Find out if you can afford to open your own bubble tea business.
Bubble tea (also referred to as boba tea) has been around for a long time. Much like coffee culture and kale salads, itâs a business idea that doesnât seem to be going away.
Bubble tea shops are still opening at a fast pace across the United States. Boba tea shops used to be an urban phenomenon, but now itâs spreading to small towns, even in rural areas, all across the nation.
Are you considering opening a bubble tea shop? Good for you!
This article will explain how much it costs to open a bubble tea store and share valuable information about launching and operating one.
Bubble Tea is, at its simplest, a drink made with tea, milk, and tapioca balls.
Bubble tea is popular because of the colorful way itâs served. The best bubble tea shops present it in ways that make people in Generation Z, Millennials, and others want to photograph it and post it on Instagram and other popular social media platforms.
The more a shopâs tea is photographed and shared online, the more popular it can become.
Bubble tea: Its origins
Bubble tea was invented in Taiwan in the 1980s. Since then, itâs become popular in the United States and other parts of the world. The market is currently worth approximately 2.5 billion dollars across the globe. The Bubble Tea market is expected to reach 4.2 billion dollars by 2027. The obsession with bubble tea isnât ending soon.
Opening a bubble tea shop: The costs
Bubble tea is served cold, but itâs clear that itâs still hot as a trend. It could make sense to open a bubble tea shop to catch the wave and ride it through the rest of the decade.
You may be wondering: How much does it cost to open a bubble tea shop?
The average cost of establishing one is between $75,000 and $500,000, depending on the location and how the shop is tricked out.
Prominent locations and those in populous areas are more likely to require an investment on the higher end of that scale. Shops or kiosks in shopping malls or airports tend to be less expensive to start up. The majority typically cost between $100,000 and $200,000.
Remember: The bubble tea phenomenon is all about posting pictures on social media. Itâs essential to spend enough to renovate and decorate your store so that people will want to take selfies with your shop as the background and post them.
How bubble tea shops calculate profits
Making and serving bubble tea is fun, but if you open a shop, youâll undoubtedly want to earn money from it!
To figure out your potential annual revenue, take your average selling price per cup and multiply it by your projected average number of cups sold per day and then multiply that by 350 days (if you plan to be open most days, closing down on major holidays).
Example: A bubble tea shop that sells tea at $5.00 per cup and makes an average of 100 sales per day would make about $500 per day. Multiple that by 350 days, generating about $175,000 in annual revenue.
Next, you need to calculate expenses.
Typical boba shop expenses include:
- Rent or property loan payments
- Employee pay
- Ingredients (tea, syrups, flavorings, tapioca pearls)
- Equipment costs or equipment loan payments (bubble tea machines, ice maker)
- Costs for chairs, tables, signage, and other dÃ©cor
- Supplies (cups, caps, straws, napkins)
- Marketing costs (posters, promoted social media, local advertising).
Example: If your shopâs expenses come to $75,000 per year, subtract that from your revenue of $150,000 which leaves you with a $75,000 profit for selling 100 cups of bubble tea per day.
How to start a bubble tea store
Bubble tea is a relatively simple (and fun) product. However, starting a bubble tea business comes with challenges. Here are some steps to take to ensure your bubble tea operation is a successful one.
Write a business plan
You canât launch a successful bubble tea business without a plan. Consider it your map to a successful future. Many business plan templates are available online, including those from the U.S. Small Business Administration (SBA). At the very least, it should include:
- Executive summary
- Opportunity overview
- Leadership team and hiring plan
- Financial plan and projections
- Marketing strategy.
Map out anything you need to achieve business success.
Determine your product lineup
Many shops simply serve bubble tea. Others expand their menus to offer smoothies, milk tea, Asian foods, and drinks typically found at coffee shops.
When you complete your business plan, you should know whether you have enough saved up to cover the initial investment in your shop or if you need financing. Some common loan types for bubble tea shops include:
- Term loans provide a lump sum of cash that you pay back with interest over a predetermined period (the term). Short-term loans are typically paid back in a year. Long-term loans can have terms of up to 30 years. Term loans can be used for many purposes, including maintaining cash flow, purchasing supplies, or buying property. You can get term loans from traditional banks and financial companies, online lenders, or lenders affiliated with the U.S. Small Business Administration (SBA).
- Real estate loans are similar to a mortgage you get for a home but are used to purchase business property, like a store for your bubble tea business.
- Equipment loans are relatively low-interest financing you can use to purchase the equipment you need to run your bubble tea business. The loans come with low-interest rates because the equipment collateralizes them.
- Business line of credit is similar to the credit line you get on your home. Youâre provided with a limited amount of money you can borrow when needed. You only pay the cash back when you use it.
- Business credit cards should be used to purchase things for your shop. Theyâre an excellent way to keep a record of your shop-related purchases and keep them separate from the personal stuff you buy. This is particularly beneficial at tax time.
Getting the right financing for your bubble tea business is a big step toward owning a successful operation.
Find a bubble tea store location
Bubble Tea is extremely popular in New York, California, Texas, and Florida. Itâs only starting to emerge as a trend in many parts of the south and midwest.
