All You Need to Know About Starting a Bubble Tea Business

The Ever-Growing Bubble Tea Trend

Bubble or Boba Tea is a fruity beverage that first migrated from the United States from Taiwan in the 1990s and has been growing in popularity ever since, really obtaining its kickstart in the early 2000s. Consisting of chewy tapioca balls, it is a beverage of fruit or milk tea served hot or cold. Customers of the west are constantly raving about this drink because it is quick, customizable, and unfamiliar. With the tapioca pearls put in, if which many Americans have not tasted before especially in this concept, really gives them a takeaway experience that leads them wanting more. Not to mention the beverage is a drink and a snack all in one-perfect for a lunch break at the office or an after school snack. Even though it has been going around for years it is still a sensation-and the marketplace still has openings for someone to top the Bubble Tea Business.

How to Start a Bubble Tea Business

Before you go wondering how to start a bubble tea business, you must first consider what is required in business. You must consider franchise cost, location, operation, marketing, training, employees, and, of course, how much initial capital you can to work with. That’s just the beginning of it. Then you must consider the aesthetic you’ll be aiming for in light of the fact that plays into your quality and audience. The recipes you make and the ambience of your shop. The list goes on and on. Therefore, if you would like to start one, be prepared to plan, and flesh out every detail between the time you start putting matters in motion to the time it starts producing revenue.

Target Audience of the Bubble Tea Shop

Determine your target audience when you are starting a bubble tea business. A bubble tea franchise will have an audience of either teenager, working adult, foreign or American crowd. It is up to you to decide which one of these categories you wish your business to fall into and it is very important to select. Choosing either will define most of your aesthetic, which affects your décor, mission statement, employee preference, and even recipes. However, it is also important to consider the ups and downs of choosing one or both. With choosing one, you have the possibility of losing sales in light of the fact you unintentionally alienate a certain type of customer. Select both and you have the possibility of insulting a customer if it doesn’t lean additional toward their tastes (in light of the fact this is a foreign-originated concept). However, these dangers lie in all businesses, and as you see many do just fine.

Maintaining Cashflow

When starting any business, you must determine where you will find the capital to start and maintain it. To many, this could be an investor, or it could be your pocket. Most take out a loan-but it goes farther than that. You must also understand what you require to keep the shop functioning and creating revenue to where you suffer no loss at the end of the day.

Bubble Tea Business Cost

Like most businesses, starting a bubble tea cost structure is similar. There is the cost of the location, possible repair to the building and or renovation, bubble tea location rental fee, décor, equipment, supplies, employees, unforeseen costs, possible loan payments, utilities. However, at least I can offer you some help and guidance in the situation.

Bubble Tea Location Rental Fee by Monthly Fee

When choosing a location for your business do plenty of research. Avoid misconceptions that a state capital is additional expensive than a metropolitan city. Don’t completely write off the tiny areas either. Also do not go off of state averages in light of the fact that sometimes towns vary in price from one another so much, it doesn’t give an accurate reflection of what to expect from rental costs in the state. All of this is illustrated below in the table with various states that have almost nothing in common. A better location would ultimately lead to a high rental cost. Below is some of the rental fee that may or may not be higher based on location. This is one of the important aspects to factor in for cashflow and expected return.

StateAverage per Square Feet (PSF)Takeaway Shop Average monthly rental
(200 SF)
Dine in Shop
Average Monthly Rental
(1000 SF)
Michigan$1.83$366$1830
Florida $8.33$1666$8330
California$1.90$380$1900
Ohio$13.07$2614$13,070
New York$75$15,000$75,000
Oregon$0.47$94$470
Alabama$0.60$120$600
Comparison of projected monthly rental cost of a Boba Tea Shop

Bubble Tea Staff Cost

How many employees will you have on your payroll? Will they have insurance? Are they part-time or full-time employees? Are you offering a 401k? Do they require specific attire? Are they contracted? Do they require special training? These are all matters that you will have to consider when evaluating bubble tea staff cost -and the higher of standards you set for your business, and therefore your employees, the additional it will cost you.

Franchise Fee

Now if you are joining a current company and would like to buy a branch (think subway) then you may find yourself up against a franchise fee. Franchise fees, of course, vary from company to company, but baseline prices often include what is required to start up the business and then some, Therefore the company makes some money off of you. Yes, there are those companies out there that believe your efforts of marketing can benefit the company as a whole but let’s be honest, they’re few and far between therefore I wouldn’t bet my money on it.

