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Cafe Chain Startup Chaayos raised $21.5M to open 300 stores

Chaayos has raised $21.5M Series B Funding round for business growth

Popular Food chain startup Chaayos, a neo-café or technology-led café chain, has raised a mixture of equity and debt funding $21.5 million Series B funding round led by US-based Think Investments with the participation of existing investors –Tiger Global Management, SAIF Partners, Integrated Capital, and former WhatsApp chief business officer Neeraj Arora.

“Chaayos was started with a vision to serve a customized cup of tea to every chai-lover, backed by great food, and delivering seamless customer experience. We are excited to partner with our new investors to further propel the chai café revolution in India,” said Nitin Saluja, co-founder ad CEO of Chaayos.

According to a press release, the organization plans to use its investment resources to expand its cafe infrastructure, invest in technology, hire a few more senior people and improve teams across all divisions.

The chain currently operates over 80 stores across the country, in which 50 are present in Delhi-NCR, while 22 are located in Mumbai and Bengaluru and 8 in Chaayos stores, respectively. For the next 3-4 years, the company stated its plan to expand the number of its outlets to over 300 cafés.

“The continued confidence of our guests has allowed us to expand our café network at a fast pace and we will end FY20 with nearly 100 Cafés. We shall endeavor to get to 300 cafes over the course of the next 3-4 years. Alongside growing our café network, we will continue to invest heavily in technology and augment teams across all levels,” Nitin Saluja stated.

Founded in 2012 by IIT alumni Nitin Saluja and Raghav Verma, working on a theme of “Experiments With Chai”. The cafe chain offers over 80,000 customized varieties of tea using its chai bots to customized customers’ requirements. Basically, the company uses technology across domains to improve customer experience.

The various technology solutions used by the company include patented IoT (internet of things) and the controversial facial recognition technology used for logging in, repeating usual chai orders and making payments without using OTP or one-time-password. The company has 1.7 million registered guests across 80 cafes

“The latest addition to Chaayos technology stack offers a magical guest experience via facial recognition for logging in, for repeating your usual Chai and for making payments without hassles of OTP,” Nitin Saluja stated.

However, the company got into a controversy when some customers complained against the company’s technology camera for not acquiring consent from the users for using their facial recognition system to capture images of them without disclosing information on what the data would be used for, and with no option to opt-out.

Chayoos explained that the technology was being tested at selected outlets as they believe that it would lessen the waiting time for customers. They also said that the data collected were encrypted meaning it could not be shared and that they respect the privacy of their customer so they have the freedom to opt-out.

Nevertheless, the company claimed that every Chaayos store turned profitable within the three to six months after its launch, providing better control over unit economics.