“Arshad Chaiwala Demands Rs. 1 Cr for 5% Equity on Shark Tank Pakistan”
Arshad Khan and Kazim Hassan are co-founders of Cafe Chai Wala. In 2016 Arshad Khan’s picture went viral of making tea, he said for one and a half to two months I could not understand what is happening to me. When I understood, I started modeling and acting in Lahore, Faisalabad, Karachi. After that a lot of people told me to open a cafe, when I used to work at someone’s cafe I wanted to open my own. After that I met Kazim Hassan and we launch a proper office in Islamabad.
Kazim Hassan said that in March 2020, we opened our first cafe, Roof Top cafe in Blue Air Islamabad and as soon we built it, Covid came in March and then there was a gap and then we relaunched it in October 2020, It went viral even before it was launched. They asked for Rs. 1 Cr PKR for 5% equity. Rs. 20 Cr Valuation.
Shark asked them that there are any cafes you are running in Pakistan? Founder said that yes we are currently running two cafes in Pakistan, one in Balakot and second one in Saidu Sharif. The international cafes are running in Lifford Lane, Slough and Scotland and these all are running on franchise. Franchise fee in Pakistan is 35 Lacs Upfront 5% royalty, and for UK franchise fee is £150k – £200k pounds. Equity split is 50-50% between these two founders.
There revenue in last month in UK is 38000 pounds. Shark Faisal and Rabeel are out for today but they give their best wishes to them. Shark Rabeel said that I think whatever you have done till now, credit goes to you for taking where you are, but you need a lot of help in this and you need that opportunity to open that network. What I offer you is 1 Cr PKR for 24% equity. Shark Romana said that Rabeel you have given a good offer and I think I can also add a lot of value in this thing, I have a lot of experience in merchandising products and these restaurant, cafes etc. I had a chain in London, our own cafe chain so if you wouldn’t mind I would love to join your offer. He said sure why I would mind.
Then Shark Usman said that I would also like to give you an offer similar to there, 1 Cr PKR but for 30% equity and master franchise. Founders said that your offers are good but we got the same offer for 2 Cr PKR but we rejected it. Founders said can you give us 1 Cr PKR against 20% equity than the Sharks said no there’s a lot of risk in your work. At the end founders take the deal of 1 Cr PKR for 25% equity and the deal is closed.
They were not able to negotiate the deal, instead of having a good brand. They already have franchises in the UK, so they should double down on their franchising model with less franchising fee. Their franchising fee is too high. I suggest such startups visit Exitbase.pk if they want to dilute huge equity. We have a lot of such investors.
Amazing to see how Arshad branded himself from a chai wala to an owner of the food brand. It’s great learning how he utilizes his viral photo into a good venture.
https://www.facebook.com/cafechaiwala
https://www.instagram.com/cafechaiwala_arshadkhan/?hl=en
Sumbal is shark tank enthusiast, ever since the show started airing, she has followed it. She likes writing and researching about startups. She is also helping a few startups scale.
