Do you want to start a bubble tea shop and you want to know the cost breakdown? If YES, here are 9 factors that determine how much it cost to open a bubble tea shop.
Right from the time Americans started loving the taste of bubble tea, it turned into a lucrative business especially if the business was established in an area with a lot of tea lovers and people who are health conscious. Compared with other industries, milk bubble tea has low investment cost, fast income, broad market, and a huge customer base of young people.
If you are looking towards opening a bubble tea shop in your neighbourhood and you are wondering what the venture will cost you so you can plan and budget properly, we are bringing you some of the most popular expenses you will incur while setting up the business.
9 Factors That Determine How Much It Cost to Open a Bubble Tea Shop
When it comes to costs, a high end Bubble Tea Shop can cost over $100,000 to open and a franchise can cost even more. A successful bubble tea shop requires proper equipment, training and high quality ingredients, and these all cost money..
But if you are prudent with your costs, and depending on the area you want to open a shop, it is entirely possible to open up your own store for $10,000 – $40,000. When thinking of opening your store, there are a couple of things that can affect your startup cost and they include;
Table of Content
- 1. Franchise Cost: $5,000 – $20,000
- 2. Liability Insurance – $2,000
- 3. Shop Rent – $50,000+ per year
- 4. Decoration: $8,000 – $40,000
- 5. Inventory and Equipment Cost – $10,000+
- 6. Hire Staff Cost – $25,000+
- 7. Business Running Capital: $10,000 – $20,000
- 8. Licensure and Certification – $750
- 9. Logo development, signage and marketing materials – $10,000
- Can You Really Make Money Selling Bubble Tea?
1. Franchise Cost: $5,000 – $20,000
It is a fact that most business people would prefer to buy into the franchise of a successful bubble tea shop than opening their own business outright. If you want to join a brand, you have to pay the franchise cost and this make up a large percentage of your startup cost.
Different brands will produce different brand costs. As an investor, you need to choose the most suitable bubble tea brand according to your own specific situation.
Keep in mind that for brands with a larger popularity range, the franchise fees can range from $10000 to $20000, while for micro brands with smaller fame, it is relatively less, basically $5000-$10000 is enough, and even some brands are less than $5000.
2. Liability Insurance – $2,000
Another significant cost you will incur while setting up your bubble tea business is insurance cost. You need to carry some basic insurance so as to protect your business from harm. This is a requirement you cannot wish away. Your business insurance can cost you around $2000.
3. Shop Rent – $50,000+ per year
When it comes to opening a bubble tea shop the rent and decoration investment can be relatively large. You should note that the location and size of the shop you choose will influence your decoration and rent costs.
But generally speaking, milk tea shops do not need a large area, 20 square meters is enough, so the rent for running your milk tea shop is not too high. Remember, you’ll want to find a location where your audience hangs out. That might be a college campus environment or a similar young and vibrant setting. Rent tends to be pricey in such locations.
Do you want a kiosk or a pick-up or sit-down setting? Will you be serving other foods or beverages? All of this will impact your rent. This may run to around $50,000 a year
4. Decoration: $8,000 – $40,000
The decoration of a bubble tea shop is relatively simple, mainly reflecting the warm and delicate feeling. Typically, you will need a bar counter and working bench, as well as a commercial kitchen. But if you are starting a bubble tea kiosk in shopping center, you will need a full kiosk set.
The store needs to have a serving bar and some leisure tables, chairs, seating booth etc. So, altogether the decoration cost can get to about $20000-$40000, but a mall used bubble tea kiosk just needs $8000-$15000. The costs are quite different which depends on the decoration grade and the area of the shop.
5. Inventory and Equipment Cost – $10,000+
The basics include gas or electric stove, blender, stirrers, shaker cups, sealer machine, refrigerator and ice maker. Most of this equipment can be bought online at sites such as Boba Tea Direct. Or search online for used equipment. You should budget about $10,000 or more for this.
6. Hire Staff Cost – $25,000+
Initially, this might simply reflect what you — as your sole employee — need to take out of the business. You’ll spend less than this if you have a working mate, savings or second source of income. And you’ll spend more as your staffing needs increase. You need to keep aside around $25,000 or more for this, but that just depends of the size of your shop.
7. Business Running Capital: $10,000 – $20,000
In order to open a bubble tea store, you need to prepare some funds for the operation of the store. Generally speaking, you may have to budget around $10,000-20,000 as your running cost so as to be on the safe side.
8. Licensure and Certification – $750
Depending on your location and products sold, you’ll probably have to have a business license and a health permit at the very least. Visit the U.S. Small Business Administration (SBA) website to find out the licensing requirements in your state. This should cost you about $750 or more.
9. Logo development, signage and marketing materials – $10,000
This might include everything from creating your logo to buying store signage and producing business cards, fliers and other sales and marketing literature. You will be looking at up to $10,000 to get this sorted out.
Equipment You Will Need To Run a Bubble Tea Business
To run a successful bubble tea shop, you will need certain equipment to make your business easy and profitable. Some of the equipment to budget for include;
Bubble Tea Sealer Machine
High quality bubble tea equipment is one of the most important parts of opening a bubble tea shop. Boba Tea Sealer Machines are a staple at any real bubble tea shop. They create an airtight seal giving your cups an authentic look and feel. Sealer machines also save money in the long run because plastic sealer film is cheaper than traditional lids.
Tea Shaker Machines
Tea Shaker Machines will help you mix the hot tea, with powders and ice to make sure they dissolve properly and create the “bubbles” on top of the tea.
Sugar Dispensing Machines
Sugar Dispensing Machines are the best way to make sure that your drink quality is consistent and your customers get the exact level of sweetness that they ordered. It may look to you that you can do without a sugar dispenser, but it is in your best interest to buy it.
Automatic Tea Brewers
Automatic Tea Brewers can save time and cut employee costs. But if you’re just starting out, you can also brew tea using a gas or electric stove.
A stove will also be necessary for cooking your tapioca pearls (boba). The main differences between a gas and an electric stove are speed and heat consistency. A gas stove will heat up faster and bring your water to a boil much faster than an electric stove.
However, an electric stove will produce a more consistent heat source which will make cooking your tapioca pearls a lot easier. Some other necessary items you need for your bubble tea business include; tea shop utensils, shaker cups, stirrers, tea dispensers, measuring cups, etc.
Can You Really Make Money Selling Bubble Tea?
Most definitely! Depending on the store location and volume, on average, a decent bubble tea shop can sell approximately 150 – 500 servings a day. There have been stories of locations that sell over 1,000 servings a day. On average, a store charges $3.00 – $3.50 USD for a serving of bubble tea (16oz or 20oz serving).
However, the approximate cost for materials to make the tea comes out at approximately $0.75 USD. That’s about a 350% markup. Now, that shows some good profit.