September 6, 2022 | Last Updated on: April 15, 2024
Bubble tea (also referred to as boba tea) has been around for a long time. Much like coffee culture and kale salads, it’s a business idea that doesn’t 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 it’s 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, including how to secure a franchise loan.
Let’s level set by explaining what bubble tea is. There are many variations, so it’s essential to define it.
Bubble Tea is, at its simplest, a drink made with tea, milk, and tapioca balls.
Bubble tea is popular because of the colorful way it’s 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 shop’s tea is photographed and shared online, the more popular it can become.
Bubble tea was invented in Taiwan in the 1980s. Since then, it’s 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 isn’t ending soon.
Bubble tea is served cold, but it’s clear that it’s 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. It’s 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.
Making and serving bubble tea is fun, but if you open a shop, you’ll 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:
Example: If your shop’s 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.
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.
You can’t 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:
Map out anything you need to achieve business success.
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:
Getting the right financing for your bubble tea business is a big step toward owning a successful operation.
Bubble Tea is extremely popular in New York, California, Texas, and Florida. It’s only starting to emerge as a trend in many parts of the south and midwest.
If you’re 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 you’re 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 stores’ 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 it’s 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.
Acquiring high-quality bubble tea equipment is one of the most critical parts of opening a bubble tea shop.
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.
You’ll also need dependable food service suppliers, for getting regular deliveries of fresh black tea leaves, pearl milk, flavor powders, fruity syrups, and chewy boba.
If you’re not a bubble tea expert, it’s 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.
New bubble tea shop owners often overlook branding. However, it’s 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 décor. Think about it, every time someone sees your logo on a cup, it’s an advertisement for your store.
Before opening your doors, work with an experienced small business lawyer and accountant. They’ll 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.
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. It’s up to you to determine whether franchise costs are worth the ease of opening and running a boba tea shop.
The challenges of operating a bubble tea store don’t end when it opens. It’s only the beginning. Here are some things you can do to overcome challenges, avoid risks, and achieve 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!
