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Do you want to start bubble tea shop business?
Starting a bubble tea shop business is very easy and extremely profitable as well. If you don’t know how to open a bubble tea shop, just go through this milk tea business plan template. It will guide you through everything which you need to know for starting this venture.
The first thing you should do is to develop a comprehensive plan for your tea room business model. The business plan will not only help you in startup but it will also help you in taking important decisions for your company over the next years. In case you don’t know how to write a good milk tea business plan, we are providing a detailed milk tea business plan template of a bubble tea shop startup ‘Sam’s Stop’ to help you avoid the trouble of making a plan yourself.
Executive Summary
2.1 The Business
Sam’s Stop will be a licensed and ensured tea shop located in Downtown Manhattan. We will be strategically located in the most suitable place for opening a bubble tea shop business plan.
2.2 Management
The business will be solely owned and operated by Sam Kin who is a graduate from Harvard University and is known for his sharp business acumen and exceptional management skills. Sam will hire a small team comprising of chefs, waiters, assistants and cleaners for operating and managing the shop.
2.3 Customers
Our customers will primarily be the residential community living near our shop. We will offer high-quality and healthy tea latte, milk tea, fruit flavored tea, brown sugar milk, macchiato and slush to our esteemed customers.
2.4 Target of the Company
Our primary target is to become the best tea shop in the New York City within next 3 years of our launch. Our secondary target is to achieve the net profit margin of $10k/month by the end of the first year, $15k/month by the second year, and $25k/month by the third year.
Company Summary
3.1 Company Owner
Sam is a business graduate of Harvard University. After completing his Bachelor’s, he worked with a couple of fast food restaurants at executive positions. He is known for his sharp business acumen and exceptional management skills.
3.2 Why the Business is being started
The main motive behind Sam starting a bubble tea business plan is his intense passion for tea room business model. Sam has exceptional business skills and this venture is just his first step into the business world. Within next three years he plans to open five more bubble tea spots in different cities, and after that, he will move towards business plans for restaurants. So, this venture is where Sam will enter the corporate sector.
3.3 How the Business will be started
Sams’s Stop will be launched in a 200-square-feet shop located in the main commercial market of Downtown Manhattan. The shop was previously used as a grocery store, so a lot of work needs to be done for turning it into a tea shop. The company’s financial experts have forecasted following costs for the start-up:
The detailed start-up information is as follows:
| Start-up Expenses | |
| Legal | $55,300 |
| Consultants | $0 |
| Insurance | $32,750 |
| Rent | $32,500 |
| Research and Development | $32,750 |
| Expensed Equipment | $32,750 |
| Signs | $1,250 |
| TOTAL START-UP EXPENSES | $187,300 |
| Start-up Assets | $0 |
| Cash Required | $332,500 |
| Start-up Inventory | $32,625 |
| Other Current Assets | $232,500 |
| Long-term Assets | $235,000 |
| TOTAL ASSETS | $121,875 |
| Total Requirements | $245,000 |
| START-UP FUNDING | $0 |
| START-UP FUNDING | $273,125 |
| Start-up Expenses to Fund | $11,875 |
| Start-up Assets to Fund | $15,000 |
| TOTAL FUNDING REQUIRED | $0 |
| Assets | $23,125 |
| Non-cash Assets from Start-up | $18,750 |
| Cash Requirements from Start-up | $0 |
| Additional Cash Raised | $18,750 |
| Cash Balance on Starting Date | $21,875 |
| TOTAL ASSETS | $0 |
| Liabilities and Capital | $0 |
| Liabilities | $0 |
| Current Borrowing | $0 |
| Long-term Liabilities | $0 |
| Accounts Payable (Outstanding Bills) | $0 |
| Other Current Liabilities (interest-free) | $0 |
| TOTAL LIABILITIES | $0 |
| Capital | $0 |
| Planned Investment | $0 |
| Investor 1 | $332,500 |
| Investor 2 | $0 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| TOTAL PLANNED INVESTMENT | $695,000 |
| Loss at Start-up (Start-up Expenses) | $313,125 |
| TOTAL CAPITAL | $251,875 |
| TOTAL CAPITAL AND LIABILITIES | $251,875 |
| Total Funding | $255,000 |
Services for customers
It is wiser to plan your services or menu before you think about how to start a milk tea business plan template. You can only plan subsequent things after you know what you will be providing to your customers. Sam’s Stop will offer following products to its customers:
