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The Big Business of Bubble Tea
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- čas přidán 15. 08. 2024
- Bubble tea has exploded in popularity in recent years, both in the US and across the globe. In this video we look at how bubble tea became so popular as well as the economics of bubble tea shops.
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#Wallstreetmillennial #bubbletea #boba
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0:00 - 1:01 Intro
1:02 - 2:52 Why is bubble tea so popular
2:53 - 7:22 Economics of a bubble tea franchise
7:23 China
I don't think the growth looks exponential, but more like a traditional strong linear growth. Remember kids, "exponential" is not a synonym for "bigly".
Or Ugeeeeeee
The graph looks like an exponential curve
@@LeonMortgage Linear curves are never perfect when you measure real things. Exponential growth would imply a rapidly increasing tangent in the later data points, which is absent here.
low barrier of entry makes it almost impossible to build a moat around their business.
Wtf is the word "bigly"? Did you pull that word straight from a 1970s jello party?
When Jack in the Box entered the bubble tea market, I was surprised and wondered if McDonald's would follow suit.
They have bubble tea in McDonald’s in Asia
McDonalds sold Bubble Tea in Germany from 2012 to 2013. Tried it once, it tasted terrible.
McDonalds sold a variation of Bubble Tea (Milk Tea) here in the Philippines. It was horrible for me as it seems that it reeks of Aspartame. That sweetener leaves an unnatural aftertaste.
they have CosMc now
@@triadwarfare aspartame is the WORST. im so glad people agree. literally cant stand the taste of it, its disgusting
I grew up in Taiwan. People have been saying it's a fad since 1990s, but the bubble tea businesses are still booming over there somehow.
can still see em throughout Asia, they're have a very long lifespan
I think I don't be the guy who opens a bubble tea shop, I want be the guy who supplies that guy with pearls and cups.
You're already too late
No this doesnt make any sense. You just took the saying about the gold rush and applied it to the bubble tea industry without thinking for a second. The reason why its used for the gold rush is bc it is very very hard to find gold consistently in large quantities and quite easy to consistently sell shovels. This does not apply to bubble tea. You can upcharge bubble tea to a insane amount like 10 dollars for pearls that cost 26cenrs per serving and some milk and syrup. The margin for selling the bubble tea directly is wayyyy higher than selling the raw ingredients
@@yikes2612depends on how long you plan on making money. Bubble tea is popular now but selling plastic cups is definitely more sustainable over time. Using the bubble tea rush to create a foundation for your plastic cup manufacturing or distribution is a good play for long term even after the fad dies they’ll likely be a new beverage you can still supply
@yikes2612 I think he was just joking bro. Holy shit💀
Ok genius.
I used to own a couple of boba tea storefronts and food trucks here in Dallas/Ft Worth.
Most of this is in the ballpark and accurate on paper.
7:08 But the biggest thing that is way off is about staffing/managing. It’s not easy nor simple. It’s actually the hardest.
I'm quite interested, can you elaborate?
What bussinesses are you into now ?
As someone who uses boba tea as a date night, I can tell you you are downplaying the profit margin. None of these places are paying their workers even 30k a year. And a large cup in Florida will run you about 8 dollars minimum
He was not talking about a store in florida though.
@@glithchFlorida is cheaper than California so I’d say the same… each cup is $5-$7 or more based on my last trip to California. The El Monte location is an example of course but the price per cup is definitely over $5.00.
The video is correct in the profit margin of Ding Tea in California. Bubble tea is already ultra competitive in the last 5 years and a number of brands have expanded too quickly and failed. Look up Honey Boba in California, and you will know what I mean. People are now discerning about the quality of the syrup, if the shop uses real tea and how chewy the tapioca pearls are.
Ding Tea unfortunately suffers from the real tea flavor aspect as well as consistency of their tapioca pearls. At least in California they do (they are not alone). Because of its slightly lower quality, Ding Tea is usually a bit cheaper than some other boba shops in the area. Boba Time and Lollicup are also discount boba chains in California.
SIMP!!!!!!
The $8.00 dollars is worth it. Because the bubble and boba drinks are the bomb
Less than 60k a year in profit. After dealing with employees, customers, suppliers, maintenance, working pretty much everyday unless you close on Sundays which would probably kill your profits it doesn't sound worth it to me.
