A known face in the finance and business circles in India, Ravi, a former CFO of Adani Ports, had worked closely with Gautam Adani during a big part of his career of 37 years. And, so, running a business with utmost financial discipline was nothing new to him. “I told the boys to pursue financial discipline from the very first day of Roastea,” says Ravi. “Our focus should be on creating value and not running after lofty valuations”.

This has been followed to the tee by Anurag and Chaitanya. The fundamentals of Roastea’s story have always been clear – that is, growth along with profitability. The company has remained cashflow-positive from the first day and PAT (profit after tax)-positive from the first year.

 The business model

“While it was always alluring to go the B2C way to begin with, we opted to go in the other direction and started with our B2B vending machines.” Interestingly, Roastea is one of the aberrations, to start with B2B first. Most of the other companies, such as Blue Tokai, had started with cafes and Chaayos and had gained years of experience operating as a café chain, before venturing into vending machines.

Roastea’s Made in India enabled vending machines are sleek with a highly automated design, equipped with TFT screens, designed for no-touch dispensing, auto-self-cleaning. At the same time, they are energy-efficient too. These state-of-the-art, IoT-enabled vending machines offer a unique selection of fresh milk-based beverages and provide an authentic and fresh experience by incorporating real milk in their filter coffee and tea.

They also offer various types of masala teas and are capable of serving 60+ beverages simultaneously, with the same consistency and quality. The company’s greatest strength lies in its new-age machines, which are made at Roastea’s own dedicated factory, based in Bengaluru and featuring advanced technology, tailored to meet the needs of corporate clients. Its cloud-based IoT technology allows for remote machine monitoring and management, ensuring high-quality control and consistent service.

“We aim to become the second-largest player in India’s vending machine industry by the end of 2024-25,” adds Chaitanya. “Our unique brewing mechanism, which has been upgraded to replicate the finesse of a skilled barista, offers a diverse range of beverages, from ghar wali chai to robust espressos. We also give nine types of green teas and other offerings like soups and hot chocolate”.

Roastea vending machines are now deployed across 35 cities in India. Many large MNCs, tech and IT firms, pharma companies and business parks, among others, have all replaced their existing vending machines with better quality Roastea machines. “Roastea machines maintain the highest per month, per machine revenue,” says Anurag, highlighting their insistence on operational precision.

Covid impact

World started to change for Roastea after the pandemic. “There was a significant shift in consumer behaviour then,” says Chaitanya. “After being at home and amid restrictions for several months, there was a strong urge among people to move out, meet friends and family and carry on with their regular life just like before”.

For Roastea this meant an opportunity. From vending machines to cafes With significant success in the vending machine business, Anurag and Chaitanya decided to venture into the B2C spaces, with Roastea opening its first café in Ahmedabad in mid-2021. The brand has travelled a long way since then, with about 15 Roastea cafes now spread across Ahmedabad, Bengaluru, Mangaluru and Dehra Dun.

“Understanding the unique needs of our diverse clientele has always been our focus and, hence, we offered wide range of food items that the existing cafes did not serve, due to which most existing cafes were running in losses,” adds Anurag.

According to the founders, Roastea outlets have the highest average per day sale across all competitions and, along with the vending machine business, cumulatively, the brand now serves around 500,000 cups per day. The biggest value differentiation of Roastea today lies in the fact that it is now an omni-channel brand. It has endeavoured to touch the lives of customers, tea and coffee aficionados across both the B2B and B2C touch points and is fast growing.

From no machines and cafés in 2019, to over 2,700 machines and 14 cafes now and, from a single variant of the machine to over 4-5 variants now made-in-India machines, Roastea has come a long way. After registering revenues of Rs33 crore and Rs60 crore, it is aiming for the Rs100 crore mark in the next 18 months. Working like a corporate and not a start-up, the company has at a gross margin of over 53 per cent, going towards 55 per cent. Its operating margin is 25 per cent, stretching towards 27-28 per cent and EBIDTA at about 19 per cent aiming at 22-25 per cent.

“Our plans are ambitious,” affirms Chaitanya, with utmost conviction. “We want to emerge as the number one player in both the vending machine and café space in the country over the next two years”. By 2027-28, Roastea aims to achieve revenues of Rs300 crore, with a cash profit of Rs80 crore. It plans to open over 60 outlets across 40-50 cities and have 10,000 vending machines operational across corporates.

To fuel its growth plans, Roastea has so far raised two rounds of funding from friends and family. In its latest round, raised this year, Roastea secured Rs40 crore of funding from large family offices in the country, at an undisclosed valuation. In an earlier around a couple of years back, the company had raised about Rs14 crore from high net-worth individuals and family offices of large industrial houses. Even after the two rounds, the Bhamidipaty twins continues to hold controlling stake in the company and intends to steer their start-up to all the glory it truly deserves.

“Right product, right service, right revenue model and financial discipline. We believe in value creation, not valuation,” says Ravi Bhamidipaty, summing up the key attributes for Roastea’s success.