Chai Business Plan, With a Projection

A chai business plan is a plan for a drink that's cheap to make and quick to spoil. Tea, spices and sugar for a 32-ounce bottle of concentrate cost $1.70, the bottle 95 cents, and the brewing and bottling $1.50, so a bottle costs about $4.55 before fees and sells for $14 direct. Concentrate is kept cold and lasts a few weeks, so the plan brews to orders and sells fast: bottles direct and to grocers, gallon jugs to cafés, and lattes at a market stall that let people taste it. In the example below, a chai maker in Baltimore ends its first year about $20,500 ahead on $63,800 of sales, with every hour paid at $20. Below is a description example, each part of the plan, the first year month by month, the startup budget, and a free template.

The short version

• Describe the business in a paragraph: the chai, who buys it, where, the goals.
• Cost a bottle: tea, spices, sugar, the bottle and label, brewing time, fees.
• Brew to orders: refrigerated concentrate has a short life.
• Direct bottles and stall lattes earn the most; grocers sell the most bottles.
• Cafés buy by the gallon and reorder every week.
• Date every batch and sell the oldest first.
• TaroStack dates every batch, warns before bottles pass their date, and keeps café orders on one list. More below.

Part 1: the business description

Patapsco Chai Co., a made-up chai maker in Baltimore, Maryland, I use in these examples, writes:

Patapsco Chai Co. brews masala chai concentrate from black tea, whole spices and cane sugar in a shared commercial kitchen, and sells it in 32-ounce bottles online and at two markets, to grocers and co-ops, in gallon jugs to cafés, and as lattes at its market stall. In its first year it aims to sell 500 bottles and 40 café gallons a month.

Part 2: what each sale costs

A batch of 5 gallons makes 20 bottles in 90 minutes. Where each channel's margin ends up, and where it leaks, is in chai business profit margin.

Part 3: customers and prices

In a month at full speed the stall's lattes bring $1,930 of the $5,657 of contribution, the direct bottles $1,886, the grocers $1,185 and the cafés $656. The grocers sell the most bottles; the cafés reorder every week and need no selling once they're on. What grocery buyers ask of a new supplier is in selling to grocery stores requirements.

Part 4: the first year, month by month

Fixed costs are $1,495 every month: the shared commercial kitchen ($800), market fees ($200), insurance ($70), the website ($40), ads ($200), the cold delivery run ($150), and software and card fees ($35). Sales start at 15% of full speed:

The year's sales are $63,784 and the profit $20,528, with every hour paid at $20. The first three months lose a little, $1,091 at the lowest, while the grocers and cafés come on.

Part 5: the startup budget

The $5,900 spent before working cash is earned back in month 9, when the cash reaches $8,607.

Get the template

Download the chai business plan workbook. Four sheets: your bottles, jugs and lattes with price, variable cost and a month at full speed; the first year, month by month, with sales, profit and cash; your fixed costs; and your startup budget with working cash. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.

Where this stops working

Batches brewed twice a week, each with its own date, bottles in the fridge and at a dozen grocers, café jugs going out every Monday, and spices bought by the pound from importers. A notebook can't say which bottles are near their date, or how much cardamom is left for Thursday's brew. Which bottles go first is in FEFO vs FIFO.

How TaroStack does it

TaroStack dates every batch, warns before bottles pass their date, and keeps café orders on one list.

Batches dated. Each batch is a recipe of tea, spices and sugar, so it takes them off stock, is costed from what they cost, and gets a lot and a best-by date, recorded automatically.

Before they expire. Lots close to their date raise an alert, a forecast shows what will expire unsold, and picking lists put the earliest dates first.

Cafés and grocers on one list. Each order is a sales order, with one picking list for the delivery run, and the lots each customer got are recorded as it ships.

Recipes, batches, lots and sales orders are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.

Questions people also ask

Is a chai business profitable?

It can be. In the example, a chai maker ends its first year about $20,500 ahead on $63,800 of sales, with every hour paid at $20.

How much does it cost to start a chai business?

In the example, $9,400, with the refrigerator, the kettle and stall setup, and $3,500 of working cash the biggest parts.

How do you sell chai to cafés?

By the gallon, with a weekly delivery. In the example, a gallon sells for $32 and makes about 21 lattes for the café.

Does chai concentrate need to be refrigerated?

A concentrate like the example's, brewed tea with spices and sugar, is kept cold and dated, and lasts a few weeks. Shelf-stable concentrates are made differently and need a process review.