How can those things “kill your profits” when those things are already calculated into the costs that derived at the profit
@@codycast I am assuming they are were operating 7 days a week. Closing the store to take one day off for your self unless you REALLY trust your two minimum wage employees would eat into what little profit you are making. Perhaps you misunderstood me because I didn't use a comma.
@@BoSmith7045 basically your profit is made up of all of the income you bring in minus all of the expenses.
What you left with is a profit.
So you don’t take that final number and say “well let’s just subtract the expenses for XY and Z“ as that has already been done
OMG. I talked about changing ONE thing that could change your profits as a aside. And you are acting like I lumped in employees and paper cups. You are hung up on "unless you close on Sundays which would probably kill your profits". Reread the original post without the throw away comment and quit being so autistic.
You gotta have like 5+ shops.
In Canada, its been around since the late 90s and has grown steadily since then. I feel its reached its peak saturation (at least in the urban areas).
Nayuki and other retail chains like Heytea in China are not really just bubble tea stores. they sell baked goods, ice cream... etc.
Sounds like the bubble tea industry is in a bubble.
💥😮
No sponsor this time. Someone probably got shit-canned over shilling that gambling site in the last video.
Oof
Lmao
Na, they just won big on that gambling site and don’t need money anymore 😉
They might as well also do beer and pizza ads, it would fit the gambling audience.
I can’t even grasp how dumb your comment is. I am a professional political analyst with background in academics and use other providers of prediction markets to do my work. It is not a gambling - it is a professional tool. Trading stocks would be THE SAME gambling in your logic.
Cassava is an amazing plant! Very popular in West Africa! Hoping West African countries raise their price of cassava sold to benefit from this!!
I hope that store in California comes with a small living space in the back because you're not affording rent in California with that profit
Probably why it’s being sold
You gotta have multiple shops.
most people run it as a side business dude.
Great content. The phenomena of bubble tea is worth analyzing. This will be the foundation for identifying the next fad to buy into.
Fad or trend, the big question. Some stuff were fads which died in months. Others were seasonal, where they come back. Others simply stayed. 👍
Something loaded with sugar and cream(fats) sells alot im shocked
@@SpinachLeafIt literally just taste like watered down milk with a ton of sugar and then they add the pearls lol, it’s really nothing special
Not sure about other provinces but here in Yunnan bubble tea is starting to lose its shine a bit. There is a massive over-saturation but the fever seems to have calmed down. Coffee shops, however, are literally popping up everywhere. I know the owner of our small (500k+) town's oldest coffee shop and he has witnessed going from being the only real coffee shop to one of about 400 in less than 10 years. Starbucks growth here has been explosive...
Haven’t seen even the most basic small bubble tea go for less than 6.
Depends on where you are. The more competition in the area, the lower the prices are.
In San Francisco, they go for $8
Taiwans national beverage is bubble tea. I went to Tawain in 2017 in college. Then i came back and all i could see is bubble tea shops
I promise you the cost of goods in a bubble tea shop are not running 33%. The most expensive part are the pearls, which they charge extra for so those costs are covered. Essentially you are paying for the cup, tea, milk and flavoring. The most expensive part would be the plastic cups and straws, maybe 50 cents. The rest would be around 15 - 25 cents each. I dont see a cup of bubble tea costing more than a 1$ to make.
Rent & Salaries are the killers in gastronomy
This makes me realise that guy could produce a million views 20min analysis without talking to anyone in the industry... The sincenrity and the professional tone is a joke all along. Wow, i have been watching this guy for years
He looked at china's shop and cost was higher than 33%
...but you have to set up shop in a "more money than sense" location and employ smiley young people to keep your customers from remembering what an absurd product and price is in front of them.
@@user-wo4xz6ri4s why would you believe a random youtube commenter over the video author? And why would a plastic cup and straws cost 50 cents? A basic Google search finds Bossen and the cost per cup is about 10 cents. Straw is going to be less. @joshboy88420 has no idea what he's talking about. I'm not saying WSM is necessarily correct because the random commenter is wrong. I'm just saying don't trust either source.
Running a brick and mortar shop and only net profiting $45,000 a year is absolutely horrendous.
That is just the profit from the bubble tea drinks. Nowadays, most bubble tea shops also sell baked goods and fried foods to complement the drinks.
I am confused because the tea shops here in So Cal are about $7+ for a large drink. I'm not sure if that makes sense a difference in the net. Also, certain LA areas don't have a $16 hr minimum wage.
