With over 3,601 bubble tea outlets in the US, it’s fairly apparent this Asian drink has been adopted by customers throughout America. The mixture of milk and tea together with tapioca pearls makes for a scrumptious drink that retains customers wanting extra. Just like espresso outlets, boba or milk tea outlets have great progress and revenue potential with most consultants anticipating US progress on this trade by 2030.

Regardless of total progress expectations, don’t count on beginning a neighborhood bubble tea enterprise to be straightforward. With elevated recognition comes vital dangers and rising competitors. Listed below are a number of the particular dangers it’s good to know earlier than opening a bubble tea store in the US.

What’s Bubble Tea?

Bubble tea, milk tea, boba, pearl tea – all of those names describe the identical beverage. However what precisely is a bubble tea? Bubble tea is a drink that originated in Taiwan in 1980. The drink is a mix of milk and tea and the tapioca pearls, which resemble “bubbles” the place the drink acquired its identify. The beverage was initially served scorching however these days bubble tea is extra in style as a chilly drink.

Different variations of bubble tea might be fruit teas that are fruit juices combined with tea, easy plain sweetened brewed teas, yogurt teas which have a base of Yakult, slushies or smoothies that are blended milk tea drinks, and extra.

Milk tea.

Bubble tea additionally comes with quite a lot of add-ons relying in your choice. There’s the fundamental ones like pearls, additionally known as boba or tapioca balls, popping boba (sure, these items pop in your mouth whenever you chew on them and also you get a burst of juice), and brown sugar pearls. There’s additionally coconut jelly, aloe vera, custard or pudding, crimson bean, and grass jelly. Some outlets  even add cheese foams on prime of their milk teas. I promise this tastes higher than it sounds.

The bubble tea market has a compound annual progress price (CAGR) 7.51%. The market reached $2.29 billion in 2022 and is predicted to develop to $4.08 billion by 2030 so it is a enterprise that loads of revolutionary beverage buyers expect might be the subsequent huge factor in the US.

What are the dangers of beginning a Bubble Tea Store?

Regardless that the bubble tea trade appears to be like promising in the US there are some actual dangers to opening a store in the US. Listed below are the primary issues I’ve about this beverage enterprise that try to be conscious of.

Inconsistency Threat 

Bubble tea outlets are in danger for inconsistencies. For instance, the tea should be brewed on the proper time and temperature. If not, the flavour doesn’t come out nicely and the remainder of your milk tea drinks wouldn’t style good. One other instance is including the correct amount of milk to boost the flavour of tea. You may compromise the style in case you add much less of it or an excessive amount of.

So how do you keep away from such a danger issue? Be certain to attend the trainings that include your franchise or create commonplace working process for making drinks that’s adopted by administration and staff in case you’re an unbiased store. Be certain your milk teas are constant in order that prospects know precisely what they’ll get after they go to your location.

Sharetea is a pacesetter on this trade.

Not Protecting Up With The Tendencies Threat

Millenials and Gen Z are what maintain the bubble tea market prospering and if there’s one factor about them is that they’ve a factor for maintaining with the traits. As an illustration, tapioca pearls have been the one toppings for bubble tea after which brown sugar pearls got here in after which adopted by popping boba. So if you’re a bubble tea store that doesn’t know what these toppings are and are sticking to the classics, you then danger dropping the curiosity of your prospects who select to go to different bubble tea locations which have what’s “in” in the mean time.

Sustain with the traits by retaining your self up to date in what’s occurring in social media circles. This implies being on-line consistently and interesting along with your prospects.

Advertising and marketing Threat

Bubble tea outlets that don’t put money into advertising are vulnerable to failing. Do know that there are loads of bubble tea outlets in the US. As talked about above there’s over 3,601 of them. The competitors is hard and your bubble tea store ought to stand out from the remainder.

Advertising and marketing closely on social media the place most Millenials and Gen Z spend their time on might be one efficient manner of reaching out to prospects. Supply seasonal promos to get them to come back again sometimes. When you franchise a bubble tea store, ask what the advertising methods are so you realize if there are future advertising plans for your online business.

Boba tea.

Location Threat

Location is necessary for any enterprise, however it’s particularly necessary for bubble tea outlets. Bubble tea is a comparatively impulse-driven buy, so companies must be positioned in areas the place individuals are more likely to be strolling by and see their store.

In accordance with a report by Taipec, a bubble tea provide firm, the very best areas for bubble tea outlets are:

• Busy excessive streets: These streets are sometimes stuffed with foot site visitors, making them perfect for bubble tea outlets that depend on walk-in prospects.
• In busy buying centres: Purchasing centres are one other nice possibility for bubble tea outlets, as they entice a lot of people who find themselves already on the lookout for one thing to eat or drink.
• Close to universities with a big worldwide scholar presence: Bubble tea is particularly in style amongst younger individuals, so finding a store close to a college with a big worldwide scholar inhabitants might be an effective way to draw prospects.
• Close to to public transport centres in giant cities: Public transport centres are sometimes busy areas with loads of foot site visitors, making them perfect for bubble tea outlets.
• In densely packed workplace areas: Bubble tea is a well-liked lunchtime snack, so finding a store in a densely packed workplace space might be an effective way to draw prospects throughout the workday.

A research by the College of California, Los Angeles discovered that bubble tea outlets which are positioned in high-traffic areas are usually extra profitable than these which are positioned in less-trafficked areas. The research discovered that bubble tea outlets which are positioned in areas with a excessive foot site visitors of 10,000 or extra individuals per day are likely to have greater gross sales than these which are positioned in areas with a decrease foot site visitors of 5,000 individuals per day.

The Instance of Gong Cha: Gong Cha is a Taiwanese bubble tea chain with over 1,000 areas worldwide. The corporate’s success is basically on account of its strategic location in high-traffic areas. For instance, Gong Cha’s flagship retailer in Taipei is positioned in the midst of a busy buying district.