- Milk Tea: Bubble Milk Tea, Brown Sugar Milk Tea, Almond Milk Tea, Hazelnut Milk Tea
- Tea Latte: Black Rose Latte, Oolong Latte Float, Matcha Latte, Tie Guan Yin Latte
- Fruit Flavored Tea: Peach Green Tea, Mango Green Tea, Honey Green Tea, Fresh Lemon Green Tea
- Brown Sugar Milk: Black & Yellow Milk, Black Babo Milk, Red & Yellow Milk
- Macchiato: Rose Tea Macchiato, Jasmine Green Tea Macchiato, Milk Tea Macchiato
- Slush/Milk Shake: Oreo Milk Shake, Mango Slush, Passion Fruit Slush, Ice Cream Shake
Marketing Analysis of bubble tea shop business
Note
The most important component of an effective milk tea business plan is its accurate marketing analysis that’s why Sam acquired the services of marketing experts to help him through this phase. It is only after this stage that a good bubble tea business plan template could have been developed. After identifying the local market trends in Manhattan, the marketing experts and analysts also helped him in developing the bubble tea marketing plan.
5.1 Market Trends
As for a general trend, the market demand for bubble tea businesses is on the rise. Bubble tea is one of the most popular drinks with Americans. The biggest reason behind the popularity of this bubble tea shop business plan template is that people are becoming more health conscious day by day.
As a result, people have started avoiding carbonated drinks and have leaned towards healthy alternatives such as smoothies, slushes, milk and fresh fruit juices. That’s why the number of bubble tea shops has been increasing during the last few years. In short, this industry has a lot of potential and even a small bubble tea shop can yield immense profit provided that you successfully plan it and target your customers.
5.2 Marketing Segmentation
Our marketing experts have identified following type of target audience which can become the potential customers of our tea shop.
The detailed marketing segmentation comprising of the company’s target audience is as follows:
Strategic/Operational Business Plan
5.2.1 Working Community:
The first category includes the workers and employees who work in the businesses or offices located in the vicinity of your milk tea business plan template. This group leads a strenuous life, burdened with plenty of work and thousands of matters to think upon. It has been observed that this group often takes soft drinks, especially coffee and bubble tea to take a break from their hectic routine. Our tea shop will be the perfect place for them to rest while on their way home.
5.2.2 Residential Community:
The second group of our target customers will be the community residing in the vicinity of our restaurant. Bubble tea is one of the favorite drinks of American teens so we hope to have a lot of sales due to them. Not only teens, adults and middle-aged people also love smoothies, slushes and fresh tea due to health benefits, that is why we classify this group as our second target group.
5.2.3 Passers-by:
The third category includes those people who do not live or work near our tea room business model but have come to the area for any business purpose or commercial activity. We also hope to attract these passers-by with our economical and delicious smoothies, milkshakes and tea.
The detailed market analysis of our potential customers is given in the following table:
| Market Analysis | |||||||||
| Potential Customers | Growth | YEAR 1 | YEAR 2 | YEAR 3 | YEAR 4 | YEAR 5 | CAGR | ||
| Working Community | 45% | 11,433 | 13,344 | 16,553 | 18,745 | 20,545 | 13.43% | ||
| Residential Community | 38% | 22,334 | 32,344 | 43,665 | 52,544 | 66,432 | 10.00% | ||
| Passers-By | 17% | 8,322 | 9,455 | 10,655 | 12,867 | 14,433 | 15.32% | ||
| Total | 100% | 42,089 | 55,143 | 70,873 | 84,156 | 101,410 | 9.54% | ||
5.3 Business Target
Our business targets are as follows:
- To become the best bubble tea shop in Manhattan within next 3 years of our launch
- To recover the initial investment within next 1 year of launch
- To open two more tea shops by the end of the second year and three more shops by the end of the third year
5.4 Product Pricing
After considering the market demands, we have priced all our products in the similar ranges as of our competitors. Our product pricing is as follows:
- Small Serving: $3/serve
- Regular Serving: $4/serve
- Large Serving: $5/serve
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Strategy
Sales strategy is also an important component of a bubble tea shop business plan template and hence it must be developed with great care and attention must be paid to every detail.
