Professional Documents
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on
Industry Competition and Consumer Perception in the Food & Beverage Industry :
A Study with reference to Chaayos
at
CHAAYOS
in Partial Fulfillment of
PGDM-FMG – Batch-30
Submitted to
Prof. Faisal Ahmed
Submitted by
Aman Gupta
Roll No. 301008
This is to certify that Mr. Aman Kumar Gupta, Roll No. 301008, has completed his summer
internship at Chaayos, Ghitorni, New Delhi and has submitted this project report entitled
Industry Competition and Consumer Perception in the Food & Beverage Industry : A Study with
reference to Chaayos towards partial fulfillment of the requirements for the award of the Post
This Report is the result of his own work and to the best of my knowledge, no part of it has
earlier comprised any other report, monograph, dissertation or book. This project was carried out
i
DECLARATION
I, Mr. Aman Kumar Gupta , Roll No. 301008 have completed my summer internship at
Chaayos, Ghitorni, New Delhi and has submitted this project report entitled Industry
Competition and Consumer Perception in the Food & Beverage Industry : A Study with reference
to Chaayos towards partial fulfillment of the requirements for the award of the Post Graduate
This Report is the result of my own work, no part of it has earlier comprised any other report,
ii
SIP PROGRESS REPORT
Meeting-1
Meeting-2
Meeting-3
Meeting-4
Meeting-5
iii
ACKNOWLEDGEMENT
throughout the course of this MBA project. During the project work, I am grateful for their
guidance, invaluably constructive criticism and friendly advice. I thank them sincerely for
sharing their honest and enlightening views on a variety of issues relevant to this project.
I express my warm thanks to Prof. Faisal Ahmed for his support and guidance at FORE
I would also like to thank all the individuals who supported me with the requisite means
and driving conditions for my project. At last, a big thank you to all the respondents who
took out time to fill the survey which helped in establishing the possible relationships
Thank you,
Aman Gupta
FMG 30
301008
iv
CONTRIBUTION
The report is a complete analysis and a study on the topic “Industry Competition and Consumer
Perception in the Food and Beverage Industry : A Study with reference to Chaayos”. For the
analysis a number of research papers, journals and webpages have been referred and are cited in
the References section. From my end the contribution has been towards the Objective 2 analysis
i.e. To analyze the consumer perception towards Chaayos and its products. An unstructured
questionnaire was prepared (please refer to the Annexure for reference to questionnaire). The
questionnaire was circulated among various people who have actually dined in Chaayos or have
tried its products. The data collected from the questionnaire was further analyzed using various
statistical tools on MS Excel. The output from the analysis has been put in the report in the form
of Figures and a separate chapter is devoted for the conclusion of the report. The conclusion in
each chapter is a part of self analysis after thoroughly going through the data collected from
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TABLE OF CONTENT
Certificate i
Declaration ii
Acknowledgement iv
Contribution v
List of Figures vi
List of Abbreviations vi
1. Introduction 1
1.1 Background 2
1.4 Objectives 3
2. Literature Review 4
2.5 Conclusion 9
3. Methodology 11
3.3 Sampling 12
4.2 Background 15
4.3 Challenges 16
5. Objective 2 Analysis 24
6. Conclusion 32
6.1 Limitation 32
Annexure I
References IV
LIST OF FIGURES
5.4 F - test analysis for time spent & Atmosphere of the cafe 29
5.5 Anova : Single Factor for consistency in taste & quality of products 30
LIST OF ABBREVIATIONS
2. Difference Diff
3. Between B/w
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EXECUTIVE SUMMARY
India has always been well known across the globe for various reasons but Food has always been
a primary whenever people discuss different cuisines. India has grown remarkably in the Food
and Beverage sector when we talk about the growth of industry sectors. And since the world is
witnessing a huge transition of technology use in sectors which we never even imagined for.
Taking an example from the well known cafe chain Chaayos, the restaurant has its USP in the
Chai, which to your surprise are made through the use of tech IoT designed Chai Monks.
Chaayos saw the technology as an opportunity for disaster and used it to their benefit and to date
they run more than 200 cafes in 9 different cities of the country.
Since, the F & B sector is extremely a huge sector when we consider it as a whole, so every
restaurant or hotel faces a cut edge competition from the other restaurant in the same segment. In
this report further we have analyzed the Industry competition in the food and beverage sector,
which helped and created a base for our further analysis and research on the objective “ the
consumer perception towards Chaayos and its products”. Because in order to stay in business and
sustain in the competitive environment, the restaurants have to come up with some or the other
mechanism to impress their customers. Like in this report we have analyzed how Price,
Promotion, Packaging, Atmosphere of the restaurant and Consistency in taste of Chai and Snacks
has actually helped Chaayos in creating brand value along with customer loyalty.
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Chapter 1 : Introduction
The food and beverage sector is typically defined by its output of products, which are designed
to meet people's diverse food and beverage needs. However, it excludes food and beverage
manufacture and distribution. The food and beverage service business has grown significantly in
recent years, and it now serves more than 100 million meals per day.
It has infiltrated all aspects of society. The food and beverage service industry currently includes
hotels, restaurants, cafes, industrial canteens, hospital canteens, railways, and airlines.
The primary function of this industry is to provide food and drink to people in order to meet their
diverse needs. The major goal is to satisfy the customers. The following are some of the needs
● Social : a welcoming environment in which people can openly express their feelings.
● Convenience : The desire for someone else to do the work for you.
