After my usual evening run, I usually decompress by sipping chai. The Chai and Sandwich upgraded tapri which I have been frequenting for the past couple of months has been a window into the slice of life moments. The soundscape is chirpy, located next to a jogging area and a prominent hospital. It is a melting pot of people from various backgrounds from paramedics to families.
The tapri is run by an industrious local micro businessperson, employing staff to support his chai business. Today he quipped during our chat, he did not understand whether his sales are making sense after selling three hundred cups at INR 10 per cup. So, I asked him a few questions.
What are your input costs daily?
Milk -1280 for a 20-liter pack, Chai Masala- 45, Tea- 200, Paper Cups Packet for cups: 200
This is about 1800 per day
And other costs:
Electricity: 10, 000/month, Gas: 2000/month,
Manpower costs: 300/Day
Total costs per day then are approximately 2500 per day only from three hundred cups a day at 10 rupees. The margin for the owner is five hundred rupees only from cutting chai revenues.
He makes coffee, and other snacks which are his main income then.
He also sells cutting chai in a bigger cup at 20 rupees, which I partake. As a good Samaritan I suggested that he should increase the 20-rupee cup sale, as input costs remain the same, doubling the margins referencing a case study that I had read on increasing the toothpaste opening leading to more purchases, and greater daily use.
A ten-minute chat was an insight into bottom-up businesses that focus on cash in the pocket rather than valuations.