Chai Point expects aggressive growth in its vending machines business
Chai Point expects its 2018-19 revenue growth to be a lot higher than the growth rates it clocked over the past two years, boosted by sales of its vending machines
Bengaluru: Chai Point, the chain of tea and snacks stores owned by Mountain Trails Foods Pvt. Ltd, expects its 2018-19 revenue growth to be a lot higher than the growth rates it clocked over the past two years, mainly boosted by sales of its boxC vending machines.
Revenue growth was close to 60% on a year-over-year basis in 2016-17 and 2017-18, a top executive said. It is also targeting turning Ebitda-positive by the end of this year. Ebitda is short for earnings before interest, tax, depreciation and amortization.
The company opened its 100th store in the country in Bengaluru’s Indiranagar area on Friday, featuring a new menu and a new store design. It plans to open around 40 new stores during 2018-19, which will take its total store count to around 120-125.
Chai Point has been clear from the start that the white collar employee is its target consumer. The idea behind launching its boxC vending machines, consequently, was to capture more of this consumer base and mainly at workplaces.
The first semi-automatic version of the boxC (the c stands for chai or tea) vending machines were launched in 2016. Last October, the company changed the look and feel of these to sleek, black, IoT-enabled, fully-automatic vending machines under its boxC 2.0 strategy.
After the 2.0 version of its boxC was launched, the company began a more aggressive focus on sales through this newly-revamped channel. To date, the company has deployed close to 2,000 boxC vending machines across both versions and plans to ramp that up further this year, its co-founder and chief executive Amuleek Singh Bijral said without divulging a number. There are around 500 companies or institutions that have registered for Chai Point’s boxC machines so far.
The vending machine channel currently contributes close to 40% of the company’s total revenue and that number is expected to tread higher over the next 2 years. Deliveries are also growing rapidly and presently make up 23-24% of its total revenue, while the rest comes from store walk-ins.
“The fastest-growing parts of the business are delivery and vending machines. Stores we will grow at a rate that is in line with infrastructure growth and our target segments and locations for store growth are white-collar hubs,” Bijral said.
Vending machines will grow more rapidly in terms of footprint too because they can be launched much faster than new stores and can be deployed anywhere. For instance, the target locations for boxC machines are not just technology parks but also hospitals, nursing homes, large-format retail stores, dealerships, start-ups, accounting firms and other types of large institutions.
With boxC, the company can also enter new geographies more easily. Chennai does not have a Chai Point store yet but the company is already present there through its boxC machines. While it does not plan to enter any new geography this year in terms of stores, Chai Point is going to start looking at other cities for boxC.
Its vending machines are currently deployed in Chennai, Bengaluru, Mumbai, Pune, Hyderabad and NCR. New geographies that it is considering are cities like Kochi, Trivandrum, Ahmedabad and Ludhiana.