Bubble Tea Business Overview

Bubble tea shops specialize in creating and serving tea-based drinks customized with various toppings, particularly chewy tapioca pearls (boba). These establishments combine traditional tea preparation with modern flavors and additions, offering customers both classic milk teas and innovative drink combinations. Most shops also provide additional toppings, such as fruit jellies, puddings, and flavored pearls, to enhance the drinking experience.

Each drink starts with a tea base – typically black, green, or oolong tea. The tea is then mixed with milk, fruit flavors, or other ingredients according to the recipe. Customers can customize their drinks by selecting their preferred sweetness level, ice amount, and combination of toppings. This personalization allows shops to meet diverse customer preferences while maintaining quality and consistency.

The industry has developed several common ways to establish and operate these businesses:

• Independent Shop: A locally-owned establishment where owners maintain complete control over menu offerings, operations, and branding. This setup allows for menu flexibility and direct profit retention.
• Franchise Location: Operating under an established bubble tea brand name, these locations receive standardized recipes, training, and marketing support in exchange for franchise fees and royalty payments.
• Mobile Vendor: Operating from food trucks or temporary locations, these sellers provide bubble tea at events, festivals, and high-traffic areas with lower overhead costs.

How Do Bubble Tea Shops Make Money?

Bubble tea shops generate their primary income through drink sales, with prices typically ranging from $4 to $7 per beverage. The addition of extra toppings, which customers frequently request, increases the final sale price and profit margin per drink. Beyond basic drink sales, these businesses boost revenue through several complementary streams.

Many shops expand their offerings to include light food items and snacks that pair well with bubble tea. These additions not only increase the average transaction value but also attract customers during different times of the day. Shops often create combo deals combining drinks and food items to encourage larger purchases.

Catering services represent another significant revenue stream. Many bubble tea shops provide bulk orders for corporate events, parties, and special occasions. These large-volume sales often come with higher profit margins due to the efficiency of preparing multiple drinks at once.

Delivery partnerships with food service apps have become increasingly important for revenue generation. While these services take a percentage of sales, they expand the customer base beyond the physical location and increase overall order volume.

Some establishments also sell merchandise such as reusable cups, special straws, and branded items. These products not only generate additional revenue but also serve as walking advertisements when customers use them outside the shop.

Industry Statistics

Bubble tea shops are classified under NAICS code 722515 – Snack and Nonalcoholic Beverage Bars. The industry specializes in preparing and serving customized tea-based beverages with various toppings and add-ins. Let’s examine the data that shows how this industry has grown and evolved.

Bubble Tea Shop Industry Size & Growth: Bubble tea is highly popular in Taiwan and has since become a go-to drink in the United States, where in 2024, sales reached $2.6 billion. Over the past five years, the industry has shown strong performance with an annual growth rate of 9.1%.

Looking ahead to 2029, the market is expected to reach $2.9 billion, with a projected annual growth of 2.3%. Some trends shaping today’s boba tea market include premium ingredients, unusual flavors, health-conscious options, and tech-enabled ordering. Boba shops today focus on quality tea leaves, real fruit purées, house-made syrups, and gourmet toppings to stand out. Unique flavor combos like matcha-mango or brown sugar-oregano are popular. Low sugar and low-calorie options are on the rise to attract health-focused consumers. (IBISWorld)

Number of Bubble Tea Shops: 6,635 bubble tea shops are operating nationwide, representing a substantial growth of 24.1% annually between 2019 and 2024. The industry remains largely fragmented, with no single company holding a dominant market position. Many operators choose the franchise model due to lower startup requirements and the advantage of established brand recognition. (IBISWorld)

Bubble Tea Shop Average Profit Margin: Food service establishments like bubble tea shops typically maintain profit margins between 3% and 8% of total revenue. (IRS)

States with Most Bubble Tea Shops: California leads the nation in bubble tea shop concentration, followed by New York and Texas. These states, particularly in urban areas with diverse populations and high concentrations of young consumers, have seen the most rapid growth in new store openings. (U.S. Census Bureau)

Cost to Start a Bubble Tea Shop

Starting a bubble tea shop could range from $25,000 to $150,000. The lower end represents a small kiosk or basic shop with minimal equipment, while the higher end includes a full store with extensive equipment and build-out.

Here are the main costs to consider when starting a bubble tea shop:

Equipment ($12,000 – $50,000): Commercial tea brewers, boba cookers, sealing machines, refrigeration units, and ice makers form your core equipment. Specialized equipment includes bubble tea shakers, fructose dispensers, and tea storage systems. Additional needs include water filtration systems and blenders for smoothie-style drinks.

Location Setup ($8,000 – $60,000): First and last month’s rent plus security deposit starts your lease. Renovations include plumbing, electrical work, counter space, and seating areas. Health department requirements need specific sinks, drainage, and food-grade surfaces. Finding a previous food service space can reduce costs.

Initial Inventory ($3,000 – $20,000): Starting inventory includes tea leaves, tapioca pearls, flavored syrups, cups, lids, and specialty straws. Additional supplies like sweeteners, non-dairy creamers, and toppings support menu variety. Proper storage solutions help maintain fresh ingredients.

Furniture and Fixtures ($2,000 – $20,000): Service counter, menu boards, point-of-sale systems, and seating areas create the shop atmosphere. Storage solutions, drink preparation stations, and display cases organize workflow and ingredients.

These cost estimates are approximate, and actual expenses will vary based on your business model and scale of operations.

Additional Resources:
National Juice Bar Association