Chaayos makes a powerful comeback in FY22, increasing revenue by 145%
- ByStartupStory | December 1, 2022
After COVID, the tea shop chain Chaayos showed excellent financial performance. The Tiger Global-backed company increased its revenue by 2.45X to Rs 135 crore in FY22, while its losses increased by 36.5% to Rs 71 crore during the same time frame.
This is a quick recovery after revenue fell by 44.8% in FY21 to Rs 54.85 crore from Rs 99.4 crore in FY20, primarily as a result of lockdowns caused by COVID across all of its markets. The 10-year-old business offers dine-in, takeout, and online ordering options, along with a selection of teas. The business acquired $53 million in June of this year with plans to rapidly expand by the end of the year. The only source of operating income for Chaayos was sales of items like chai and instant tea premix, which saw a 2.45X growth to Rs 135 crore in FY22 from Rs 55 crore in the prior fiscal year (FY21).
The company also has non-operating income, which decreased 19% to Rs 5.21 crore in FY22 and is mostly comprised of interest and gains on current investments. Following COVID, the business increased its workforce, which raised employee benefit expenditures, which rose 64% to Rs 51 crore in FY22 from Rs 31 crore in the prior fiscal year (FY21).
This also includes ESOP costs of Rs. 6.1 crore. The cost of rent for Chaayos grew 40% to Rs 28 crore in FY22, with over 150 locations in Delhi-NCR, Mumbai, and Bengaluru.
\ In FY22, the company’s overall costs increased by 86% to Rs 211 crore from Rs 113 crore, while advertising expenses and commissions paid to sales agents increased by 2.85X and 2.83X, respectively, to Rs 20 crore and Rs 17 crore (FY21).
The company’s losses increased by 36.5% to Rs 71 crore in FY22 from Rs 52 crore in FY21 as the scale increased. Despite an 86% increase in cost, cash outflow from operations increased by 48% to Rs 68 crore in FY22. As the Nitin Saluja and Raghav Verma-led company aims to hire more personnel following the funding and open 100 outlets by the end of the year and 300 by 2022–23, expenses are likely to rise in the current fiscal year. Chaayos deserves praise for creating a brand and gaining sufficient traction, but it also has a good chance given the decline of its rivals, particularly Cafe Coffee Day. The business will still need financing, although it might be difficult to raise it at the proper price given the current financial climate.
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