Does your future location meet these standards? If not, rethink your construct spot.

Menu Selection Threat

As talked about above, bubble tea isn’t simply milk tea. It’s additionally flavored teas and yogurt drinks and even espresso. Your bubble tea store might be in danger in case you promote simply a few flavors of milk tea. So add extra number of milk teas and toppings in your menu to maintain prospects engaged and fascinated with your model.

Labor-intensive Drink Threat

Bubble tea outlets are labor-intensive companies. You have to to rent and prepare workers, and you’ll need to ensure that your workers is environment friendly and productive. This coaching course of can turn into extra difficult whenever you launch new flavors or add-ons frequently. You’ll additionally must compete with different service companies for top-quality labor.

Seasonal Demand Threat

Bubble tea is a seasonal beverage. Demand for bubble tea is usually highest in the summertime months. When you open your bubble tea store within the winter, you might have problem producing sufficient gross sales to remain afloat. Preserve this in thoughts in case you function a enterprise in part of the nation with 4 seasons and lengthy winters.=

Is proudly owning a Bubble Tea Store Worthwhile?

You may cost a bubble between between $3.50 and $6 per 12 ounce cup. Add-ons include an extra $0.75 – $1.00 at most outlets. The revenue margin in operating a bubble tea enterprise might be 18% to 25% however once more, this is determined by a number of elements reminiscent of ensuring you’ve got a great location and that you’re advertising your model sufficient.

You must also take note of different bills reminiscent of hire, payroll, provides, stock, gear, licenses and promoting. Be sure you spend enough time drafting a marketing strategy and get an correct understanding of the prices concerned on this enterprise. Getting right into a enterprise the place you don’t perceive the numbers is without doubt one of the largest dangers of all.

You May Like: Is Ding Tea Well worth the $259K Funding? 

Is Bubble Tea a fad enterprise?

One may assume bubble tea is only a fad. However the drink has been round for the reason that 90s and also you won’t have heard of it until you’re residing near Asian-American communities and the drink was simply part of a restaurant’s menu. There have been different bubble tea outlets that opened in California reminiscent of Shortly and Ten Ren. It wasn’t till 2013 when there have been extra bubble tea outlets that opened that individuals began noticing them. After all, social media and vloggers performed an enormous half in creating the hype round bubble tea.

So is it only a fad? I don’t assume so particularly because it’s 2023 and there are nonetheless many boba tea outlets opening and solely starting to work their manner into the U.S. market. The problem right here is maintaining with the traits, the rising new flavors, broader shopper adoption, and making your bubble tea store well-known.

Boba on the seaside?

Is Bubble Tea Too Aggressive?

Is the bubble tea store too aggressive? It certain is! However you may’t precisely blame them for it when there’s loads of bubble tea outlets round so the one factor they need to do is to aggressively market their merchandise. To not point out, some bubble tea outlets reminiscent of Sharetea, Gong Cha, Comfortable Lemon, Ding Tea and Chatime have sturdy world presence world wide that by the point they enter the U.S. market, they’re already a success. So smaller bubble tea outlets find yourself mustering all that effort in promoting their model.

So how do you battle towards different bubble tea manufacturers? As talked about above, the important thing elements in competing towards different manufacturers are having a great location, an distinctive advertising technique, and a monetary or marketing strategy.

Why is Bubble Tea Common?

The recognition of bubble tea has baffled some who nonetheless don’t fairly get why a milk tea drink has grown to a billion greenback trade. Listed below are some factors as to why the beverage is in demand:

Customization

There’s loads you are able to do whenever you order bubble tea. Except for choosing out the flavour of your alternative, you may choose to have them scorching or chilly. You too can add any topping you need (for an extra price). You too can modify the sugar ranges of your drink by making them frequently candy or right down to 0% sugar.

The worldwide model Starbucks has discovered a strategy to generate $1 billion in income yearly by promoting drink add-ons. Little doubt that bubble store ideas will probably be testing premium add-ons as a income drivers with the totally different flavors and components like grass jelly, espresso jelly, custard, and crimson beans to call just a few. These are just some of the numerous totally different add-ons that you could supply for bubble tea. The customization of a bubble tea drink provides prospects that pleasant milk tea expertise.

Texture

Bubble tea makes for an fascinating drink whereby one doesn’t simply drink the beverage however in addition they have one thing to chew on such because the pearls, pudding, popping boba, aloe vera, and coconut jelly. Including these sorts of texture to bubble tea makes it extra enjoyable and yummier to bask in.

A Wholesome Choice… Kind Of

As a result of bubble tea has extra pure components (simply tea, milk, and typically even honey), it’s thought of a more healthy possibility. However then once more, the sugar content material might be actually excessive which isn’t actually wholesome. Until they go for half or no sugar in any respect.

Will Bubble Tea work in the US?

The bubble tea trade in the US is on the rise so it looks like it’s working in the mean time. The CAGR proportion is excessive as nicely which is nice information if you wish to put money into a bubble tea enterprise. However take note not all markets in the US are the identical.

When you open in an space with a major Asian inhabitants like many components of Southern California for instance, you’ll have a bigger viewers of customers who’re conscious of your drink. Alternatively, residents in small city center America could not even know what the beverage is.

When you’re on the lookout for a number of bubble tea franchises, you may try our information on Chatime and Sharetea. These franchise choices present a better strategy to break into this market with a confirmed menu, provide community, and working proceedures that may make it easier to keep away from a number of the frequent pitfalls of this enterprise.

Are you able to get into the bubble tea enterprise? Pay attention to the dangers so your online business can survive the competitiveness of the milk tea trade and sip on the candy taste of success.