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 business plan. 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 business. 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 business plan, we are providing a detailed business plan 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.

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.

Bubble Tea Shop Business Plan - 3 Years Profit Forecast

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 is his intense passion for business. 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 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:

Bubble Tea Shop Business Plan - Startup Coast

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 bubble tea business. 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

The most important component of an effective bubble 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 sample 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 business 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.

Bubble Tea Shop Business Plan - Market Segmentation

The detailed marketing segmentation comprising of the company’s target audience is as follows:

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 our tea shop. 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 shop 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 CustomersGrowthYEAR 1YEAR 2YEAR 3YEAR 4YEAR 5CAGR
Working Community45%11,43313,34416,55318,74520,54513.43%
Residential Community38%22,33432,34443,66552,54466,43210.00%
Passers-By17%8,3229,45510,65512,86714,43315.32%
Total100%42,08955,14370,87384,156101,4109.54%

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

Strategy

Sales strategy is also an important component of a bubble tea shop business plan 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:

Greeting Card Business Plan - Sales Monthly

6.4 Sales Yearly:

Greeting Card Business Plan - Sales Yearly

6.5 Sales Forecast

Our forecasted sales pattern is given in the following column chart:

Greeting Card Business Plan - Unit Sales

The detailed sales forecast is given in the following table:

Sales Forecast   
Unit SalesYear 1Year 2Year 3
Milk Tea1,887,0302,680,3202,588,240
Tea Latte802,370815,430823,540
Fruit Flavored Tea539,3207702301,002,310
Brown Sugar Milk265,450322,390393,320
Macchiato143,530125,030176,240
Slush/ Milk Shake134,240394,340842,230
TOTAL UNIT SALES3,771,9405,107,7405,825,880
Unit PricesYear 1Year 2Year 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 CostsYear 1Year 2Year 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 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 1Year 2Year 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 a bubble tea business is to develop a comprehensive financial plan which will cover the detailed costs of startup.

8.1 Important Assumptions

 General Assumptions   
Year 1Year 2Year 3
Plan Month123
Current Interest Rate10.00%11.00%12.00%
Long-term Interest Rate10.00%10.00%10.00%
Tax Rate26.42%27.76%28.12%
Other000

8.2 Brake-even Analysis

Bubble Tea Shop Business Plan - Brake-even Analysis

 Brake-Even Analysis 
Monthly Units Break-even5530
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 1Year 2Year 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/Sales30.00%39.32%48.64%

8.3.1 Profit Monthly

Bubble Tea Shop Business Plan - PROFIT MONTHLY

8.3.2 Profit Yearly

Bubble Tea Shop Business Plan - PROFIT YEARLY

8.3.3 Gross Margin Monthly

Bubble Tea Shop Business Plan - GROSS MARGIN MONTHLY

8.3.4 Gross Margin Yearly

Bubble Tea Shop Business Plan - GROSS MARGIN YEARLY

8.4 Projected Cash Flow

The following column diagram shows the projected cash flow.

Bubble Tea Shop Business Plan - Projected Cash Flow Diagram

The following table shows the projected cash flow:

 Pro Forma Cash Flow   
Cash ReceivedYear 1Year 2Year 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
ExpendituresYear 1Year 2Year 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   
AssetsYear 1Year 2Year 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 CapitalYear 1Year 2Year 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 1Year 2Year 3Industry Profile
Sales Growth4.35%30.82%63.29%4.00%
Percent of Total Assets
Accounts Receivable5.61%4.71%3.81%9.70%
Inventory1.85%1.82%1.79%9.80%
Other Current Assets1.75%2.02%2.29%27.40%
Total Current Assets138.53%150.99%163.45%54.60%
Long-term Assets-9.47%-21.01%-32.55%58.40%
TOTAL ASSETS100.00%100.00%100.00%100.00%
Current Liabilities4.68%3.04%2.76%27.30%
Long-term Liabilities0.00%0.00%0.00%25.80%
Total Liabilities4.68%3.04%2.76%54.10%
NET WORTH99.32%101.04%102.76%44.90%
Percent of Sales
Sales100.00%100.00%100.00%100.00%
Gross Margin94.18%93.85%93.52%0.00%
Selling, General & Administrative Expenses74.29%71.83%69.37%65.20%
Advertising Expenses2.06%1.11%0.28%1.40%
Profit Before Interest and Taxes26.47%29.30%32.13%2.86%
Main Ratios
Current25.8629.3932.921.63
Quick25.428.8832.360.84
Total Debt to Total Assets2.68%1.04%0.76%67.10%
Pre-tax Return on Net Worth66.83%71.26%75.69%4.40%
Pre-tax Return on Assets64.88%69.75%74.62%9.00%
Additional RatiosYear 1Year 2Year 3
Net Profit Margin19.20%21.16%23.12%N.A.
Return on Equity47.79%50.53%53.27%N.A.
Activity Ratios
Accounts Receivable Turnover4.564.564.56N.A.
Collection Days9299106N.A.
Inventory Turnover19.722.5525.4N.A.
Accounts Payable Turnover14.1714.6715.17N.A.
Payment Days272727N.A.
Total Asset Turnover1.841.551.26N.A.
Debt Ratios
Debt to Net Worth0-0.02-0.04N.A.
Current Liab. to Liab.111N.A.
Liquidity Ratios
Net Working Capital$120,943$140,664$160,385N.A.
Interest Coverage000N.A.
Additional Ratios
Assets to Sales0.450.480.51N.A.
Current Debt/Total Assets4%3%2%N.A.
Acid Test23.6627.0130.36N.A.
Sales/Net Worth1.681.290.9N.A.
Dividend Payout000N.A.