These diverse requirements play a significant influence in determining the criteria that determine
the various types of service methods used in the food and beverage business.
There is a huge competition in food and beverage industry in India as well, if we go by different
types of hotels in hospitality we can see we have hotel chains like JW Marriott, Taj Hotels, The
Oberoi’s, The Leela and many more, then for the restaurants chains like Haldiram’s, Bikanervala,
Pizza Hut, Dominos, and others but our main focus is towards the cafe chains being in
competition with Chaayos like we have Chai point, Chai Sutta bar, MBA chaiwala and many
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more. Chai Sutta bar and MBA chai wala are a very small consumer segment and are not well
known in the market but Chai Point is a clear competitor for Chaayos.
1.1 Background
The India Tourism Development Corporation (ITDC) was established in October 1996 with the
goal of improving and growing the country's tourism infrastructure and promoting India as a
tourist destination. ITDC achieved its goals by marketing India's largest hotel chain and
providing all tourist services under one roof, including lodging, food, transportation, in-house
travel agency, duty-free shopping, entertainment, PR, and consulting. It also provided private
As the industry grew further and manifolds, the customers started to turn in for leisure time at
these spots for brunch, evening outings or even for dinner as well. There are a number of
alternatives available for the customers to choose and visit the restaurants and this way it
increases competition in the industry. Because of this one restaurant tries to keep itself a step
ahead of the other in the same market area. Every restaurant tries its best to keep up with the
consumer satisfaction and provide them with the best possible experience. In turn the customers
opt for restaurants with which they have had a memorable experience.
Competition in the market is the major source of giving out your best and sustaining in the
market. It increases your power to fight and come up with something innovative every time you
serve your customer. And this innovation is the major parameter your customer judges your
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This study will help understand what are the basic areas which make this sector so competitive.
The F&B sector is termed to be a highly competitive industry, because the diff. Restaurants have
different styles of packaging, promotion of their services and products, competitive pricing, and
many more. This study will help us in getting a proper and in depth insight that which parameter
plays an important role to attract customers and what exactly do consumers perceive.
The main purpose of this study is to understand how competitor analysis in the F & B sector
helped it develop and grow better. The competition from various other restaurants in the market
has actually improved the quality of products being served to the customers and improvement in
the services as well. This study will also help us gouge out the consumer perception about the
products of restaurants like Chaayos. What exactly are the consumers looking for when they
make a visit to a restaurant or order online from the same restaurant this way they are able to see
the difference b/w the service they are given in dine in and in ordering online. A study was also
conducted to see the impact of consumer perception about the products of Chaayos and how it
1.4 Objectives
Based on the Purpose of the study, the following are the two Objectives of the Study
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Chapter 2 : Literature Review
literature review can be only a basic summary of the sources. However, it typically has a
hierarchical pattern and consolidates both synopsis and composition. A synopsis is a recap of the
critical data of the source, however, a composition is re-association, or a reshuffling, of that data.
It may give another understanding of old material or consolidate new with the old analysis. Or
then again it may follow the scholarly movement of the field, including significant discussions.
Also, contingent upon the circumstances, the literature review may assess the sources and exhort
The F&B sector is the most sought after industry in terms of consumption and footfall. This
industry mostly relies on the customer feedback and constant improvement till the product
completely dies out from the market. In the F & B industry it is really tough for a company to
make changes in the product depending upon the choices or feedback of a few customers. As
taste may vary from a consumer to consumer that is like some customers might like spicy food
and others might find it extremely spicy and would want to reduce the spice level similarly some
consumers prefer higher node of sweetness and some like no to less sugar. So in nutshell it's not
possible for a restaurant to alter a product based on the reviews of 10-15 customers. Unless,
holistically the restaurant chain is receiving repetitive or the same feedback from nearly all the
customers, the restaurant looks into the matter and makes the changes accordingly. Taking a
reference from the current experience of Chaayos, in the recent past introduced Bun Dabeli in all
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its cafes, and after analyzing the reviews received from the customers, the product development
team came to the conclusion the spice level needs to be reduced in the product.
So further in this section we’ll be discussing how the F & B industry has evolved in India and
India being the 2nd most populous country at times serves to be a reason for profit for some
particular sectors of industries, F & B sector is one of them. No matter what the consumers will
keep on coming in, but the highest differentiation here is the competition from the local vendors
available in the Indian markets. They serve as the biggest threat to any big restaurant booming
business. But since when the Covid-19 Pandemic kicked there has been a considerable change
The Indian consumer's evolving purchase pattern has seen major changes over the years.
degree of urbanization, education levels, and the advent of new work opportunities in the service
sector, such as information technology, call centers, and retailing, all influence lifestyles (Louis
& Zaware, 2016). According to Louis and other writers the middle class has grown as a result of
economic changes implemented two decades ago. Consumption patterns in India are shifting as
disposable income rises. India's beverage business, in particular, is a large market for
international beverage makers. With India's growing population and rising level of living, the
Convenience, sophistication and health are few factors which are directly linked with the
increased sales (Louis & Zaware, 2016) which indeed proves to be beneficial for the F & B
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sector in India. According to a recent study, consumer spending in India is expected to rise by
13% each year over the next three years. The dynamic demography and population (which
accounts for 17% of the worldwide population) draw significant investment from the world's
biggest food and beverage corporations. In terms of purchasing power parity, India is the largest
country. One of the most important elements is an increase in disposable income. The
convenience of ordering online is changing the overall pricing competitiveness environment, and
businesses will have to build and implement new ways to offer to markets. The primary variables
driving increased demand in the food and beverage business are age structure and educational
levels. Despite being one of the world's largest food producers, India accounts for less than 1.5
percent of global food trade, indicating enormous potential for both investors and exporters.