6.1 Competitive Analysis:
We have a really tough competition because bubble tea shops are nearly everywhere in Manhattan but none of our competitors is offering as much high quality and delicious drinks as ours. Our high-quality, healthy and economical drinks, combined with the unparalleled customer service of our staff will give us an advantage over other tea shops in the region.
6.2 Sales Strategy
We will target our customers by following three ways:
- Conducting seminars, webinars, and workshops in different institutions to emphasize the health benefits of bubble tea and other similar drinks.
- Advertising our tea shop in food magazines, newspapers, TV stations, and social media.
- Offering a 20% discount on all drinks for the first three months of our launch.
6.3 Sales Monthly:
6.4 Sales Yearly:
6.5 Sales Forecast
Our forecasted sales pattern is given in the following column chart:
The detailed sales forecast is given in the following table:
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Milk Tea | 1,887,030 | 2,680,320 | 2,588,240 |
| Tea Latte | 802,370 | 815,430 | 823,540 |
| Fruit Flavored Tea | 539,320 | 770230 | 1,002,310 |
| Brown Sugar Milk | 265,450 | 322,390 | 393,320 |
| Macchiato | 143,530 | 125,030 | 176,240 |
| Slush/ Milk Shake | 134,240 | 394,340 | 842,230 |
| TOTAL UNIT SALES | 3,771,940 | 5,107,740 | 5,825,880 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Milk Tea | $140.00 | $150.00 | $160.00 |
| Tea Latte | $600.00 | $800.00 | $1,000.00 |
| Fruit Flavored Tea | $700.00 | $800.00 | $900.00 |
| Brown Sugar Milk | $650.00 | $750.00 | $850.00 |
| Macchiato | $140.00 | $120.00 | $100.00 |
| Slush/ Milk Shake | $150.00 | $1,300.00 | $1,450.00 |
| Sales | |||
| Milk Tea | $2,149,800 | $2,784,000 | $3,383,200 |
| Tea Latte | $120,050 | $194,500 | $268,500 |
| Fruit Flavored Tea | $50,110 | $71,600 | $93,000 |
| Brown Sugar Milk | $139,350 | $194,600 | $249,850 |
| Macchiato | $62,350 | $72,300 | $82,250 |
| Slush/ Milk Shake | $229,500 | $365,500 | $501,500 |
| TOTAL SALES | |||
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Milk Tea | $0.70 | $0.80 | $0.90 |
| Tea Latte | $0.40 | $0.45 | $0.50 |
| Fruit Flavored Tea | $0.30 | $0.35 | $0.40 |
| Brown Sugar Milk | $3.00 | $3.50 | $4.00 |
| Macchiato | $0.70 | $0.75 | $0.80 |
| Slush/ Milk Shake | $3.00 | $3.50 | $4.00 |
| Direct Cost of Sales | |||
| Milk Tea | $989,300 | $1,839,000 | $2,679,700 |
| Tea Latte | $66,600 | $119,900 | $173,200 |
| Fruit Flavored Tea | $17,900 | $35,000 | $52,100 |
| Brown Sugar Milk | $19,400 | $67,600 | $115,800 |
| Macchiato | $27,700 | $69,200 | $110,700 |
| Slush/ Milk Shake | $64,200 | $224,700 | $385,200 |
| Subtotal Direct Cost of Sales | $1,294,100 | $1,699,400 | $2,104,700 |
Personnel plan
It is highly advisable to prepare a personnel plan before you think about how to start a milk tea business plan templated bubble tea shop since it is one of the biggest contributing factors of the success of any business. The personnel plan of Sam’s Stop is as follows:
