Why Tea Franchises Offer Better ROI Than Coffee Shops in India

When it comes to beverages in India, chai is king. For decades, coffee chains have dominated the premium café space, but 2025 is telling a new story - tea franchises are delivering better ROI than coffee shops.

From the bustling lanes of Hyderabad to emerging Tier 2 cities, chai cafés are redefining India’s beverage business. Lower investment, wider audience appeal, and higher margins make tea franchises the smarter choice for new F&B entrepreneurs.

Here’s an in-depth look at why tea franchises are outperforming coffee shops and why now might be the best time to start a tea franchise business in India.

1. Tea Has a Larger and More Loyal Market

India is the second-largest tea consumer in the world, with over 80% of households drinking tea daily. Coffee, while popular among urban youth, caters to a more limited audience and is often considered a “lifestyle drink” rather than a daily habit.

Tea’s advantages:

• Daily consumption across all demographics

• Popular in metros, Tier 2, and rural areas

• Strong cultural connection and nostalgia factor

In short, a tea café can attract a broader, more consistent customer base compared to coffee shops, which often rely heavily on premium urban audiences.

2. Lower Investment and Setup Costs

Starting a coffee shop especially a branded or premium one comes with high costs:

• Espresso machines, grinders, and imported coffee beans

• Extensive interiors for a “premium café” experience

• High rental locations to target affluent customers

In contrast, tea franchises require far less capital. Here’s why:

• Brewing equipment and ingredients are affordable and locally sourced

• Outlets can function in smaller spaces like kiosks or compact cafés

• Initial franchise investment is 8–15 lakhs, versus 30–70 lakhs for a coffee franchise

This lower entry barrier allows entrepreneurs to start faster, scale sooner, and face less financial risk.

3. Higher Profit Margins Per Cup

Tea is not only cheap to make it’s incredibly profitable:

• Cost per cup of tea: ₹4–₹6

• Average selling price: ₹15–₹30

• Gross margin: 60–70%

Compare that to coffee shops:

• Cost per cappuccino or latte: ₹40–₹60

• Average selling price: ₹150–₹250

• Gross margin: Often lower due to high operational costs (rent, baristas, imported beans)

This means a tea franchise with high ROI can break even faster, even with modest daily footfall.

4. Easier to Scale Across Tier 2 and Tier 3 Cities

Coffee shops thrive mostly in metros and upscale urban hubs, while tea cafés can flourish anywhere:

• Busy market streets

• Residential neighborhoods

• Near colleges, hospitals, and IT parks

• Tier 2 and Tier 3 cities with low competition

This geographic flexibility makes tea franchises ideal for entrepreneurs looking to scale faster with lower operating expenses and rent.

5. Wider Menu Options for Repeat Business

Successful tea franchises are no longer about “just chai.” They attract and retain customers with diverse and innovative menus:

• Hot teas: Masala chai, Irani chai, Suleimani tea

• Iced teas & mojitos: Perfect for summers and young audiences

• Filter coffee: Catering to South Indian coffee lovers

• Snacks: Bun maska, samosas, toasties, and Osmania biscuits

This multi-product strategy increases average ticket size and encourages repeat visits, boosting overall profitability.

6. Strong Delivery and Takeaway Potential

Another advantage tea franchises have over coffee shops is delivery efficiency.

• Tea travels well in spill-proof packaging and remains appealing for takeaway and bulk orders

• Coffee drinks like cappuccinos and lattes lose quality quickly during delivery

• Tea cafés can leverage Swiggy, Zomato, and bulk office orders to expand revenue beyond walk-ins

This hybrid dine-in + takeaway + delivery model maximizes revenue with minimal operational complexity.

7. Shorter Break-Even and Faster ROI

Because of lower investment and higher margins, tea franchises often recover their initial investment in 12–18 months, while coffee shops may take 2–3 years to reach break-even.

A profitable tea franchise opportunity also allows reinvestment into new outlets faster, accelerating business growth and creating a multi-location revenue stream.

Why Hyderabadi Chai Adda is the Ideal Tea Franchise Choice

If you’re serious about investing in a tea franchise that beats coffee shops on ROI, Hyderabadi Chai Adda checks every box:

• Authentic chai menu: Irani chai, masala chai, Suleimani tea, iced teas, and mojitos

• Diverse product line: Includes filter coffee and snacks for higher ticket sizes

• Low investment, high ROI: Starting from ₹8–15 lakhs

• Comprehensive support: Training, marketing, setup assistance, and operational guidance

• Scalable models: Kiosks, mid-size cafés, and premium lounge formats

Whether you’re looking to start a tea franchise business in Hyderabad or scale across India, Hyderabadi Chai Adda offers a proven path to profitability.

Explore the franchise opportunity: https://www.hyderabadichaiadda.com/franchise

The Indian beverage market is evolving fast, and while coffee shops carry a certain urban glamour, tea franchises are quietly outperforming them in ROI, scalability, and long-term profitability.

With lower investment, stronger cultural appeal, and faster returns, tea franchises are the smarter bet for 2025 and beyond. And with Hyderabadi Chai Adda, you can turn your love for chai into a thriving business without the risks of starting from scratch.