In this segment we’ll be discussing various trends in the F & B industry in India. Then further
touching upon the analysis of economic scope, demographically and geographically segmenting
Talking about the trends in the F & B industry, we are bullish on India’s Food Space (Jain &
Sudhendranath, 2011). In India, we favor exposure to the food space over HPC(Hygiene &
Personal Care). We feel that food presents more appealing long-term growth potential, as a
number of categories remain underserved. Nestlé (a market leader in chocolate and dairy), GSK
Consumer (a market leader in malted beverage), and Jubilant Foodworks (an exclusive Domino's
Pizza franchise in India with a 65 percent share of the pizza home delivery industry, according to
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1. Dining-in vs. eating out: We believe that as the pace of urbanization accelerates, resulting
in infrastructure bottlenecks, the concept of dining-in will catch up. We believe that the
portion of the people to eat in. Most chain restaurants (such as Chaayos, McDonald's and
Subway) and freestanding restaurants are now offering home delivery. One of the reasons
for the bullish outlook on Jubilant FoodWorks is because of this (Jain & Sudhendranath,
2011).
2. Escalating innovation cycle: Food companies are putting more emphasis on packaging
(smaller and more cheap packs), product (mass marketing of premium categories),
3. Regulatory environment to become more stringent: Analysts believe that the regulatory
environment for food companies will become more stringent over time when the food
safety and standard rule is implemented in 2011. This, we believe, will make it easier to
4. The processed and packaged food market is still in its infancy, which is the fundamental
reason for ongoing greater growth. This sector has seen sales growth accelerated in recent
years as incomes have climbed and urban consumers' health consciousness has expanded.
5. Increased competition: The HPC market is very competitive, with a host of local,
national, and multinational competitors vying for a piece of the action. This means that,
unlike the food sector, which is still growing, HPC, in our opinion, is significantly more
vulnerable to price wars. This would have an impact on the value growth category as
well.
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As when discussing the consumer related reviews or feedback in the F & B industry, taste is
something which customers assume should remain consistent, not just the customers, it is
supposed to be the primary driving factor in the industry. Taste is a crucial factor to consider:
One consistent topic emerged from our discussions with FMCG businesses and modern retail
participants. In the food and beverage industry, product flavor is a critical factor of success. Even
health items are designed to appeal to a consumer's sense of taste, with "health" benefits supplied
as an afterthought. For instance, Marico's Saffola Zest, which was introduced as a "healthy
snack" but failed to appeal to customers' taste buds, was discontinued. This is also shown in the
persistent popularity of PepsiCo's Lays and ITC's Bingo baked chips over the "healthier" Parle's
baked chips. Thus, in our perspective, the flavor platform is gaining over the health platform,
The F & B industry has a growing range of demographics if we talk about the recent changes in
the generation or the people have started to order food online rather than dining in the
restaurants. The main reason behind this change is the level of comfort achieved and everything
available in just one click or one stop destinations like Zomato and Swiggy. They have changed
the entire mechanism of the F & B industry, how it used to operate and how it is operating
currently.
Due to the increase in online ordering and less dine in many restaurants have started an option of
“cloud kitchen”. A cloud kitchen is the kitchen or a restaurant with no space for dining in
customers but for delivery and take-aways only. For instance, Chaayos has started a cloud
kitchen in the name of “Ghee and Turmeric”. GnT is a cloud kitchen which has a wide range of
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options for Indian main course meals for its customers. But there is no dine in the restaurant of
GnT, where customers can go and have their meal at the restaurant.
The F & B sector has evolved in this way because if we go by recent trends and demographic
analysis, we will come across a conclusion, there is an increased number of nuclear families and
more working professionals in the families. Both men and women are working professionals and
are left with less time to cook at home, so they prefer ordering food from outside. We can also
see that many people have opted food blogging as one of the professions, which has raised the F
& B sector by manifolds. The F & B industry is just as vulnerable as others to broad
demographic shifts, which will have an impact on real estate through forms like retail food
combos, more cloud kitchen operations, and food delivery (Wilson, 2019).
2.5 Conclusion
Through the literature, it is very evidently visible that the F & B sector is a growing and
unstoppable industry. There is a wide scope of innovation and yet a limited time span for a
product. The entire food and beverage industry stands on the will of the customers and their
desires. Restaurants and cafes are highly susceptible to the demographics of the area they are
operating in, Chaayos and Starbucks strictly target the premium segment of the customers. These
companies open cafes in the elite areas of the metro cities. And recently according to a study
there are few predictions made in regard to the F & B sector, there is going to be even more
demand boost for dining and delivery as the single households are growing, millennials spending
on food and beverages will out pass the expenditure in past 10 years, neighboring restaurants and
cafes on the edge of the metro cities with workplace will become one of the most hotspot
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destinations for dining and with the concept of work from home the industry will grow even
But this sector is the most vulnerable to the external environment as we can see from the recent
events which have impacted the industry deeply, not just the F & B sector but the others sectors
as well. When the pandemic Covid-19 kicked in, the entire world economy came to a stand still.
