If you’re a fan of cold drinks, you have probably heard of bubble tea. Also known as boba tea, this Taiwanese beverage features a sweet drink filled with chewy tapioca pearls. Bubble tea is incredibly popular around the world, particularly with younger people. Given the surging demand for boba tea, you may be contemplating opening a bubble tea shop. The good news is that bubble tea is relatively inexpensive to make – and often sells for $5+ per cup. Depending on your other expenses, you could make $6,000 to $9,000 per month in profit selling boba tea. If you want your bubble tea shop to succeed, you will need a killer marketing plan. Budget Branders can help. We offer a full line of high quality disposable products (including plastic boba tea cups and film), each of which can be printed with your name and logo to help expand your marketing reach for pennies on the dollar.
What Is Bubble Tea?
Bubble tea – or boba – is a Taiwanese beverage. The “bubbles” are actually tapioca pearls that can be made from tapioca or cassava starch (for a gluten-free option). These pearls are then added to a drink to become what is known as bubble tea on the East Coast or boba tea on the West Coast. To make the pearls, the tapioca or cassava starch is added to boiling water. It is then kneaded into a dough-like consistency, with ingredients like vanilla or caramel often added for color and flavor. The dough is then cut, rolled into small balls, and placed in boiling water for 30 minutes. Well-made boba will have a nice chew, and will be soft but not mushy. There are also alternatives to traditional boba that are in high demand. For example, the small spheres can be filled with fruit juice to become “popping boba” that explode in the customer’s mouth as they chew. Lychee jellies, aloe chunks, or even sweetened cheese foam can be added for visual appeal. Once the pearls are formed into small spheres, they are typically simmered in a sugary syrup so that they are sweet. They are then put into a beverage of choice: the traditional milk tea, green tea, black tea, coffee, fruit juice, a slushie or a smoothie. The drink is served in a transparent cup with a wide straw so that you can suck up the bubbles/boba/pearls as you enjoy the beverage.
Is Bubble Tea Popular?
Bubble tea has long been enjoyed in Taiwan, China, and throughout Asia. More recently, however, it has become incredibly popular in the West – including the United States. The global boba tea market was valued at $2.02 billion in 2019, and is expected to reach $3.39 billion by 2027. Bubble tea is particularly beloved by Gen Z – the younger generation that is known for jumping on trends and popularizing it via social media. Because bubble tea can be almost endlessly customized – with vegan, gluten-free, low sugar and other options available – it appeals to a wide swath of people. It is also very Instagramable, which makes for great content for the customer and a good marketing boost for the bubble tea shop business. In the United States, demand for bubble tea is partially driven by novelty. While it has been popular in Asia since the 1980s, it is a relative newcomer to the U.S. Bubble tea shops have become so popular that they can be found in both cities and small towns across the United States.
How Much Profit Do Bubble Tea Shops Make?
If you’re interested in opening up a bubble tea shop, one of your biggest questions might be how much money you can make with this type of business. The answer to this question depends on a number of factors, including the cost of running a business in your area.
Typical Bubble Tea Shop Expenses
The typical expenses associated with running a boba shop include:- Rent or mortgage payments for the physical space for your shop
- The cost of equipment, such as an ice maker, refrigerator, range, and bubble tea makers
- Employee wages
- Ingredients, including tea, syrups, fruit, and either boba or the ingredients to make the tapioca pearls
- Disposable products to serve the tea in, such as cups and wide straws
- Marketing costs for traditional and online advertising, a logo, and more
Bubble Tea Mark-Up & Profit Margin
The mark-up on a cup of bubble tea is fairly significant. Even though the price of tea is rising, it is still relatively cheap to make a large amount of tea. If you order boba in bulk or make it yourself, it is likely to also be relatively inexpensive to add the “pearls” to the milk tea. Altogether, the cost of raw ingredients to make a cup of boba tea might be as little as 75 cents. While prices vary by location, the average price for a cup of bubble tea is anywhere from $3.50 to around $6.00. As such, it isn’t unusual to sell a serving of boba tea for 4 to 8 times as much as it cost you to make it. Of course, these numbers don’t take into account all of the other factors that go into producing a cup of bubble tea – like labor, taxes, rent, utilities, and marketing. Generally, you can expect a 20 to 30% profit margin on your bubble tea. If you sell 200 cups of tea for $5 each in a day, you will make $1,000 each day – or as much as $30,000 per month. When you account for expenses, you may earn as much as $6,000 to $9,000 each month in profits. Of course, there are a lot of factors that go into profitability when it comes to bubble tea shops. If you want your business to soar, these tips can help:- Choose a great location. Ideally, you will be able to find a space near a school or college campus given that young people are the top consumers of boba tea. Alternatively, finding a spot in a trendy shopping area with outdoor seating options would be great.
