How Much Profit Do Bubble Tea Shops Make?

How Much Money Bubble Tea Shops Make

In case you didn’t know, boba shops are a big deal. They’re basically these adorable little cafes that serve up sweet and chewy tapioca balls in all sorts of flavors, and people can’t seem to get enough of them!  But how much do boba shops actually make and are bubble tea shops a good investment?

To answer these questions, we need to look at the potential total revenue, expenses and then bubble tea shop profits.

 

How Much Revenue Do Boba Shops Generate Annually?

To figure out the annual amount of revenue, you just need to take your average selling price/cup times your average amount of cups sold/day and then multiply that by about 350 days.

So bubble tea shops that have an average selling price of $5.00/cup of bubble tea and sell about 100 cups per day would make about $500/day x 350 days = $175,000 in annual revenue.

Now that we have the yearly revenue, we need to subtract our expenses to get the yearly profit.

Typical boba shop expenses include:

-Rent or lease for the business space

-Employee salaries

-Ingredients (tea, syrups, tapioca pearls)

-Equipment costs (bubble tea machines, ice maker, etc)

-Marketing costs (logo design, custom cups, social media)

So if our yearly expenses are $75,000/year then we take our revenue of $150,000 – $75,000 = $75,000 profit for only selling 100 cups/day.

 

Most boba shops can sell well over 100 cups per day and busy tea shops regularly sell over 1,000 cups/day!

How Much Does it Cost to Make a Cup of Bubble Tea

How much profit for each cup of boba tea?

Another way to figure out your bubble tea shop’s profit potential is to figure out your profit for each cup that you sell. Then you can estimate your revenue and profit based on daily cup sales.

First, you need to start with your cost per cup of bubble tea and then add in your expenses. The good news is, is that a lot of your expenses will be fixed costs, meaning that they don’t change every month. For example, your rent will be a fixed cost.

If your rent is $2000.00/month then it will be the same if you sell 100 cups/day or 1,000 cups/day. So once you sell enough to cover your fixed costs, then you will begin to make a lot more profit per cup of boba that you sell.

Next on the list are variable costs, these are things that change each month like how many ingredients you use. These will be directly proportional to the amount of boba that you sell.  The more cups of boba you sell, the more you will need to spend on ingredients.

 

But as long as your making profit for each cup of bubble tea you sell, then the more you sell, the better!

 

Find Your Break Even Point

We created a spreadsheet here where you can input all of your expenses so you can calculate your potential profit and break even point.

Tea Shop Break Even Analysis

Should you hire a manager?

One decision that can have a large impact on your bottom line is who will manage your bubble tea shop. If this is your first store, then it makes sense to manage it yourself at the beginning. This will help ensure that your boba business runs smoothly and eventually you can train a manager to run the store for you. Most bubble tea shop owners do this once they want to open their 2nd store with the goal being to open 3-5 stores and then run the businesses as more of a CEO role without actually being in the stores.

 

To Franchise or Not to Franchise?

Another important big impact on how much your bubble tea shop will cost is if you want to franchise or open your own store. Franchise bubble tea shops will cost you more money to start with some franchise fees starting out as high as $100,000! The benefit of starting a franchise is that you have a well-oiled machine with an already established brand and customer base.

Opening your own bubble tea store will give you a lot more control over your brand and the daily decisions in your boba shop. However, this also means that you have more responsibility to make sure your bubble tea shop is successful.

We have helped supply products to both franchise owners and independent bubble tea shops alike. Some bubble tea shops do very well for themselves, but there are also some bubble tea stores that struggle to make it in the industry due to lack of customer base or poor management skills.

 

Costly Mistakes to Avoid

The biggest mistakes we see from new boba tea store owners are picking a location that is too expensive, bad customer service and no marketing.

You want to pick a good location for a good price and the easiest way to do this is to start small. Rent is usually calculated by the price/square foot so if you start in a smaller location, your rent will be less expensive. It is much better to have a small boba shop in a great location then a massive boba shop in a bad location.

Bad customer service is the quickest ways to lose customers. Focus on treating your employees well and then training them to treat your customers the same way. You can also read through these common customer service mistakes to make sure you have all of your bases covered.

In 2022, marketing is more important than ever.  The first key is to focus on what happens in your store.  This includes your internal branding like your store logo and custom products and also includes the quality of your bubble tea, the atmosphere of your store and your customer service.  If customers have a great experience at your store, they will naturally tell their friends and your store will grow through word of mouth.

The next step is making sure that you have an online presence like social media account and a website. You can read more about the basics of marketing your bubble tea shop here.

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