People stopped stepping out from their houses, complete lockdowns in the nations kept the
restaurants closed due to which many small scaled restaurants couldn’t survive and ultimately
had to shut down. But the online food delivery still was a ray of hope for the survival of many
food outlets. Yet the paranoia of infections grappled the consumers which held them back from
ordering food from outside. As the fear of covid subsidized and the restrictions were lifted
people turned up to the restaurants in heavy numbers. Hence we have also seen that there are
various challenges associated in the industry but still none that can’t be done. The work from
home concept has actually proved to be beneficial for the industry, more and more people started
to order food from the restaurants even those who used to order once or twice in a month. But as
we know the larger the pond, the more are the chances of dying or being beaten by the larger
creature in the same pond, similar to the scenario of the F & B industry. As much as the sector is,
there is a huge competition in the industry from various restaurants and now further we will be
discussing the competition in the industry and what are the consumer's perceptions related to the
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Chapter 3 : Methodology
In this report we will be studying two project objectives. The one objective of the study is the “to
analyze the industry competition in the food and beverage industry” and the second objective of
the study is “to study the consumer perception about the products of Chaayos”. So in this
chapter, we will discuss the methodology for the analysis and study of the two objectives.
For the first objective the study will be based on the analysis from the secondary data research
like articles, websites, internet resources, research papers, journals and many more. Based on the
secondary resources from the internet, we will be developing a case study which will comprise of
Michael Porter’s 5 forces, which will give a detailed analysis of the competition in the F & B
industry. And since the objective 2 is quantitative in nature, so will be relying mainly on the
primary data. This chapter deals with the stepwise procedure followed inorder to carry out the
present research work and is further divided into major sub sections for ease of understanding.
The project design consist mainly of the following phases which are extremely important for the
2. Selection of data constructs for each objective : Primary or Secondary data research
3. For Secondary data research : collecting resources through internet, like from journals,
4. For Primary data research : it's customer centric, choosing the mode of research like
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marketing, etc. But our analysis will be based on the data collected with help of
5. Questionnaire development
6. Data collection
7. Data Analysis through statistical tools like regression, Anova, correlation testing, etc.
For collecting the required data for research, both primary and secondary sources have been
used. For the analysis of objective 1, various research papers, journals and webpages have been
chosen for detailed analysis of competition in the F & B industry. The reference for the research
paper and journals have been cited in the references and webpage are mentioned with URL in the
references. For analyzing objective 2, the sample size chosen, unstructured questionnaire
consisting of both open and close ended questions was referred as the primary source and was
circulated via social media direct messages in order to record the responses. The questionnaire is
attached in Annexure.
3.3 Sampling
The population size for the research is very large and cannot be approached in such a short
period of time. Because there are a lot of customers who have tried tea and snacks at Chaayos
and the people belong from different geographies like Delhi NCR, Mumbai, Bangalore, Chennai,
Pune, and many more. Due to the lack of time, a convenient sampling procedure was used to
identify a sample size of 100 persons. Each individual was chosen purely by chance, and each
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member of the population has an equal chance of being included in the sample. Every sample of
Field work was conducted in different cities like Gurgaon, Faridabad, Delhi, Bangalore and
Mumbai. Field work included Chaayos cafe visits to focus interviews of customers visiting
chaayos for dine in or take away. Few detailed questions were asked from the customers like
what brings them in chaayos ? What do they like the most about the cafe ? Why do they prefer
visiting again ? How much time on an average do they spend in Chaayos cafes ? and many more.
These questions were informative enough to get the insights about the consumer behavior
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Chapter 4 : Objective 1 Analysis
In this chapter we will be studying on an objective that is “to analyze the industry competition in
the Food and Beverage Industry”. For the analysis of the objective of competition in the F & B
sector, we have gone through numerous research papers, webpages, and journals which help for
detailed insights. We will be conducting a competitive analysis through Michael Porter’s 5 forces
Scarcity in the supply network. Limitations on healthcare. And there's the rising popularity of
delivery apps and take-out food. These are just a few of the current and future developments
driving change and innovation in the Food and Beverage sector. “For Food and Beverage brands,
this rapidly changing and often unpredictable landscape has made already fierce competition
even fiercer”(Shaw E. ,2022). Customers' face-to-face connections have all but vanished, giving
way to online engagements through social media networks, review sites, and food apps. Modern
consumers are more networked and emboldened than ever before, and they expect to be serviced
on demand, on their terms, and through the online platform they prefer.
There has been a considerable amount of competition in the F & B industry, but lately it has
genuinely increased due to digital platform innovations and then the pandemic hit the world,
which has literally strangled the entire food and beverage industry worldwide. But this time the
digital proliferation proved to be a mode of survival for the industry, delivery apps like Zomato
Swiggy were no less than a messiah for the food industry. Yet these apps have actually flooded
the customers with a bulk of options to choose from, creating a bottleneck competition for each
restaurant option visible on the app. This actually made it difficult for the small run cafes or
restaurants to enter the market and grow. If these restaurants are not updated with latest
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techno-trends or the so called new way of marketing through social media influencing and
delivery app recommendations, it is going to be a burning coal walk for them. Nowadays, 80%
restaurants in a particular locality have got themselves registered on one or the other delivery
apps, because this is the way of business now in the F & B industry.
This was the competition problem pertaining to digital platform innovation, now coming on to
the competition inside the industry. Every restaurant always keeps the track of its competitors in
the market. Looking out for tactics the restaurants are using for customer engagement and
loyalty. Customers look out for things which attract them, influence them in a different manner
and get excited when they are treated differently from the usual experience. At this moment the
basic 5 P’s of marketing are in play : Promotion, Price, Product, Place and People.
