Chai-nomics: A business with 47% profit margin!

✓ The shop on an average serves ~1200 cups a day

-Chai orders- 700 cups

- Coffee orders-400 cups

- Horlicks/Boost- ~100 cups

-Priced between Rs 15-20/ cup

✓ On weekends this number goes to 6000cups (Saturday & Sunday included)

↑ On a weekly basis- (1200+5)+6000 = ~ 12000 cups a week

There are 4 weeks a month + 2 days extra(depends)

↑ cups sold a month- (12000*4) + (1200*2)= 48000+2400~50,000 cups a month

Average ticket size is Rs 15-

>> Monthly revenue - 50,000* 15= Rs 7,50,000

>> Yearly Revenue-7,50,000*12= Rs90,00,000

Now let's understand the cost incurred-

↑ Milk - Cost of 1litre milk-Rs 40

- 1 litre serves ~10 glasses(standard size is 100ml)

>> For 50,000 glasses- 5000litres of milk

>> 5000*40=2,00,000/month of milk

↑ Sugar - Cost of 1kg of sugar is roughly- Rs 45/kg

- 1 cup requires 3gms of sugar

50,000cups=1,50,000gms or 150kg/ month

-Cost of sugar per month-150*45-6750 ~Rs 7000/month

(Average daily wage in India stands at Rs272) Cost of labour= Rs 40000/month

↑ Cylinder- cost of a cylinder- Rs1100
3 cylinders are required a month= Rs 3300

↑ Tea: Loose tea costs roughly around 250/kg
Roughly 40kg is needed per month = 40*250=10,000/month

↑ Coffee - A cup of 100ml requires 2gm of Coffee
- 17000 cups= 34000gm/month
-34-35kg of coffee/ month

-Cost of 1kg of coffee ~400/kg

-35*400-Rs 14000 ~R$15000

-Boost/ horlicks at 550/kg

- 1 cup requires 3gm -4000cups/month requires 12000gms Or 12kg/month

-12*550 i.e Rs 6600/month

Rent=Rs 1,00,000 a month(roughly)

Assuming water to be free:

Total cost →→ Milk+ sugar+ coffee+ tea+ boost/horlicks+ cylinder+ labour+ rent

Rs 2 lac (milk) + Rs 7000(sugar)+ Rs15000 (coffee) + Rs10000 (tea leaf) + Rs 3300 (cylinder)+ Rs 40000( labour)

+ Rs6600(boost/horlicks) + 1lac (rent) = Rs 3,81,900

An approx of Rs 4lacs/month

Profit-> 7.5 lacs- 4 lac a month=3.5lac/month

3.5*12= Rs 42 lac/year

42 lac a year is to take home profit!

A crazy 47% margin!