7.1 Company Staff
Sam will act as the CEO of the company and will initially hire following people:
- 1 Manager to manage the overall operations
- 1 Cashier to receive cash from the people
- 2 Accountants to maintain financial records
- 4 Sales Executives responsible for marketing and advertising the tea shop
- 10 Chefs for preparing drinks
- 10 Waiters to serve the customers
- 8 Cleaners to clean dishes and other facilities at the tea shop
7.2 Average Salary of Employees
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Manager | $85,000 | $95,000 | $105,000 |
| Cashier | $66,000 | $73,000 | $80,000 |
| Accountants | $45,000 | $52,000 | $59,000 |
| Sales Executives | $145,000 | $152,000 | $159,000 |
| Chefs | $550,000 | $650,000 | $750,000 |
| Waiters | $410,000 | $440,000 | $480,000 |
| Cleaners | $60,000 | $63,300 | $70,000 |
| Total Salaries | $1,280,000 | $1,430,600 | $1,598,000 |
Financial Plan
The final thing to do before you think about how to open milk tea room business model is to develop a comprehensive financial plan which will cover the detailed costs of startup.
8.1 Important Assumptions
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 10.00% | 11.00% | 12.00% |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
| Tax Rate | 26.42% | 27.76% | 28.12% |
| Other | 0 | 0 | 0 |
8.2 Brake-even Analysis
| Brake-Even Analysis | |
| Monthly Units Break-even | 5530 |
| Monthly Revenue Break-even | $159,740 |
| Assumptions: | |
| Average Per-Unit Revenue | $260.87 |
| Average Per-Unit Variable Cost | $0.89 |
| Estimated Monthly Fixed Cost | $196,410 |
8.3 Projected Profit and Loss
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $309,069 | $385,934 | $462,799 |
| Direct Cost of Sales | $15,100 | $19,153 | $23,206 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $15,100 | $19,153 | $23,206 |
| Gross Margin | $293,969 | $366,781 | $439,593 |
| Gross Margin % | 94.98% | 94.72% | 94.46% |
| Expenses | |||
| Payroll | $138,036 | $162,898 | $187,760 |
| Sales and Marketing and Other Expenses | $1,850 | $2,000 | $2,150 |
| Depreciation | $2,070 | $2,070 | $2,070 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $4,000 | $4,250 | $4,500 |
| Insurance | $1,800 | $1,800 | $1,800 |
| Rent | $6,500 | $7,000 | $7,500 |
| Payroll Taxes | $34,510 | $40,726 | $46,942 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $188,766 | $220,744 | $252,722 |
| Profit Before Interest and Taxes | $105,205 | $146,040 | $186,875 |
| EBITDA | $107,275 | $148,110 | $188,945 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $26,838 | $37,315 | $47,792 |
| Net Profit | $78,367 | $108,725 | $139,083 |
| Net Profit/Sales | 30.00% | 39.32% | 48.64% |
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
The following column diagram shows the projected cash flow.