4.2 Background
In terms of production, consumption, export, and expected growth, India's food processing sector
accounts for 32 percent of the country's overall food market (Indian Food Processing Industry
multinational firms and investors tremendous opportunity. The food and beverage sector, which
accounts for over 40% of India's consumer packaged goods (CPG) market, was valued at $369
billion in 2017 and is still growing at record rates. (Indian Food and Beverage Industry
and flexible retail layouts are all factors fueling supply-side growth. Dietary and drinks are the
most often consumed items in India, and new food preferences and rising disposable incomes of
the country's young, burgeoning middle class are boosting demand (Greer, 2018).
The non-alcoholic beverage industry is also a major growth driver. Carbonated drinks, sparkling
beverages, still beverages, fruit juices, energy drinks, sodas, teas, and coffee are all examples of
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these beverages. In India, tea is the most popular hot beverage, and fruit juices and sodas are
gradually becoming more popular. However, a recent trend in Indian consumers' health
consciousness is driving demand for healthier product options such as low-sugar beverages and
low-carb snacks. Many Indians are eating out as a result of changing consumer choices and
behaviors, disrupting the food service business with fast service restaurants and cafes.
4.3 Challenges
There seems to be a plethora of opportunities in this sector, but alongside this there are still a
high level of challenges both at the local and international level. “The biggest challenge is that
the industry is dominated by unorganized players who contribute to 80% of the food processing
industry (by volume) unlike other sectors'' (Indian Food & Beverage Sector, 2014, p. 16). Players
in the industry face a variety of obstacles, including a lack of suitable infrastructure and supply
chain efficiencies, a paucity of competent people, and inconsistent policies at both the national
and local levels (Food and Beverage Industry Analysis, 2015). However, there is still reason to
play a crucial role in bridging the gap between demand and supply and resolving fundamental
challenges of the sector - rising food costs and high levels of food wastage," according to Grant
Thornton India LLP director (Indian Food & Beverage Sector, 2014, p. 14).
The industry's ongoing expansion is vital for India's economic and social development. "The
food processing industry is critical to freeing India from the clutches of hunger and
malnutrition," says Dinesh Shahra, founder of Ruchi Soya Industries Limited. "On the one hand,
it will provide options of global standard to aspiring consumers in India, on the other hand, it
will help in boosting income levels of farmers in India," he adds (Indian Food & Beverage
16
Sector, 2014, p. 17). One of the many challenges in the sector is the high percentage of attrition
rate. There is very limited skilled labor and that too, is extremely overworked and over-burdened
with extended shift hours and overtimes. This takes a toll on their health and family, due to
which the employees in the sector move to the company that gives them a better work life
The Government of India, now places a great attention on the growth of the food processing
industry, which is expected to employ 48 million Indians (Indian Food Processing Industry
Analysis, 2017). Over the previous five years, the government has made significant progress in
reducing waste and establishing crucial infrastructure to support the industry's growth. In
public-private partnerships, sixty agriculture export zones (AEZ) have been constructed, as well
as over 42 mega-food parks (Indian Food Processing Industry Analysis, 2017). In exchange for
tax breaks and deductions, the government is collaborating with international firms to establish
supply networks and integrate cold storage techniques. The administration has also prioritized
the revision of restrictive legislation and the swift execution of the Food Safety and Standards
Authority of India's mandate (Indian Food & Beverage Sector, 2014). While numerous private
and public efforts are being promoted, the future of India's food and beverage industry will be
Michael Porter identified five elements that influence a company's profitability in its industry.
These five forces analysis are now referred to as Porter Five Forces Analysis in the corporate
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3. Bargaining Power of Buyers
The Porter Five Forces model is a holistic strategy framework that decouples strategic
decision-making from a simple analysis of the current competition. The Porter Five Forces
analysis looks at how Chaayos may create a long-term competitive advantage in the food and
beverage industry. Managers at Chaayos can use Porter Five Forces not just to create a strategic
position in the Food & Beverage industry, but also to investigate profitable opportunities across
Chaayos Porter Five (5) Forces Analysis for Consumer Goods Industry :
New entrants in the F & B industry innovative products and services and fresh perspectives,
putting pressure on Chaayos to decrease its prices, cut expenses, and offer new ways to add value
to customers. To maintain its competitive advantage, Chaayos must handle all of these
● Through development of new products and services. New items not only attract new
customers, but they also provide existing customers an incentive to continue purchasing
Chaayos products.
● Investing in research and development and building capacities. Newcomers are less
inclined to enter a dynamic business where established firms, such as Chaayos, are
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constantly setting the bar. It drastically decreases the possibility for new businesses to
Almost every company in the f&b industry buys raw materials from a variety of sources.
Suppliers with a strong position in the market can reduce Chaayos' market margins. Powerful
suppliers in the Consumer Goods sector utilize their negotiation leverage to get higher pricing
from food and beverage companies. Higher supplier bargaining strength reduces the overall
● By experimenting with product designs using many materials, the company can transition
● Creating devoted suppliers who rely on the company for their livelihood. One of the
lessons Chaayos could learn from many other companies is how they build third-party
manufacturers whose entire company relies on them, resulting in a situation where these
third-party manufacturers have substantially less bargaining power than the companies.