- Stay up to date on trends. Part of bubble tea’s appeal is its cool factor. If you own a boba tea shop, you can’t just stick with the same boring menu. Follow what is happening in the world of bubble tea, particularly in Asia, to keep your customers interested and excited. For example, brown sugar boba tea (also known as mudflip or tiger milk tea) is a hot new drink in Singapore – and its something that you could easily reproduce for American clientele.
- Use high quality products. Boba tea is relatively simple, and consists of just a few ingredients: the tapioca pearls and a beverage. You don’t want to skimp on quality, because your customers will definitely notice if the boba are mushy or the tea is weak.
- Stay consistent. While you want to include new offerings for your boba tea shop, you should try to maintain consistency with your ingredients. For example, the pearls should be roughly the same size and have the same texture.
- Market yourself. It may be possible to have a successful bubble tea shop without advertising or marketing it – but it is highly unlikely. Coming up with a marketing plan and figuring out ways to get your drink in the public eye is critical to your profit margin.
The Average Revenue Of A Bubble Tea Shop
It helps to have some idea of what your bubble tea shop could produce in annual revenue to estimate what you could earn each year. The average annual revenue for bubble tea shops nationwide is roughly $325,000. However, you should keep in mind that revenue will be largely dependent on the location of your shop, the effectiveness of your advertising, the demand for bubble tea in your area, and more. Cities with a higher cost of living also skew the national revenue average with higher drink prices. Shops can make anywhere from $150,000 per year on the lower end to over $500,000 per year on the higher end.Are Bubble Tea Shops More Profitable Than Other Types Of Food & Beverage Businesses?
Selling bubble tea can be very profitable, because the ingredients are cheap and bubble tea is marketed as a premium product. As previously mentioned, the profit margins for bubble tea tend to be somewhere between 20-30%. Bubble tea shops are one of the most profitable types (if not the most profitable type) of food and beverage businesses. Restaurants have an average profit margin of 3-5% and coffee shops have an average profit margin of 2.5-6.8%. This means the profit margins for bubble tea can be up to 10 times higher than other types of food and beverages in many cases. Of course, you need to consider demand as well. It’s possible for a store with a lower profit margin to make more overall with higher sales volumes. Bubble tea is growing in popularity, but there are many markets where it still isn’t very popular and it’s important to do your market research before opening up a shop. You may find that it could actually be more profitable to open up a coffee shop or a restaurant as opposed to a bubble tea shop.The Key Factors That Determine Bubble Tea Shop Success
There are several key factors that all successful boba tea shops have in common. The five biggest factors that determine success can be found below:- Variety & Quality Of Drinks: Driving sales is a numbers game. The more drinks you have the more tastes and preferences you can sell to. Creating high-quality drinks with unique flavors helps you stand out from your competition.
- Advertising & Marketing Strategy: You need your target market to know about your shop in order to drive sales. An effective marketing strategy includes multiple channels like social, SEO, magazine ads, and billboards.
- Customer Service: Your drinks and advertising will get customers in the door, but exceptional service will keep them coming back. Providing good service is key to developing repeat customers and revenue.
- Shop Location: Location plays a critical role in bubble tea sales. Even the most avid bubble tea fans will only be willing to drive so far for good bubble tea. A location with high visibility and traffic will help drive more sales.
- Cost-Efficient Operations: Being able to creatively cut costs without reducing the quality of your drinks or your service leads to greater profits, which can help you beat your competition and survive in the long-term.
Increase Your Sales with Budget Branders
Whether you’re a long-time fan of bubble tea or a relative newcomer to the game, you can run a profitable boba tea shop. From sourcing high-quality ingredients to finding the perfect location, each choice that you make can impact your overall success. Using custom printed bubble tea cups is just one way that you can help your business thrive. At Budget Branders, we know how much work it takes to run a successful small business. We offer the highest quality disposable products (including transparent plastic cups), all of which can be branded with your name and logo. This type of marketing is especially effective when it comes to boba tea, as customers often snap pictures of their drink to share on social media. To learn more or request a quote, reach out today by filling out our online contact form or hitting the live chat button on the bottom right of your screen. The information disclosed above does not constitute legal or financial advice. Use this information at your own discretion.
