Bubble tea is a drink invented in the 1980s in Tainan and Taichung and has gained popularity around the world. With so many flavors and combinations of toppings it’s a beverage bubble tea franchises can offer with their own spin. You can serve the drink hot or cold in a large variety of flavors, making the bubble tea’s market huge. Heard of the ice coffee craze and how that’s taking off? Well, this is the version for tea.
In this article, we will discuss the bubble tea market and startup costs associated with choosing a franchise model. It’s a good idea to compare franchise models to an independent shop to see why it’s an attractive proposition. Finally, we will dive into 11 of the best bubble tea franchises to see what it takes to run one.
Bubble Tea Market Growth and Other Data
The bubble team market is driven by flavor and the need to find a healthier alternative to creamer-filled coffee. In 2019 the bubble tea market was valued at $2.4 billion and projected to grow to $4.3 billion by 2027 with a CAGR (compound annual growth rate) of 7.8%.
Market segmentation can be broken down as follows:
- Base flavor: original, coffee, fruit, chocolate and others.
- Base ingredient: black tea, green tea, white tea and oolong tea.
- Component: sweetener, liquid, tapioca pearls, creamer, flavor and others.
- Region: Asia-Pacific, Europe, North America and LAMEA.
Analysis of the market reveals that black tea is the most popular with green tea in second place. However, green tea is set to have the highest growth rate – since it’s attractive for the health-conscious drinker.
Furthermore, the market is driven by Asian communities living around the world. For instance, in U.S. cities like New York and Los Angeles have a vibrant Asian population and guess what? Bubble tea is doing well there.
In 2019 fruit flavor had the most sales and that’s because of health-conscious drinkers making up a large portion of the customer base.
Moving forward bubble tea will expand to a wider demographic. Consequently it’s projected that chocolate flavor will see an explosion in popularity with a registered CAGR of 8.4%.
Are Bubble Tea Franchises Profitable?
Franchises in most expanding marketplaces are likely to be profitable if the right conditions are created. For example, we know that black tea is currently the biggest seller with Asians being the primary market. Franchisees can use this information to set the location in the right neighborhood and choose a menu to meet the demand.
It’s not uncommon to see long queues in bubble tea shops as there is a buzz around the beverage right now. Play your card right and bubble tea franchises could be a goldmine since the popularity is exploding.
Also read: 10 Froyo Franchises and Their Startup Costs
Bubble Tea Franchise Versus Going Independent
Should you choose a franchise or independent shop model? The answer depends on various factors. Firstly, you need to know if the upfront costs of a franchise model are higher. You need to pay the company for the package and it’s a fee that’s set by them. Typically all franchisees have to pay the same price so there is little wiggle room for negotiation. Also, a percentage of gross sales will go towards royalty and marketing fees.
However, you have a lot more support with a franchise model. This includes advertisements, training, and equipment you need to successfully run the establishment. Every franchise is different so you need to investigate for yourself. How much support will you get? Excellent bubble tea franchises provide enough so that the higher startup costs are justified, but that isn’t always true.
Franchise models are great for people that want to run a business without having to innovate for themselves. You’re given a proven strategy that you have to follow. As an independent shop owner, you’ll need to come up with the brand, menu, and marketing strategy. It’s a lot of work and requires a particular skillset.
What Are the Costs Associated with Starting a Bubble Tea Franchise?
To open up a bubble tea franchise, you will need a minimum of about $150,000. This money goes into paying the franchise fees, store rental, equipment, various startup fees, and to meet liquid reserve requirements. However, the above number is just an approximate starting point—the specific requirements will vary with each franchise.
The startup costs will vary based on what franchise you choose, location, and other factors. However, general costs can be broken down into 4 categories:
- Franchise fee: this is the cost set by the franchise. The amount of stuff you get in return for this fee will help you decide if it’s a worthwhile investment. For the price a supportive franchise will provide marketing, equipment, and training. Also, note the length of the agreement since this fee does not grant you access indefinitely.
- Rental: this could be your biggest expenditure depending on where you are setting up shop. Get a good price in this category to help keep costs low.
- Stock: you’ll need inventory to get started and this is a recurring cost that is based on how many units you sell. Ideally, you should buy enough stock to get started, but not so much that you are making a risky investment.