Buyers could be a demanding set. They aim to get the greatest deal possible by paying the least
amount of money feasible. In the long run, this puts a strain on company profitability. The
smaller and more powerful Chaayos' client base is, the greater the customers' bargaining strength
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How can Chaayos tackle the bargaining power of buyers?
● By establishing a broad consumer base. This is beneficial in two ways. It will lower
buyers' bargaining power and provide the company the opportunity to streamline its sales
● By developing new items at a rapid pace. Customers frequently seek discounts and
● Existing Chaayos consumers will be less likely to defect to its competitors as a result of
Industry profitability decreases when a new product or service solves comparable customer
needs in different ways. Services like Dropbox and Google Drive, for example, replaced storage
hardware drives. If a substitute product or service offers a unique selling proposition that is
significantly different from the industry's current offerings, it poses a significant threat.
● By focusing on services alongside the products, this makes the customer feel more
valued.
● By focusing on the customer's basic needs instead of just the product they are purchasing.
There is a huge competition for chaayos from the local tea vendors and others in the same F & B
segment like Chai Point and Starbucks. If there is competitive pressure among existing players in
a sector, prices will fall and the industry's financial position will suffer. Chaayos competes in a
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crowded F & B industry. This competition develops a negative impact on the organization's
How can Chaayos tackle intense rivalry amongst existing competitors in the F & B Industry ?
● Rather than fighting for a niche market, collaborate with competitors to expand the
market.
Chaayos strategists may acquire a thorough view of what affects the profitability of a business in
the Food & Beverage market by studying all five competitive forces. They have the ability to
spot game-changing trends early on and move quickly to seize the opportunity. Chaayos'
management may modify the Porter Five Forces in their favor by thoroughly comprehending
them.
As we have gone through the Michael Porter 5 forces and analyzed that innovation and creativity
is the key to sustain in the market. Chaayos also needs to stand and abide by this mantra to grow
Chaayos is well known for the use of IoT in its Chai making mechanism. They have very
beautifully mend the technology into their business through personalized chai monks and kettle.
The chai making process is automatic with least human interaction possible. This is the main
reason why Chaayos has been able to come up this far. It's all because of the use of digitalization.
Rather than going against the move, they chose a path in the direction of flow of wind.
21
There are few other recommendations from our side after the analysis of the industry
competition, though Chaayos itself is doing extremely well so far, but really needs to know the
customer intentions as at the end of the day they are the reason for business.
Only 22% of Food and Beverage brands claimed to respond within 60 minutes, compared to
more than 50% who claimed to do so within five hours. It can be difficult to respond swiftly with
Eighty-seven percent of food and beverage businesses only have 19 or fewer employees who are
solely responsible for listening. When interacting with brands, modern consumers want
immediate responses. Are you responding to online inquiries from customers quickly enough?
In this way, the company needs an AI based software tool that would help in segregating
customers' feedback and queries on priority basis. In this way the company would be able to
approach the upset customers first and which would actually help them bond with their
customers well.
Knowing how your rivals interact with customers can provide your business a big advantage in a
cutthroat industry like food and beverage. Companies in the food and beverage industry
concentrate on competition sentiment data to the tune of 72%. Tracking and keeping tabs on how
consumers interact with the brands and business posts of your competitors can provide accurate
insights into consumer preferences and suggestions for new product and marketing strategy
developments.
22
Create a strategic procedure to compare yourself to the competitors. Utilizing competitive
benchmarking, you can compare your company's efforts to those of your rivals, monitor KPIs
These few recommendations will actually prove to be beneficial for any organizations which are
customer centric and are extremely dynamic. To be well prepared, what's coming ahead from
your competitors' end will actually help you gain an edge over others. Customer feedback and
queries are a prime and utmost priority for companies like chaayos. Software tools which are AI
based prepared to perform categorizations based on set predefined parameters will help the
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Chapter 5 : Objective 2 Analysis
In this chapter we will be studying on an objective that is “to analyze the Consumer Perception
in the Food and Beverage Industry with reference to Chaayos and its products”. For the analysis
a questionnaire was prepared to get the insights about consumer preferences and behavior while
making a purchase from Chaayos and what they perceive about its products, pricing, packaging,
promotion and many more. And for better market research on the same, we paid a visit to
numerous Chaayos outlets in different geographies like Delhi NCR (North Region), Mumbai
(West Region) and Bangalore (South Region). This helped in the analysis and understanding of
While conducting a market research, there is a complete dedicated process for it which involves
following steps :
1. Problem Definition
The above mentioned steps is a logical and sequential process which needs to be followed for
utmost output.
A research problem is a particular topic, challenge, paradox, or knowledge gap that you intend to
solve in your study. You might search for theoretical or practical issues that aim to further
knowledge or bring about change. Problem definition is the step which defines the entire
24
problem that is faced by the company related to the market as well as the management for the
Which new product should be launched in the outlets and which product needs to be
discontinued ?
1. What are the consumer preferences and expectations from their snacks ?
2. Are customers influenced to try new products through product marketing and promotions
in the cafes ?
The study focuses on the consumer perception related to Chaayos and its products. For the
analysis few variables are considered which are interdependent on each other. The variables
taken for analysis are Price, Packaging, Promotion, Atmosphere and Consistency of products.
These variables are independent variables and dependent variables are Sales of product, brand
value & brand awareness, product awareness, quality services, time spent in cafe, taste and
quality of chai and snacks. Since the F & B industry is a very competitive sector, Chaayos has to
keep itself ahead of its competitors in order to grow and be profitable in the market.
