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Bubble tea shop startup business plan

By restricted Published 4 years ago 5 min read
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image credit-Simon Chilton on flickr.com

WHY OPEN A BUBBLE TEA SHOP?

If your reason for reading this post is because you want to open a bubble tea shop, then you have come to the right place. It's possible you drank some when you visited a family member or friend, and you felt opening a bubble tea shop in your location would be a nice idea. Or it could be that you are a bubble tea fan, and you want to open a bubble tea shop because you want others to have a taste of this fantastic drink. There is no perfect time to open a bubble tea shop. The demand for bubble tea keeps increasing, and it is becoming more popular across the world. Making and selling bubble tea is not just fun, but the cost to prepare this drink is cheap. Using ingredients of high-quality, it will cost you about $0.7 to prepare a bubble tea of 700ml (24oz); and you can sell this drink between 4-6 USD depending on the location of your bubble tea shop. Imagine the profit you will make when you start your own business.

PREPARING BUBBLE TEA

You only need a few things to make this fantastic drink; they include:

• Tapioca pearls (boba)

• Ice

• A stirrer

• A shaker cup

• Tea or hot water

• A high-quality bubble tea syrup or powder

Bases

Bases like water, earl grey, black tea, or green tea can be used to prepare bubble tea. The base you use for preparation will affect the taste of your bubble tea. Some flavored powders offer a better taste when used with certain bases than others. Taro Tea powder with Jasmine Green Tea is one of my favorite combos. You can brew your tea after cooking your tapioca. (If you want water as your base, all you need to do is to use water instead of tea). When mixing your bubble tea powder, it's very important that you use hot tea or water if you want it to dissolve completely.

Bubble Milk Tea with Powder

You need the following ingredients to prepare a bubble milk tea with powder: 500ml (16oz) – 2.5 scoops of bubble tea powder (50 grams). Optional ingredients: non-dairy creamer (20 grams), liquid fructose (20 grams). Follow the instructions below once you have the ingredients mentioned.

1. Add the powder you want to use to a shaker cup.

2. Add 100ml of your base (hot water, black tea, or green tea).

3. Stirthe mixture until the powder dissolves completely.

4. Add ice to just above the line, e.g., 500ml

5. Fill to the line with your base (hot water, green tea, or black tea)

6. Shake drink for 8 secs.

7. Serve drink and enjoy it.

Bubble Tea Shop - Startup Cost

It will cost at least $100,000 to open a Franchise Bubble Tea Shop; however, it's way cheaper when you open your own bubble tea shop. This section will cover the money you need to startup, the cost of operation, as well as the profit you stand to make. The startup cost for a bubble tea shop varies depending on the store size you want, but generally, the startup cost is between $15,000 - $30,000. Here is a basic example of the amount to spend when setting up a basic store:

o $5,000 Initial Inventory

o $1,000 for Bubble Tea Cup Sealer

o $1,000 for Bubble Tea Shaker

o $1,000 for Fructose Dispenser

o $1,000 for Cups/Straws/etc

o $2,500 for Stainless Steel Counter

o $1,000 for Ice Machine

o $1,000 for Refrigerator

o $1,000 for P.O.S.

o $ 5,500 for Misc.

Total cost = $20,000

The cost listed above is only an example, and it does not cover remodeling, construction, or other relevant things that will depend on the location of your shop.

Budget Store: There are lots of things you can do if you are on a budget to reduce your startup costs. For instance, instead of buying a refrigerator or ice machine, you can rent them for the time being until your business is well established.

Operating Costs

Basically, your operating cost is a combination of your fixed costs and variable costs. Fixed costs cover bills and rent. Variable cost includes inventory as well as the number of employees you schedule at a particular time.

Here is a good example of what an operating costs looks like:

Fixed costs

• Rent - $2,000

• Bills -- $1,000

• Insurance - $1,000

• Other - $1,500

Total - $5,500

Variable Costs

• 105 Cups Sold/Day x (.75) x 30 - $2,363

• Employee Opening/Closing Time -$750

• Employee 1 - $3,750

Total - $6,968

Let’s do a little math

Operating costs= Fixed costs + Variable costs

From the illustration above, fixed costs = $5,500, and variable costs= $6,968.

Thus, operating cost = $5,500 + $6,968 = $12,467.50monthly cost

Profits

Making profits is the primary reason behind any business set up. In as much you want people to having a taste of this drink, making profits is paramount as your business will seize to exist if there is no profit. In the beverage industry, a good metric to measure profits involves finding out the average cost for a cup and then multiply the price by the number of cups sold per day.

For instance, let's say the average cost for a cup is $5. From our previous calculation for operating costs, we got $12,600/month. Thus, we need to sell $12,600/$5, which equals $2,520 cups per month. Dividing this by 30 days, our daily rate of cups will be 84 approximately.

From the illustration above, your profit will be anything you sell over 84 cups per day.

• 84 cups – breakeven point with one employee

• 100 cups - $2,400 as profit per month

• 150 cups - $9,900 as profit each month

If you want to sell more cups, have at the back of your mind that you may require more employees. If you're going to sell 300 cups per day, you may have to hire another employee, which will increase your operating costs.

Also, I have an excel file on "Break Even Analysis" that you can use as a guide if you want to do your own breakeven analysis and projected sales analysis.

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