Tea Connect’s Brew for Business Expansion The case discusses the entrepreneurial dilemma of Kishan Jainani, the founder of Tea Connect, a chain of five tea cafes across Rajasthan. Tea Connect was thriving with an annual sales revenue of INR48.1 million in 2019, despite a general sentiment of inflation hurting most industries. Jainani had ambitious goals …
Brewing Success: Strategic Expansion Paths for Tea Connect
Tea Connect’s Brew for Business Expansion
The case discusses the entrepreneurial dilemma of Kishan Jainani, the founder of Tea Connect, a chain of five tea cafes across Rajasthan. Tea Connect was thriving with an annual sales revenue of INR48.1 million in 2019, despite a general sentiment of inflation hurting most industries.
Jainani had ambitious goals of opening 20 cafes and achieving a sales revenue of INR 200 million by 2022. Tea Connect had a well-orchestrated marketing mix comprising market research recommended offerings, keeping prices under control, high footfall locations, and use of topical advertising on social media to provide more bang for the buck.
A minimalistic lounge with humble decor, sumptuous food, and colorful, contemporary, and innovative ambiance described Tea Connect. Standardization was the Tea Connect Mantra and implied standardized procurement, processes, offerings, and standardized experience to all its customers at all the outlets.
This strategy besides ensuring equity, also implied a check on the cost and made Tea Connect a cost leader. Jainani valued his employees as the most important asset and believed that a cafe’s brand went beyond its food and what built the brand was a great customer experience, which only the employees could have ensured.
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Customer experience lies at the core of Tea Connect’s business strategy. Kishan conducted regular surveys to gather customer feedback. One of the surveys revealed that a general sentiment of satisfaction existed, but some customers reported a space constraint, especially at the peak times of the day.
This finding was indeed contrary to the promise of a great service experience and made Jainani ponder on how to address it. Renovating to create more space was the only option. This insight incidentally arrived at a time when Jainani was contemplating an expansion by launching a line of consumer-packaged goods under the Tea Connect Brand name and considering a new outlet at a tourist city like Jodhpur or Mount Abu.
Renovating involved a huge cost, which was yet to be evaluated. Launching the new product line would have meant an investment of INR 2 million. Launching new outlets mandated an investment of INR 1.51 million.
Jainini faced a typical entrepreneur’s dilemma- whether to explore all three options simultaneously or whether to choose one as the starting point. The decision was critical to achieve the ambition of making Tea Connect an INR 200 million company by 2022.
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The full research paper can be accessed here Soni, S., Puri, S., Pandey, S., & Jain, T. (2020). Tea Connect: Exploring new options. Ivey Publishing DOI: https://www.iveycases.com/ProductView.aspx?id=110338