The following table shows the projected cash flow:
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $40,124 | $45,046 | $50,068 |
| Cash from Receivables | $7,023 | $8,610 | $9,297 |
| SUBTOTAL CASH FROM OPERATIONS | $47,143 | $53,651 | $59,359 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $47,143 | $53,651 | $55,359 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $21,647 | $24,204 | $26,951 |
| Bill Payments | $13,539 | $15,385 | $170,631 |
| SUBTOTAL SPENT ON OPERATIONS | $35,296 | $39,549 | $43,582 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $35,296 | $35,489 | $43,882 |
| Net Cash Flow | $11,551 | $13,167 | $15,683 |
| Cash Balance | $21,823 | $22,381 | $28,239 |
8.5 Projected Balance Sheet
The following table shows projected balance sheet:
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $184,666 | $218,525 | $252,384 |
| Accounts Receivable | $12,613 | $14,493 | $16,373 |
| Inventory | $2,980 | $3,450 | $3,920 |
| Other Current Assets | $1,000 | $1,000 | $1,000 |
| TOTAL CURRENT ASSETS | $201,259 | $237,468 | $273,677 |
| Long-term Assets | |||
| Long-term Assets | $10,000 | $10,000 | $10,000 |
| Accumulated Depreciation | $12,420 | $14,490 | $16,560 |
| TOTAL LONG-TERM ASSETS | $980 | $610 | $240 |
| TOTAL ASSETS | $198,839 | $232,978 | $267,117 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $9,482 | $10,792 | $12,102 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $9,482 | $10,792 | $12,102 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $9,482 | $10,792 | $12,102 |
| Paid-in Capital | $30,000 | $30,000 | $30,000 |
| Retained Earnings | $48,651 | $72,636 | $96,621 |
| Earnings | $100,709 | $119,555 | $138,401 |
| TOTAL CAPITAL | $189,360 | $222,190 | $255,020 |
| TOTAL LIABILITIES AND CAPITAL | $198,839 | $232,978 | $267,117 |
| Net Worth | $182,060 | $226,240 | $270,420 |
8.6 Business Ratios
The following table shows data about business ratios:
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 4.35% | 30.82% | 63.29% | 4.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 5.61% | 4.71% | 3.81% | 9.70% |
| Inventory | 1.85% | 1.82% | 1.79% | 9.80% |
| Other Current Assets | 1.75% | 2.02% | 2.29% | 27.40% |
| Total Current Assets | 138.53% | 150.99% | 163.45% | 54.60% |
| Long-term Assets | -9.47% | -21.01% | -32.55% | 58.40% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 4.68% | 3.04% | 2.76% | 27.30% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 25.80% |
| Total Liabilities | 4.68% | 3.04% | 2.76% | 54.10% |
| NET WORTH | 99.32% | 101.04% | 102.76% | 44.90% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 94.18% | 93.85% | 93.52% | 0.00% |
| Selling, General & Administrative Expenses | 74.29% | 71.83% | 69.37% | 65.20% |
| Advertising Expenses | 2.06% | 1.11% | 0.28% | 1.40% |
| Profit Before Interest and Taxes | 26.47% | 29.30% | 32.13% | 2.86% |
| Main Ratios | ||||
| Current | 25.86 | 29.39 | 32.92 | 1.63 |
| Quick | 25.4 | 28.88 | 32.36 | 0.84 |
| Total Debt to Total Assets | 2.68% | 1.04% | 0.76% | 67.10% |
| Pre-tax Return on Net Worth | 66.83% | 71.26% | 75.69% | 4.40% |
| Pre-tax Return on Assets | 64.88% | 69.75% | 74.62% | 9.00% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 19.20% | 21.16% | 23.12% | N.A. |
| Return on Equity | 47.79% | 50.53% | 53.27% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 4.56 | 4.56 | 4.56 | N.A. |
| Collection Days | 92 | 99 | 106 | N.A. |
| Inventory Turnover | 19.7 | 22.55 | 25.4 | N.A. |
| Accounts Payable Turnover | 14.17 | 14.67 | 15.17 | N.A. |
| Payment Days | 27 | 27 | 27 | N.A. |
| Total Asset Turnover | 1.84 | 1.55 | 1.26 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | 0 | -0.02 | -0.04 | N.A. |
| Current Liab. to Liab. | 1 | 1 | 1 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $120,943 | $140,664 | $160,385 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0.45 | 0.48 | 0.51 | N.A. |
| Current Debt/Total Assets | 4% | 3% | 2% | N.A. |
| Acid Test | 23.66 | 27.01 | 30.36 | N.A. |
| Sales/Net Worth | 1.68 | 1.29 | 0.9 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
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