Any kind of business venture requires a significant investment in terms of finance, a well-thought-out business plan, and a suitable site. You also need to have a business mindset; if you do, you might have thought about starting your own bubble tea company. Boba cafes are a fantastic addition to metropolitan cities and college towns because this milk tea beverage has recently gained popularity among Gen Z and millennials alike.
But if you’re seriously considering starting a boba shop, you’re definitely curious about the expense. The initial expenditures of starting a boba shop, continuous operating costs, and the profitability of a boba tea business will all be discussed in this article.
Opening a Boba Shop: The Initial Costs
Starting a boba business might cost as little as $15,000 or as much as $200,000. The fact that there are so many variables, including site, building and remodelling, business licences, technology, boba tea equipment, ingredients, and employees, contributes to the vast range.
Shop Place (Renting or Buying)
A significant portion of your first startup costs will go into the physical location of your boba shop. You’ll need cash up front whether you’re renting your store or buying it entirely. The cost of purchasing a small shop might vary significantly based on the location and the health of the real estate market. According to Statista, the average cost per square foot for standalone retail stores in the U.S. as of 2020 was $294. If the retail store was located in a shopping centre, the average price per square foot dropped significantly to $127 per square foot.
Therefore, the cost could range from $190,500 to $441,000 if the area you wish to buy is 1,500 square feet (which is typical for a boba business).
It goes without saying that purchasing your property requires an initial investment, and the longer you hold the business, the more likely it is that the building will appreciate in value. You have more control over the property when you own your place, so you won’t need a landlord’s approval if you ever want to remodel.
On the other hand, renting provides advantages as well. You can walk away at the conclusion of a lease and are released from many of the nitty-gritty responsibilities that come with property ownership. It needs less initial cost and is a smaller risk (like taxes). Therefore, take your initial investment budget and your level of risk tolerance into account when determining whether to rent or buy your boba business location.
When opening your boba tea business, renovating is the next item you should consider. Even if you rent a storefront, you will still need to set aside money to furnish the space to your restaurant’s specifications. If there isn’t a large counter in your area, you might think about making one. Or perhaps you’d prefer a more contemporary setting with new flooring and fittings.
A boba business typically ranges in size from 1,000 to 1,500 square feet. The remodelling cost for a 1,500 square foot retail space with mid-level finishes would be approximately $118 per square foot (or over $177,000 overall), according to the construction estimate from Building Journal.
Licenses and Certifications for Businesses
The business permits and certifications needed to operate make up another significant chunk of the costs for operating a boba shop. Although state-specific licence requirements can differ, generally speaking you’ll need a certificate of occupancy, a general business licence or permit, a federal employer identification number, a sales tax permit or company number, and a licence for the provision of food services.
It is advised that potential business owners budget at least a few thousand dollars for certification and licensure. Always check with the U.S. Small Business Administration (SBA) to find out whether your state has any additional (or distinct) licencing requirements. Bubble is one of the best franchise business in Australia nowadays
Technology for order taking and payments
Another significant area of investment when starting a boba tea business is technology. Customers frequently expect (and 67% prefer) to be able to utilise technology to place orders and make payments conveniently — without assistance from an employee — in the post-pandemic era. For example, you might develop a website or mobile app with online ordering features, increase payment technologies, or put in a self-ordering kiosk in your boba business. These technological investments have a starting price of about $1,250 plus additional installation and software costs (if needed).
Boba Tea Supplies
The costs of your boba tea equipment come next. It is not advised to cut corners when buying this equipment because it is crucial to the operation of your company. Large equipment including freezers, stovetops for making boba (or an automated tapioca pearl maker), blenders, bubble tea shakers, sealing machines, fructose dispensers for uniform drinks, and stainless steel workbenches are required. Smaller tools like syrup pumps, measuring cups, mixing cups, tapioca containers, and strainers will also be necessary.
The cost of the equipment might range from $8,000 to $10,000, depending on how automated you want your bubble tea business to be. For instance, the cost of this well-liked automatic tapioca pearl machine alone is little over $3,200.
Ingredients & Supplies for Boba Tea
Another important factor to take into account is the ingredients and other boba supplies. You’ll need milk, creamers, sweeteners, fruit purees, flavoured powders and syrups, tapioca starch pearls, green, white, and black tea. In addition, you’ll require cups, lids, straws, plastic for cup sealers, and any other goods required for a tea business.
The least expensive investments in this entire process are often the ingredients and supplies for your boba shop. Quality and quantity, nevertheless, do matter. Although premium components are more expensive, buying in bulk usually results in lower drink costs.
Staffing is the last expense to take into account when opening your boba shop. Depending on how large and popular your boba shop is, staffing costs can vary greatly. If you run a business in a bustling college town, you could require additional employees throughout the academic year.
According to Chron, historically, companies should aim to manage labour expenditures between 20% and 35% of total revenue. Consult with us to Start your Own Business