Initial Bubble Tea Startup Cost

The startup cost encases everything you may require to start. This may or may not include a franchise fee, but others like staff and location are a must. Not to mention décor and equipment and advertising and supplies. There is no baseline startup cost for a bubble teashop in light of the fact prices vary depending on your choice of aesthetics and location greatly, therefore it is advised to just thoroughly plan out what you are looking for, would like or require and go from there once you start researching the prices.

Comparison of Bubble Tea Franchise

Below we are using three different Bubble Tea companies to make a comparison of Bubble Tea Franchise.

Gongcha

Gong Cha

The Gongcha bubble teashop franchise focuses on the foreign aesthetic and offers a franchise branch management position is the states of New York, New Jersey, Massachusetts, and Texas. However, before a manager opens a location under the name of the franchise, they must participate in a weeklong course in New York on how they would like the establishment to operate. If you select to develop an area instead, you are expected to open 2 stores successfully within the timespan of a year. There is no set price to join this franchise, however, you can bring in a financial partner to aid you with the development in light of the fact they do not offer to finance. It takes around 2 months to be approved or denied for a store and then another 6-8 months to obtain a store up and running if you are approved. You can partner with another store within the same building, but they must have at least a separating wall between them. They do not sell their ingredients out of the franchise and they do not require you to have any experience if you wish to become a franchisee-but they do if you request to become an area developer.

Kungfu Tea

Their website showcases 10 easy-to-follow steps to opening your store in the location you desire along with the qualifications. Kungfu Tea seems to showcase a mixed aesthetic, welcoming both the foreign and the American equally without catering to one audience over the other. The steps include communicating the inquiry, contact, an interview, document signing, store location agreeance, final franchise agreement, store renovation, training, grand opening and continued support. The qualifications to obtain started $140,000-$422,000 for a traditional store and $123,000-$275,000 for a non-traditional store. There are a $37,000 traditional store franchise fee and a $10,000 training fee that is upfront. Equipment is anywhere from $25,000-$35,000 in costs and renovations greatly vary depending on location condition. There is no royalty fee.

Beeteashop

Bee Tea Shop do not offer as much information on their website about how to partner with them or how they got started as much as others, but they do showcase one situation where a franchisee was very pleased with her investment. They exclaimed it was incredibly easy to work with them, and they shockingly didn’t require any experience in business to obtain started, and as of today, they are still going strong. This bubble teashop does, however, obviously focus on the aesthetic of Americans-its mission to spread the culture with a broader audience. Unlike the others, this franchise does have a 6% royalty fee. The total investment price is estimated to be $150,000, with a franchisee price of $40,000. They charge a 2% marketing fee and require minimum liquidity of $50,000.

Why Bubble Tea Business Fail

Location of the Bubble Tea shop

This comes down to the population and the type of population it is. If there is hardly anyone there, you will hardly obtain any business, and if the community is not very accepting of the Bubble tea drink culture in which this originates from, then they’re additional than likely not going to seek service from you. You must consider if the location has a younger crowd or senior crowd. You must also be wary of how many potential competitors you have within the area.

Location Rental Fee

Many people plan out their finances with the location rental fee in mind, but as they start to grow their business they additional or less stop thinking about it-thus it goes abandoned and comes back to rear its ugly head in the best of times. Or, in some cases, the rental fee goes up additional with certain circumstances that are happening within the community. Finally, it could be affected just by sales. If you don’t generate enough business to pay the location fee, you’re done for.

Staff Management

The biggest reason why Bubble tea business fails. You never really know what you’re obtaining into when it comes to potential staff and a location. You may attempt to research the graduation rates and education rates of the area, but it often is not accurate to it is just a stroke of chance when it comes to staff and how knowledgeable or experienced, they are. Not many people consider it and do not plan our countermeasures in case this is true, and when they do finally realize it, they try to make it work anyway, ruining production and ultimately failing.

Taste of Bubble Tea

Too many people don’t put enough thoughts into their ingredients, and the customers can see that when they go to take the first sip of your beverage. They don’t like it. Don’t try to be cheap go with quality ingredients for a higher sales margin.

Your Cashflow

This comes from too much production and preparation and not enough profit. Ultimately the result of a faulty business plan. To thwart this just make sure you plan thoroughly to where you aren’t caught off guard.

Conclusion

It is hard to start a bubble teashop business, whether it is on your own or within a pre-existing franchise. Yet it can be done, with proper planning and motivation to see it through the end.