Attributes like price, packaging, promotion, atmosphere, consistency, sales, product and brand
awareness, taste and quality of chai & snacks influence the customers perception towards the
restaurants and its products not just for Chaayos. This analysis will be beneficial for the
25
companies in this sector including Chaayos. The output of the study will help the company to
fathom which area needs utmost importance and improvement in order to satisfy their customers
needs and reach up to their expectations. The study attempts to focus on the attributes which
have an impact on the business of the company and why exactly the customers are really coming
In this study few hypotheses have been formulated with the dependent and independent variables
to prove the objectives of the research i.e. “ to analyze the consumer perception towards Chaayos
H2 : Promotion & Packaging of products promote product and brand awareness at Chaayos.
H5 : The taste and quality of Chai & Snacks are not consistent over the Chaayos outlets.
Now using various statistical tools, the null hypothesis will be accepted and rejected to prove the
For the research on the objective a questionnaire (attached in Annexure) was prepared which was
floated among the customers who visit or order food from Chaayos. The customers were asked to
fill the questionnaire on the cafe visit to get to know better and deep insights about consumer
behavior and expectations from the brand. The questionnaire was filled by approximately 100
customers due to time constraints. Few customers were very interested and are a regular
26
customer of Chaayos which proves their brand loyalty. For the data analysis, the statistical tools
used are one way - Anova, Regression, correlation and F-test Two sample for Variances.
Different tools have been used to prove the hypothesis and the analysis is mentioned in the
The tool used to prove the hypothesis is Regression. Regression analysis is used to understand
the relationship between the independent variable to a dependent variable. In this null hypothesis
the dependent variable is sales of the products and independent variable is price of Chaayos
The multiple R is the correlation coefficient which tells the interdependency between the
variables. The closer the value to 1, the stronger is the correlation, 0 means no relationship at all
and -1 means negative relationship. The 0.29 value of multiple R means that there is some
27
In the Anova table the Sig. F is less than the significant value 0.05, hence the null hypothesis is
rejected. Therefore, this means that Increase in sales is related to the price of Chaayos products.
H2 : Promotion & Packaging of products promote product & brand awareness at Chaayos.
In this null hypothesis we are analyzing the relation between product and brand awareness with
respect to the promotion of the products at Chaayos outlets. Promotion of the products can be of
any form either product display on screen or staff recommendation. We have even analyzed the
correlation between various forms of brand and product promotions and how they impact each
other and to what extent. For the independent variable promotion and dependent variable product
and brand awareness following is the analysis table using F test Two Sample for Variances :
Fig 5.2 : F - test analysis for Product Display & Brand awareness
In the F - Test Analysis for Two samples for Variances proves that the two variables come from
independent samples with different means. For the f-test interpretation, we look for two values
one is the calculated F and the other is critical F. If the calculated F is less than the critical F, then
we accept the null hypothesis and prove it to be true. In this analysis table we can see the cal. F is
less than critical F (1.15 < 1.39), so we accept the null hypothesis. Hence, Promotion and
This hypothesis focuses on the brand value and awareness via packaging. Indeed packaging
plays a vital role in brand awareness. Consumers tend to judge a brand by how they’re being
28
treated or served by the brand. The very first thing a customer notices or feels in a product of a
particular brand is its packaging and taste of the product later. Therefore, we are going to prove
Fig 5.3 : Anova : Single Factor for packaging & brand awareness
To prove this hypothesis, we have used one way - Anova. Anova means Analysis of variance and
is used to make inferences about the properties of the entire sample. In Anova : Single Factor, we
look out for p-value, if the p-value is less than the sig. Level (0.05), we reject the null hypothesis.
We can see from the table that p-value (0.000121) is way less than from sig. level , hence we
reject the null hypothesis. Therefore, it is clear that “Packaging of products has a relation to
Atmosphere of any restaurant has multiple ways of impressing its customers. The atmosphere
does not just mean the physical appearance of the store but also the staff and people around in
the outlet, how they behave, how friendly and welcoming the staff of the cafe is, and many other
factors. To prove this hypothesis, an analysis was conducted using statistical tool as follows :
Fig 5.4 : F - test analysis for time spent & Atmosphere of the cafe
29
F-Test analysis was conducted to prove the null hypothesis. In the F-test, the two variables are
from independent samples, like one variable is How much time do the customers approximately
spend in Chaayos cafe when they visit for dine in and how cafe ambience and quality of service
impacts the time spent. The calculated F is more than the critical F, (1.74>1.39), hence we will
reject the null hypothesis. Therefore, Atmosphere of Chaayos is suitable for spending more time.
The customers find the cafe a perfect spot for an outing, love the peaceful environment and
H5 : The taste and quality of Chai & Snacks are not consistent over the Chaayos outlets.
The customer knows the brand and assumes that the taste of the product they tried in the cafe at
another location will be the same and consistent. Moreover, the consumers aren’t wrong, the
taste and quality consistency proves the brand experience and management. Hence to prove this
Fig 5.5 : Anova : Single Factor for consistency in taste & quality of products
To prove the hypothesis we have used one way - Anova. In Anova : Single Factor, we look out
for p-value, if the p-value is less than the sig. Level (0.05), we reject the null hypothesis. We can
see from the table that p-value (0.029) is less than from sig. level , hence we reject the null
hypothesis. Therefore, “ the taste and quality of Chai & Snacks are consistent over the Chaayos
outlets”.