If it was a counter or a stand with no seating, it’s much less hassle and up front costs.
If you can manage multiple shops, it’s almost tolerable, as you can multiply the profit to be kind of worth it.
These were my jam in 2005. I can't drink them anymore because they are high in calories and low in satisfaction.
More for me!
I think it is kind of funny how this cycles... My wife and I used to go out for bubble tea at the end of our dates in Houston back in 2002-2003
$55,000 profit on $320,000 gross sales a year? that's only around a 17% profit margin so for selling 25 cups a hour you barely bank $4580/month?
tapioca is manioc root which has a C:N complex, also known as cyanide, has to processed to be made non-toxic. (legit food supply, just has to be processed in a certain way). I was in San Francisco when they got their first bubble tea place, Wonderful Foods. There wasn't much for kids to do in the Sunset District, and that shop became it, lined up for bubble tea... When the neighborhood shops saw how successful that operation was, they all started selling bubble tea and bulk candy too. When the Wonderful Food lease came due, the landlord raised the rent 5X. The owner paid it the first time around but left the location when the landlord tried the same thing when the next lease was due for negotiation. In the meantime they were no longer the kids 'spot', just one of many bubble tea places on the street and only making it because family works there. (basically - beware of business opportunities that are 'easy entry')
Was waiting for a relevant followup to the cyanide information, but it never came.
@@alanhonlunli it's discussed on the Wikipedia entry for Cassava at length
@@skipperson4077 yeah, so u mentioned the fact, but then didn't follow up with anything relevant to it. I thought u would follow up with a story like someone didn't process it right and a bunch of people got sick off bubble tea. But you just changed topics completely.
@@alanhonlunli it's not toxic if it's properly processed which in most cases means just heating it up to the right temperature
Yeap! i remember that time. A small, hole in the wall Boboa shop on 24th and Irving. It was a few blocks from my best friend house. I was attending SFSU. Asian kids would line up outside the door for a popular basic Lychee Milk tea. It went for $2.50 a cup. I still remember the face of the owners (husband and wife), so snob... knowing that their Boboa tea shop was so popular. After a few years, i was told that the husband was addicted to gambling and gambled off all his fortune from selling the Boboa tea drink. Not sure if it was true.
Idk where you get this pricing per cup but here in Austin tx is averaging around 6-8$ per cup now...
The example you had was a chain if there are more than 55 locations nationwide the minimum wage increased to $20/hr. Might be reason for sale.
fun fact, here in Taiwan where bubble tea was invented, the look of the bubble tea really don't matter at all, firstly we call all these grab and go tea in cup 手搖杯,meaning it will have to be shake before you drink, most of the time by the store staff or a machine, so the look you see on Japanese or US bubble tea will not be there after you shake them. secondly, the use of clear plastic cup is ban here in Taiwan, so you can't even see how the tea look
Lastly tea are just a part of Taiwanese daily life at this point, so posting a picture of tea are like posting that you went to Walmart, no one really cares
so me as a Taiwanese traveling around the world, is pretty funny seeing people taking picture with their tea in wired color or fancy pattern
Asians take pictures of their coffee, not bubble tea. In other parts of the world, it is the other way around.
I remember my first bubble tea was from shop owned by Vietnamese immigrants.
Thanks for idea ! My friend is an entrepreneur I'll share this idea with him ! He was finding something new to do new business in my country there is no bubble tea shops so there is huge market to take first movers advantage😮 ! Thanks !
I love bubble tea. First tried it in 2017. I get a fruit tea with 0% sugar and it’s a refreshing and healthier beverage. Kung Fu is the best chain in the US imo. (Coco also pretty good). It will be interesting to see how much more it’s going to grow in the next 10-20 years.
Here in the Philippines we have Bubble/Milk Tea shop literally every corner but landlords have been staying away from them as they won't likely to last 6 months.
It's fascinating to see how bubble tea has evolved from its origins in Taiwan to become a global phenomenon, especially with its recent surge in popularity on social media platforms. The customizable nature of bubble tea and its visually appealing presentation make it a hit among younger demographics, driving its widespread adoption and the exponential growth of bubble tea shops worldwide. 🌏🥤
i love how you showed buissness model of this small shop. Super interesting part.
I didnt realize this channel was a Nymphia Wind stan!
Excellent analysis, your killing it mate
This video made me really want bubble tea.