- Equipment and furniture: the amount of help a franchise provides has limits. You’ll need to complete your bubble tea shop with equipment and furniture of your own.
Bubble Tea Franchise Comparison Table
| Franchise Name | Franchise Fee | Total Investment Cost | Liquid Capital Requirement |
|---|---|---|---|
| Gong Cha | $41,500 per location 4.5% of monthly sales | $177,430 – $335,400 per location | $150,000 |
| Bambu | $40,000 | $137,000-$321,000 | $10,000-$20,000 |
| Kung Fu Tea | $37,000 | $124,050 to $428,050 | $140,000 to $422,000 for a traditional store of around 500-1,500 square fee $123,000-$275,000 for a non-traditional location |
| Bubbleology | $30,000 5% royalty fee and 1% marketing fee | $163,000 – $284,000 | $100,000 |
| Sharetea | $22,500 | $260,000 minimum investment | $100,000 |
| Bee & Tea | $40,000 | $150,000 | $50,000 |
| 7 Leaves | $35,000 6% royalty fee 2% of gross sales | $250,000 – $500,000 | $1,000,000 |
| Tapoica Express | $15,000 | $99,000-$295,900 | $200,000~$250,000 |
| Boba Loca | $10,000 to $14,000 | $88,945 to $327,955 | $75,000 |
| Jazen Tea | $12,000 | $118,000-$197,500 | $150,000 |
| Chatime | $50,000 | $150,000 – $160,000 | $50,000 |
| Happy Lemon | $35,000 | $296,000-$553,000 | $40,000-$80,000 |
Info About Each Franchise
Gong Cha
Gong Cha was founded in 2006 and has its headquarters in Kaohsiung, Taiwan. It is one of the most popular bubble tea brands in the world today. The name translates to “tribute tea for the emperor”. The franchise has over 1,500 locations worldwide across 15 countries and that number is constantly growing.
The estimated initial investment is $177,430 – $335,400 per location and the agreement lasts for 10 years. The initial franchise fee is $41,500 per location and 4.5% of monthly sales.
Also, there is a marketing and advertising fee that’s 1% of sales for national and local. The franchise can be opened in New York, New Jersey, Massachusetts, and Texas.
References: https://www.gongchausa.com/franchise
Bambu
This beverage franchise was started by 4 Viennese sisters in 2008, in San Jose, California. They are marketed as 100% vegetarian drinks and provide a friendly service. You’ll find 70 Bambu stores across 22 states and Canada. The 4 sisters that started the venture are still involved with the business today.
The initial franchise fee is $40,000 with the total estimated investment is $137,000-$321,000.
Also, you need to have a working capital of around $10,000-$20,000.
The cost includes on-site training and financing is available too. There is no percentage based on the volume of sales that’s achieved. You can specify the location you’d like to open in when applying, but take a look at their current list of active sites to get an idea.
Kung Fu Tea
In 2009, the founders Michael, Allen, and Ray got back from Taiwan and drank bubble tea in Queens. It’s not the same kind of drink that reminded them of their childhood, which gave them an idea for a business. Currently, Kung Fu Tea has 187 locations in Vietnam, Australia, Canada, and across the U.S.
The upfront costs are $37,000 for a traditional store purchase fee and $10,000 for the training fee. The total initial capital is around $140,000 to $422,000 for a traditional store of around 500-1,500 square feet – and $123,000-$275,000 for a non-traditional location. Equipment costs are around $25,000-$35,000 and there might be renovation costs.
Finally, the royalty fee is 4% and you need a working capital of $5,000-25,000. Locations can be opened in across 29 states and the South has the highest number of stores.
Bubbleology
In 1983 Taiwan was introduced to bubble tea by Liu Han-Chieh. He added juicy Tapioca pearls into fruit-based teas. Since then the variety of the menu has exploded to cater to a wider customer base. They have 69 locations across UK, Europe, and the USA.
To get started with a Bubbleology franchise you need to be passionate about the brand, have local market knowledge.
$100,000 in liquid assets per store, and $300,000 net worth per store. You also need some retail or restaurant experience. The initial franchise fee is $30,000, there is a 5% royalty fee and a 1% marketing fee.
Finally, the term of the franchise is 5 years.