30
Using different statistical tools, we accepted and rejected the hypothesis proving our research
objective that Price, Packaging, Promotion, Atmosphere of Cafe & Taste and Quality consistency
31
Chapter 6 : Conclusion
The overall purpose of this study is to explore the consumer behavior and the factors that affect
this decision while placing an order for food and snacks. Using a questionnaire, quantitative
studies were used to achieve the research goal. In two ways, this thesis adds to the literature on
consumer purchase behavior and perception from a theoretical standpoint. To begin with, it
offers insights into the consumers' food ordering behavior and factors that draw them to make
repeat orders and stick to Chaayos, which has piqued the interest of scholars and practitioners
alike. The conceptual framework of the theory of consumer perception shows to match the scope
of this research, and factors connected to the same are outlined. Secondly, the companies like
Chaayos, Chai point or Haldiram’s that are customer centric and serve the customers on a daily
basis should understand the significance of taste and quality consistency of the products, the
services they provide to their customers must be worth every penny. Customer satisfaction and
The study also found out that all variables give different impacts towards consumers' purchase
behavior. Taste and Quality of services has the highest impact that influences the customers
money’s worth.
6.1 Limitations
It has been known and important to identify a number of limitations as this study has progressed
in order for the researchers to understand and acknowledge them. The research was specifically
1. The study was restricted to geographical boundaries of India like Delhi NCR, Mumbai
and Bangalore. Additional contexts and outlets which are opening soon in different
32
regions should be included in future research to further increase the generalizability of
the study.
2. Due to time constraint only 101 respondents completely filled the questionnaire and were
Likert scale. This may specifically influence the outcome and mistakes may arise.
The F & B industry is growing exponentially irrespective of the recession and growing inflation
in the market. Daily, new small chain cafes and outlets are opening up in the Indian market,
thereby creating a huge chance of employment and a wide range of opportunity. But in order to
sustain in this cut edge competitive market, the brand needs to stay a step ahead of its
competitors. This study can be taken to the next level of analysis via usage of AI based tools that
can sense the consumer emotions and suggest food and beverages according to their mood. This
way it can solve the dilemma of its customers and gain loyalty from them. There is a wide scope
of study in this industry. But one thing remains: constant customer satisfaction and retention.
33
Annexure
1. Name :
2. What is your age group ?
a. 18 - 24
b. 25-31
c. 32 - 38
d. 39 and above
3. What is your occupation ?
a. Student
b. Working professional
c. Retired
d. Others
4. Whenever you hear about Chaayos what comes to your mind first ?(what do you
associate chaayos with ) <Multiple option selection>
a. Chai
b. Snacks
c. Relaxing spot
d. Store Ambience
e. Dine in workplace
f. Mental peace
g. Others :________
5. In which city you visited or placed an order from Chaayos ?
a. Delhi NCR
b. Mumbai
c. Bangalore
d. Others : _______
I
6. How often do you dine in or order from Chaayos ?
a. Daily
b. Every week
c. Once or twice a month
d. Once in a while
e. never
7. On a scale of 1 to 5 (1-strongly disagree & 5- strongly agree) rate the following:
a. Chai & snacks at chaayos are not any different from the regular ones available
b. Paying for chaayos rather than products
8. When you visit Chaayos for dine in, approximately how much time do you spend ?
a. <= 30 minutes
b. 30 to 60 minutes
c. 1 to 2 hours
d. > 2 hours
9. On scale of 1 to 5 (strongly Disagree-1 and strongly Agree-5)
a. The atmosphere in chaayos is relatable to brand experience
b. The cafe ambience and quality of service influences the time spent in Chaayos
c. Friendly and welcoming nature of staff impacts the cafe visit
d. The cafe provides a concentrating and peaceful atmosphere
e. Chaayos provide a space which fits as a dine in workplace
10. On a scale of 1 to 5 how likely will you buy from Chaayos if you have a discount
coupon?
11. On a scale of 1 to 5 (strongly disagree-1 to strongly agree-5)
a. Price reduces the sale of a product
b. Products at chaayos are overpriced
c. A compromise in price may result in quality drop of products
d. If chaayos reduces the price of its product, I would visit/order more often
e. Prices of the products are worth it owing to the quality of services
II
12. On a scale of 1 to 5 how likely do you try or purchase over the counter displayed
products at chaayos like cookies, cakes, snacks ?
13. On the scale of 1 to 5 (strongly disagree-1 to strongly agree-5) the following parameters
influences your visit or purchase from Chaayos :
a. Word of mouth influences my purchase behavior at Chaayos
b. More likely to buy or try a new product after staff recommendation
c. Product Display on the screen in a cafe influence my purchase
14. On a scale of 1 to 5 (1-strongly disagree & 5- strongly agree) rate the following:
a. Product packaging influences the purchase of an item and thereby increase sales
b. The attractive packaging motivates the customers to choose one product over the
other
c. Packaging of products at Chaayos has build its brand value
d. Packaging of products at chaayos promotes brand awareness
15. On a scale of 1 to 5 (1-strongly disagree & 5- strongly agree) :
a. Taste of chai and snacks is same across all cafes of chaayos
b. The taste of products are the same even over geographies eg : paneer sandwiches
taste the same in North cafe as in the south.
c. The flavors of chai and snacks vary in every order
d. The same product tastes different in 2 cafes of same locality
III
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