If youâre in a new market for bubble tea, it should be relatively easy to find a bubble tea store location. Seek out an affordable place in a younger, trendy neighborhood that gets good foot and drive-by traffic.
If youâre in a saturated bubble tea market, do your research. Go to each shop in your area and see how they stack up. Figure out what you can do better and make that the cornerstone of your boba business. You can also gain inspiration from other storesâ layouts, menus, and levels of customer service. Look for small yet meaningful ways to help your business win in a crowded marketplace.
The size of your store will impact the cost more than anything else. A bubble tea shop can be a storefront with thousands of square feet filled with tables and couches. Or it can be tiny, with just a simple serving counter. If itâs your first store, it could make sense to start small, limiting your start-up costs and risk.
Tip: When renovating your store, it probably makes sense to use stainless steel and glass rather than wood. These materials are more likely to hold up to the everyday wear-and-tear bubble tea shops experience.
Purchase bubble tea equipment, supplies, and ingredients
Acquiring high-quality bubble tea equipment is one of the most critical parts of opening a bubble tea shop.
- Boba tea sealer machines are central components of bubble tea shops. They create an airtight seal giving your cups an authentic look and feel. Sealer machines also save money because plastic sealer film is less expensive than lids.
- Tea shaker machines mix hot tea with powders and ice to ensure they dissolve properly and create bubbles on top of the tea.
- Sugar dispensing machines are the ideal way to ensure that your drinks are consistent.
- Automatic tea brewers can save time and reduce employee costs. However, starting out, you can brew tea using a gas or electric stove.
- Bubble tea blenders must be powerful enough to blend ice and fruit but quiet enough not to disturb your customers. You may also want to install a sound enclosure to limit noise.
- Automatic tapioca pearl makers allow you to make pearls in your own flavors and colors rather than using the standard ones you can get from suppliers.
- Automatic tapioca pearl cookers boil water and stir boba. They come with easy-to-use spouts to drain out all of your boba once theyâre done cooking.
You can also use a stove to make boba. Some other items you need are tea shop utensils, shaker cups, stirrers, tea dispensers, and measuring cups.
Youâll also need dependable food service suppliers, for getting regular deliveries of fresh black tea leaves, pearl milk, flavor powders, fruity syrups, and chewy boba.
Get trained in making bubble tea
If youâre not a bubble tea expert, itâs critical for you and anyone working for you to get professional training before opening your shop. Making bubble tea is similar to making a cocktail or a cappuccino. Anyone can make a drink or coffee, but experienced professionals keep customers returning for more. Proper training and recipes are necessary to ensure that your products taste great so you earn a lot of repeat business.
Brand your business
New bubble tea shop owners often overlook branding. However, itâs critical to come up with a memorable business name and create a unique logo, color palette, messaging, tagline, and packaging to make your bubble tea shop stand out in a sea of bubble tea sameness. Use brand elements consistently, including on your website, signage, cups, and shop dÃ©cor. Think about it, every time someone sees your logo on a cup, itâs an advertisement for your store.
Prepare for opening day
Before opening your doors, work with an experienced small business lawyer and accountant. Theyâll help ensure you get the proper business license, business insurance, and other things needed to set up your operation correctly, so you avoid legal and regulatory issues and position yourself for success.
Franchise opportunity: A simpler way to own a tea business
Operating a bubble tea franchise like Gong Cha, Sharetea, and Kung Fu Tea could be an intelligent move for a novice business owner. It eliminates a lot of the hassle of starting your own business. A franchise company can provide you with a lot of the financing, equipment, supplies, training, marketing, and other things you need to run a bubble tea shop successfully and eliminate many of the headaches.
Be aware that if you have a unique image for your shop in mind, you will be very unhappy operating a franchise because it can be very limiting. Also, the initial franchise fee charged to new franchises and ongoing franchise fees can be high and hurt your profit margins. Itâs up to you to determine whether franchise costs are worth the ease of opening and running a boba tea shop.
Tips for growing your store
The challenges of operating a bubble tea store donât end when it opens. Itâs only the beginning. Here are some things you can do to overcome challenges, avoid risks, and achieve success.
- Leverage social media to the fullest. Your social media presence increases customer loyalty and engagement and builds your customer base. Many bubble tea businesses have been built through social media channels like Instagram and Tiktok. Make your products attractive and encourage customers to take photos and videos of them, tagging your store. Bubble tea lovers know other bubble tea lovers, so this is essentially free advertising to people in your target market.
- Offer promotions. Encourage new and repeat business by launching a loyalty program, offering new customer discounts, or promoting happy hour prices at certain times of the day. These are great ways to attract new bubble tea lovers, encourage people to come back to your shop regularly, and attract customers during slow parts of the day.
- Strive for quality. The only way to bring in new customers and beat competitors is to consistently serve up the best bubble tea and deliver the ultimate customer experience people expect from high-end operations. The only way to beat the best is to be better.
- Remember, the customer is always number one. You may want to open a shop because you love bubble tea. If thatâs your thinking, shift it to believing that youâre opening your business to share your passion for bubble tea with others. Always make your customers your top priority. Ensuring they leave your shop happier than they came in is the recipe for success.
If bubble tea is your passion, you owe it to yourself to share it with people in your community. Go off and make bubble tea in your own shop!