Probably 5500 in Irvine, CA alone to be honest..
I invested in this startup called Bobacino, they wanted to bring Boba to the rest of America via automated dispensing kiosks. Sounded like a brilliant idea, and they already demoed a working machine. Somehow they screwed it up and went defunct before launching into any markets...
While i dont like bubble tea myself, i wouldnt mind running my own tea shop, but cut down on costs by making it sit in, like anhangout for teens, and reuse cups and spoons instead of straws
That doesn't actually really decrease costs. Sadly plastic single use items are so cheap, the costs for buying, maintaing and cleaning multi use cups doesn't really come out much cheaper. Plus you also have extra cost for rent and upkeep and such for the sit in space.
This is not ment to discurage you btw, just want to pointnout that you should check and calculate carefully what costs how much before opening a shop of any kind.
Interesting. So in China, BBT shops have a harder time making a profit, because BBT is even more popular in China so they have price cutting wars so revenue per BBT is competitive. Equipment depreciation is also more severe in China as a result, as "revenue generated per bubble tea machine" is lower before they have to replace them. BBT shops are oversaturated in China.
Large chains, as opposed to franchises, pay for a lot of advertising and corporate overhead.
My take-away: it's a bit of a bubble.
Around where I live bubble tea is part of a larger business, either selling other foods or selling goods like games.
Very common in the Philippines, personally, I think that stuff is absolutely revolting
If you try to open a bubble tea shop here in PH, chances are you just burned all your investment money due to market oversaturation.
@@nceu9967 very common here.
You mean the original one? That's quite a shame. Is it the pearls or the drink? What flavours didn't you like? Milk tea?
@@yensteel anything with those disgusting balls in it. Milk tea is just too sweet. I feel my teeth dissolving
@@kevinbarry71 Ohhh, they do have way too much sugar in them. Here, you could order it with low sugar or no sugar. It may not make it satisfying for you, which is alright.
In Taiwan people dont drink it as sweet, most people order it with 0 or 25% sugar, i feel judged by friends when i order 50% like if im going to die by diabetes, most places dont have those juice balls or as many artificial colors.
Yup 12 year olds will love it. It's too sweet for me and a calorie bomb.
That Bubble Tea shop has prices from like 2010, no wonder they are tying to sell, they are charging too little.
We were house shopping in El Monte today. Cool
It’s a Management Consulting episode 😀👍🏼👍🏼
wow. amazing research and great video!
It's delicious. 1 cup at occasion time is not unhealthy. As long its delicious fun.
As a Chinese person I’m gonna point out that bubble tea is trash
That's because Taiwan isn't China; As much as you all would like to say.
@@kaydog890its name says otherwise. PRC only get to join UN when ROC was kicked out
@@kaydog890 Because Taiwan is a part of China as much as you would like to say otherwise
Great video! Very interesting!
Bubble tea still exists??? Some years ago, those shops popped up everywhere in germany, but like a year later they were gone.
They are everywhere in Southern California. I think we may have more bubble tea shop than coffee shop here.
starbucks not converting closing stores into boba shops under a new brand to me is a mindblowing missed opportunity.
Boba Milk Tea these days in LA costs over $6 now for a large.
I have tried bubble tea and I found it to be overrated.
i can assure you they are profitable in CN. kids order tons of them and this drinks are not cheap when compared to other thigns they can buy.
i like bubble tea but i get mine 25% sweet or 50% sweet cause the amount of sugar/syrup they put in those drinks by default is insane
Great breakdown of cost.
3:49 need to bring those prices up by $3
Kung Fu Tea and Gong Cha both have the option to customize the sugar level. Long live boba! ❤
I think the battleship coffee market is still wide open. Not even Starbucks sells battleship coffee. It commands a premium because hey…it’s battleship coffee.
I was ok when i first tried/saw them... but i hate that when i look for tea shops all i get is boba. I want just regular non sugared tea
Can't you just order it with 0% sugar?
Experienced in credit industry, please stop including depreciation expense as a negative in regards to a business turnover. Depreciation expense is a tool of the taxation office. Say a item was depreciate to zero, would it's market value be 0? The answer is no, it can still produce output.
Look up 蜜雪冰城, the company make a shiet load of from Franchisee for the raw materials
I don't get why people spend so much of their income on beverages in general.
Really, is Bubble Tea still a thing? I had the impression that this hype has been over for some time, at least in our country.
