Do you want to know the profit margin and how much money boba shops make? If YES, here is an analysis of the income potential of bubble tea business owners.
If your plan is to start a bubble tea business, then you will simply be bringing the Taiwanese drink to the attention of customers in a retail environment. Note that this drink is incredibly popular in much of Asia, but it’s still in the introductory stage in America.
In the united states, bubble tea is finding increasing acceptance with a trend-seeking millennial audience, particularly in university settings. Among its many other names, bubble tea is sometimes called boba tea or boba juice, pearl milk, or bobi.
Profit Margin of a Bubble Tea Business and How Much Owners Make Yearly
College campuses are among the best locations to open a bubble tea business. However, bubble tea stores make drink for a cost of roughly 75 cents and sell the drink for a few dollars. Although it all depends on your competition and pricing sensitivity, you could make a mark-up of 350 percent or better on the drink.
Additional revenue might be derived from the other foods, drinks, or merchandise you sell. One good question to ask is: what do coffee houses in your location generally charge for premium drinks? This is a good indication of what you might be able to charge.
It is likely to be in the range of $3 to $5. Using your findings, you can set a price point and see what the response is. Nonetheless, it is advisable to keep an eye on the pricing of direct (other bubble tea retailers) or indirect (coffee houses, smoothie shops, etc.) competitors.
A 350 percent mark-up on a beverage is not unreasonable especially in this business. Gross profit margins in the 75-80 percent range are not rare in the food and beverage retail industry.
The amount a bubble tea owner makes will, however, depend on the sales numbers they are looking at in the area, the foot traffic, and the prices they charge. But in the end, the huge potential of the business comes from the high profit margin.
Let’s assume you only charge $3 for a bubble tea, and you sell up to 200 or 400 in a small town festival, then you are really having a good business day. The above analysis is so true especially since you will be pocketing over 60% of the money as net profit. Moreover, there are always ways to reduce your overhead costs, as well.
You can figure out good sell products, find a food sale point and purchase in bulk to take down overhead even more or maybe your location allows you to have higher prices. There are always ways to make more profit in this business, as it is still relatively young in the United States.
If you are a bubble tea owner looking to generate more profit for your business, then think of what else you can make with the same or similar equipment purchased for bubble tea. You might also consider adding smoothies, coffee or ice cream to your menu.
Or buy cookies, pastries or other dessert items for resell from nearby vendors. How about adding t-shirts, mugs, posters, music or other merchandise that might appeal to your same customer base? Try additional products for a while and see if they sell. If they don’t, adjust your mix.