Sharetea
Sharetea was established in 1992 in Taipei, Taiwan with a focus on black tea. Since then they have branched out to Canada, U.S., UK, Singapore, Australia, Singapore and Indonesia with more than 500 stores.
The minimum requirements to get started are liquid capital of $100,000, $25,000 owner’s fee, and $260,000 minimum investment.
The franchise helps franchisees select the right location and there is a lot of room for negotiation regarding where one can open.
Bee & Tea
This franchise started in 2014 by founders that already had experience in the food industry. Their mission was to create a welcoming storefront and grow the size of the bubble tea market. They currently have 5 locations with more coming soon in South California.
The estimated initial investment is $150,000 with a franchise fee of $40,000. The minimum liquidity you’ll need is $50,000.
Also, ongoing costs include a royalty fee of 6% and marketing fee of 2%. Currently you’ll have the best chance of opening a location in California.
7 Leaves
Close friends and a band of brothers started 7 Leaves back in 2011 in Little Saigon. The business grew in Orange Country and then across the rest of California. Its mission is to provide the best of what different cultures have to offer. 7 Leaves currently have 22 locations across California, Nevada and Texas.
The 7 Leaves franchise opportunity is currently available in 12 states, which includes Texas, Arizona, New Jersey, and more.
The franchise fee is $35,000 and overall you’ll need an estimated $250,000-$500,000 for your first store.
The ongoing fees include a 6% royalty fee and 2% of gross sales.
Tapoica Express
The first Tapoica Express location opened in 1999 in the San Gabriel Valley making it one of the first bubble tea stores in the United States. Currently there are 38 Tapoica Express locations across California, Washington, and Texas.
You’ll need around $200,000-$527,000 to get started. The first check you send in is $51,000. That covers the initial franchise fee and other setup fees. The initial franchise fee costs $15,000 and gives you a 5-year contract. After, you can renew every 2 years for $3,000. Finally, you’ll need to pay a royalty fee of 2.5% of gross sales or $500, whichever is higher. There is also a marketing fee of 0.5%.
Boba Loca
Boba Loca originated in Asia and has gained significant popularity in the Western US. There are 23 locations and is an excellent opportunity for entrepreneurs in underserved markets as the franchise is actively looking to expand across the United States.
The royalty fee is 4% and the term of the agreement can be 2 or 5 years. Also, there is a 1% marketing budget. The amount of liquid cash you need to have will be assessed by the franchise on a case by case basis.
Also, the allowed locations are not yet set in stone so you’ll need to hear the results of your application to find out. It’s also preferable that you have around 3 years of retail experience.
Jazen Tea
Established in 2012 in San Jose California, Jazen Tea was created on the founding principles of freshness. The company now has 18 locations across the globe and is offering new franchisees to join.
The fees are 4% in royalty payment and 2% marketing. You also need to have $100,000 in liquid assets and the total investment is around $186,600-$339,730.
Their marketing team is available to help new franchisees get started and generating businesses from day 1.
Chatime
Chatime has over 2,500 locations around the globe and is accepting more franchisees to join their growing family. Their headquarters are in Taiwan and operate in over 38 countries, but their first outlet outside of Taiwan was in California.
You’ll need 10% of the investment cost as working capital, but it’s around $50,000. Also, the overall investment is around $150,000.
There is a 3-week training program and you don’t need previous experience in the food industry.
Happy Lemon
Happy Lemon was founded in 2006 and had the aim of international expansion. They now have more than 500 locations worldwide and was floated in the stock exchange in December of 2014.
To become a franchisee the initial franchise fee is $35,000 and expected the total investment to be around $296,000-$553,000. The working capital needed is around $40,000-$80,000.
Finally, you’ll need to pay a royalty fee of 3%.
Conclusion
In this overview of the top bubble tea franchisees you might have spotted a pattern. The majority start off in Asia or California and have the aim of expanding globally. Also, the bubble tea market is set to roughly double in the next 7 years. Therefore, franchisees have a great opportunity to get on the bandwagon before the marketplace becomes saturated.
One Response
Great article! We are also a bubble tea shop with franchise opportunities!
Please check out our site and fill out the form if you are interested in a bubble tea franchise opportunity with Pearl’s Tea!
Cheers!