It was unchanged at all in asia at least. Still everywhere. I can't say about the west. Covid messed with a lot of stores for one.
Still very popular in Central Europe, though the market seems to have largely stabilized
In Italy there was the boom from 2019 to 2022. They started closing bubble tea store from then, the market here became very saturated
The low entry cost is brutal. This business have absolutely no moat against competition oversaturating your area. Exit-scam-like IPO is the only profitable outcome for these brands.
I bought bag of bobba (and reusable straws) in local vietnamese market and made home bubble tea easily and cheaply. Its even easier than making good cappuccino at home.
California shop also has management cost of 0, I assume. All these bubble tea shops must be putting pressure on Starbucks and other coffee houses.
I have been a bubble tea fan for a while. But i rarely go to chain shops but rather the ones that use real tea and real fruits and dairy. They are more expensive, but they really are a dessert. I rarely get them because they are not good for you even with quality ingredients. Ive noticed that starbucks fancy drinks and iced teas are looking more like boba tea without the boba. Yeah, i don't buy from them either.
i like bubble tea. I could see what happened to the frozen yogurt stops happening to it
Never had it never want it.
U trippin
I had it once, I thought it was gross and too sweet. I prefer plain black or green tea.
Nayuki also sells bread
The bubble burst in nyc years ago
I liked buying bubble tea a lot last year but this year I just got tired of it don’t want to even see it, I just want the tea not the bubbles any more 😂
The only thing that is good about growing business is if you can capture most of that growth and defend it well. But a super growing industry with low barrier of entry? Avoid
Seattle
I wonder what it costs in China compared to the US. They are ridiculously expensive here.
Can go as low as 1-1.5 dollar per cup in chains like Mixue, higher end shops sells around 2-5 dollars depending on the location of shops
Dump the delivery service - that money could be spent on employees or operating costs. COGs isn’t 33% for a drink shop. The profits made from delivery is low and not worth it.
If they made it with chocolate pearls I’d give it a try. I’ll leave it to everyone else until then. I don’t need it
Just tastes like tea with a lot of sugar. I tried it couple times then promised myself won't waste money on it again
I tried one but it tasted like instand diabetes, so I never drank one after that.
Not all Bubble Tea places use artificial flavoring.
It looks like the "bubble" has burst...
I love boba tea
First time I hear about it
While bubble tea taste delicious and has a variety of flavors, it is not healthy to drink regularly. The sugar and calorie content is through the roof. The business model has a low cost of entry, making it easy for anyone with the cash to open their own store, the cost side of things made me laugh since I do know people that don't spend anywhere near the amount of money stated in this video in regards to materials or labor, you will see family or friends running these type of businesses to keep cost down. It is not worth getting a franchise because they will lock you into a contract to buy all the equipment and supplies through them at a high price. This type of business suffers from market saturation and if you want to stand out, you need to market yourself as something different, you need some sort of gimmick to stand out or you will go out of business.
Many people think this is healthy because it have tea
😂😂😂right on while I work at the bubble tea store. My boss opens 3 fucken locations in A single year. All 3 stores were started to build on the same date and open on the same date with these Chinese lion dance on their grant opening on the same date. wtf is this?
Bubbles tea is like a trend, the brand itself decline every 5 years. So they only time to make good money probably the first 2 or 3 years. As new bubbles tea place pop out, people will beginning to forget the old bubble tea. Look at Quickly and Kung Fu tea, they're long gone.
Needs more sugar and artificial chemicals.
If all the US market has right now is bubble tea with artificial flavourings, boy is your market in the early stages yet.
Once this was only known for Asian, and now, everyone knows and young ppl want one!
*cough* automated vending style machine.... get 30% profit margins lol... mix flavor selection,shake it in the cup, add pearls,seal and sell... cooking robots already do 20 times more operations... shouldn't cost more than 10k
It makes smoking look healthy
Doing better than my buddy who is losing 20k per year
How and where
@@nudgeinbox retail specialty store
Life becoming boring maybe if have known "Wall Street" as something else, then mind belief of "It got taken over", then news of fun stuff like Bubble Tea(but it's not real Wall's Street).
It's a Bubble!
I 💗 u blender tea🙃🙃🙃
wtf.... i make more selling derivatives in stocks...
Restaurant chains in Chine come and go every year.
With tax and everything else. You end up with 30k in profit
Never tried it. Sounds like liquid sugar.