market shops, based on typical Kolkata asking rents; malls cost more, with JLL reporting around ₹190 per sq ft for Kolkata mall space.
| Monthly line | Kiosk (150–300 sq ft) | Café (500–800 sq ft) | Lounge (1,200+ sq ft) |
|---|---|---|---|
| Revenue | ₹2,50,000 | ₹6,00,000 | ₹12,00,000 |
| Ingredients (food cost) | ₹87,500 (35%) | ₹2,10,000 (35%) | ₹4,32,000 (36%) |
| Gross margin | ₹1,62,500 (65%) | ₹3,90,000 (65%) | ₹7,68,000 (64%) |
| Royalty (assumed 4%) | ₹10,000 | ₹24,000 | ₹48,000 |
| Rent | ₹30,000 | ₹80,000 | ₹1,80,000 |
| Staff | ₹50,000 | ₹1,10,000 | ₹2,30,000 |
| Electricity and gas | ₹10,000 | ₹25,000 | ₹60,000 |
| Kulhads, cups and packaging | ₹12,000 | ₹25,000 | ₹45,000 |
| Marketing, repairs, other | ₹10,000 | ₹30,000 | ₹70,000 |
| Net before owner salary, loan EMI and tax | ₹40,500 (16%) | ₹96,000 (16%) | ₹1,35,000 (11%) |
Kiosk: lean, but ₹40,500 a month may be little more than a manager's wage if you run it yourself. At a reported ₹16 lakh, payback is about 40 months. Café: the most balanced format, with seating supporting snacks and groups. At ₹23 lakh, payback is about 24 months. Lounge: the most profit in rupees but the lowest margin, and a bad lease is hardest to escape. At ₹30 lakh, payback is about 22 months.
A 4% royalty is ₹24,000 a month on ₹6 lakh in sales, whether or not you made money. In our café model, that takes a fifth of the profit before royalty. Ask whether marketing fees or compulsory supply margins sit on top of it.
Investment and payback
This table uses the low, middle and high ends of the investment figures reported for Chai Sutta Bar as a stand-in. They aren't quotes, so replace them with the written numbers you receive. Payback here ignores your salary, loan interest and tax, so the real wait will be longer.
| Format | Assumed investment | Estimated monthly net | Simple payback |
|---|---|---|---|
| Kiosk | ₹16 lakh | ₹40,500 | About 40 months |
| Café | ₹23 lakh | ₹96,000 | About 24 months |
| Lounge | ₹30 lakh | ₹1,35,000 | About 22 months |
Now stress it. If the café makes 15% less revenue, gross margin falls by about ₹58,500 a month while most costs stay put, cutting monthly net almost in half. A brochure that quotes 12–18 months of payback may be assuming a location and footfall you won't get.
Questions to ask before you sign
- Total cost: does the figure include fit-out, equipment, GST, licences and opening stock?
- Ongoing charges: what are the royalty, marketing fee and any minimum monthly payment?
- Supply: which items must you buy from the brand, and at what margin to the brand?
- Territory: can another outlet open nearby? Is that in the agreement?
- Exit: what happens to fees and fit-out if you close or sell in year two?
- Evidence: can you see sales and costs from comparable outlets, not only the best ones?
Ask each operator what they earned in their first 12 months, not just last month. Visit the actual site at the hours you expect to trade, and count how many people could realistically buy a cup. College areas can go quiet during exams and holidays, and office areas on weekends, so a single busy afternoon proves very little.
Also compare the franchise with your own chai brand. Without royalty and compulsory supply, you keep more of each cup, but you'll need to build footfall yourself and develop your own recipes and training. Chai is simple enough that a strong location and consistent taste can carry an independent. Brand value matters most where customers already know the name.
Five ratios to track every month
| Ratio | Healthy range | Warning sign | What it tells you |
|---|---|---|---|
| Ingredient cost % | 30–36% of sales | Above 38% | Pour sizes, wastage and compulsory supplies |
| Rent % | Under 14% of sales | Above 16% | Whether the location works |
| Staff % | 18–20% of sales | Above 22% | Rosters against peak hours |
| Cups per day | At or above break-even | Below break-even for 3 months | Whether volume can carry fixed costs |
| Snack attach rate | Rising | Falling | Whether staff are selling food with chai |
Frequently asked questions
What is the profit margin of a chai cafe franchise?
In our estimates, a chai café franchise nets about 11–16% of sales before owner salary, loan EMI and tax, after an assumed 4% royalty. Some portals quote 22–40%, but those figures rarely state their assumptions. Gross margin on a cup of chai is high, at about 67–78%, so rent and staff decide the result.
How much does a Chai Sutta Bar franchise cost?
Published figures conflict. Most third-party sources put total investment at roughly ₹16–30 lakh depending on format, with a royalty of about 4% of net sales, though other figures are also quoted. None of these is an official disclosure, so get a written cost sheet from the brand before paying anything.
How much does a chai franchise earn per month?
Our models show about ₹40,500 a month for a kiosk on ₹2.5 lakh revenue, ₹96,000 for a café on ₹6 lakh and ₹1.35 lakh for a lounge on ₹12 lakh. These are estimates before owner salary, loan EMI and tax, and they depend heavily on footfall and rent.
Is a chai franchise a good investment?
It can be in a strong location, but payback is often slower than brochures suggest. Using ₹16–30 lakh of reported investment, our models pay back in roughly 24–40 months for a kiosk or café. Build your own model with the actual rent and a cautious cups-per-day figure before signing.
What is the cost of one cup of chai?
We estimate about ₹5–9 for milk, tea, sugar and masala in a regular cup, plus ₹2–4 if it's served in a kulhad. It usually sells for ₹15–40. Costs vary with milk prices and cup size, so work out your own recipe cost.
Sources
- Franchise India, Chai Sutta Bar franchise: cost and how to get. Third-party.
- OKCredit, Chai Sutta Bar franchise cost. Third-party.
- NextWhatBusiness, Chai Sutta Bar franchise review. Third-party.
- P&L models, product costs and rent assumptionsF&Bos estimates, November 2026.