A boba shop sells drinks that cost little to make: a 16-ounce milk tea with tapioca pearls costs about $1.20 in tea, milk, pearls, syrup and the cup, and sells for $5.75. The margin is wide, so the plan turns on everything else: rent where students and shoppers walk past, wages for a counter that's slow at 2 and slammed at 4, and pearls cooked in small batches through the day and thrown out after a few hours. In the example, a Sacramento boba shop starts with $112,000, ends its first year about $20,200 ahead before the owner's pay, and makes about $6,300 a month at full speed. Below is each part of the plan, the first year month by month, the startup budget, and a free template.
The short version
- Describe the shop in a paragraph: the street, the drinks, the crowd, the goals.
- Cost each drink: tea, milk, pearls or toppings, syrup or fruit, the cup and the card fee.
- Plan sales by category per $100: milk teas, fruit teas, slushes, snacks.
- Cook pearls in small batches; old pearls go hard and get thrown out.
- Rent and wages are the fixed costs that decide the month.
- Budget working cash for the slow first months.
- TaroStack makes each drink a recipe, so its true cost follows the price of what's in it. More below.
Part 1: the business description
Lotus Lane Boba, a made-up boba tea shop in Sacramento, California, writes:
Lotus Lane Boba is a 900-square-foot boba shop near Sacramento State, making milk teas, fruit teas and slushes with house-cooked tapioca pearls and jellies, and popcorn chicken and other snacks. In its first year it aims to reach $30,000 of sales a month.
Part 2: what a drink costs
| Drink | Tea and milk | Pearls or toppings | Syrup or fruit | Cup, lid, straw | Card fee | Cost | Price | Cost share |
|---|---|---|---|---|---|---|---|---|
| Classic milk tea with pearls, 16 oz | $0.50 | $0.25 | $0.05 | $0.22 | $0.17 | $1.19 | $5.75 | 20.7% |
| Passion fruit green tea with jelly | $0.12 | $0.25 | $0.55 | $0.22 | $0.19 | $1.33 | $6.25 | 21.3% |
| Mango slush with pearls | $0.30 | $1.00 | $0.25 | $0.20 | $1.75 | $6.75 | 25.9% |
The category costs in Part 4 run a little higher than these drinks, because they carry pearls thrown out at the end of their few hours and drinks remade. How a drink's cost share is judged is in coffee shop business plan, which works the same way.
Part 3: customers, pearls and staffing
The afternoon after classes is the rush; mornings are quiet. Pearls are cooked every few hours and held warm, and what's left after four hours is thrown out, because it hardens. Two people work the counter most of the day and four at the rush. Tea is brewed fresh every few hours too.
Part 4: what each category earns
| Category | Sales | Variable cost | Contribution | Margin | Hundreds a month at full speed |
|---|---|---|---|---|---|
| Milk teas | $100.00 | $22.00 | $78.00 | 78% | 140 |
| Fruit teas | $100.00 | $24.00 | $76.00 | 76% | 70 |
| Slushes | $100.00 | $28.00 | $72.00 | 72% | 50 |
| Snacks | $100.00 | $38.00 | $62.00 | 62% | 40 |
At full speed the business sells $30,000 a month and keeps $22,320, 74.4%; milk teas bring $10,920 of it.
Part 5: the first year, month by month
Fixed costs are $16,050 every month: wages ($9,500), rent ($4,500), utilities ($800), ads ($400), insurance ($250), register and software ($200), and other costs ($400). Sales start at half of full speed:
| Month | Sales | Profit | Cash, year to date |
|---|---|---|---|
| 1 | $15,000 | −$4,890 | −$4,890 |
| 2 | $16,700 | −$3,622 | −$8,512 |
| 3 | $18,600 | −$2,214 | −$10,726 |
| 4 | $20,400 | −$870 | −$11,596 |
| 5 | $22,300 | $538 | −$11,058 |
| 6 | $24,000 | $1,806 | −$9,252 |
| 7 | $25,600 | $2,996 | −$6,256 |
| 8 | $26,800 | $3,884 | −$2,372 |
| 9 | $27,900 | $4,708 | $2,336 |
| 10 | $28,700 | $5,306 | $7,642 |
| 11 | $30,000 | $6,270 | $13,912 |
| 12 | $30,000 | $6,270 | $20,182 |
The year's sales are $286,000, and the business ends it $20,182 ahead, before the owner's pay. It breaks even at about $21,570 of sales a month, in the fifth month. The lowest cash point, −$11,596 in month 4, is covered by the $25,000 of working cash with about $13,400 to spare. The drinks keep three-quarters of their price, so the month is decided by how many walk in; the slow first months are what the working cash is for.
Part 6: the startup budget
| Item | Example |
|---|---|
| Build-out | $40,000 |
| Equipment: sealer, tea brewers, fridges, dispensers | $20,000 |
| Lease deposit and first month | $9,000 |
| Furniture | $8,000 |
| Signs and branding | $4,000 |
| Opening inventory | $3,000 |
| Licenses and permits | $1,500 |
| Register | $1,500 |
| Working cash | $25,000 |
| Total to start | $112,000 |
The $87,000 before working cash is earned back in about 14 months at full speed. A tea shop with a quieter pace is in tea room business plan, and loose tea in tea business plan.
Get the template
Download the boba tea business plan workbook. Four sheets: your categories, each per $100 of sales with its variable cost and hundreds a month at full speed; the first year, month by month, with sales ramping up, profit, cash, the first profitable month, the lowest cash point and whether the working cash covers it; your fixed costs; and the startup budget. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
The plan uses one waste share. The shop throws out a different amount of pearls every day, tea leaves and syrups run out on a Saturday, and nobody knows what a fruit tea really costs this month.
How TaroStack does it
TaroStack makes each drink a recipe, so its true cost follows the price of tea, milk and tapioca.
Drinks as recipes. Each drink is a recipe by weight, so its cost moves when the supplier's price does.
Counts with no signal. The cooler and dry storage can be counted on a phone with no signal, and the reorder list shows what runs out first in days of cover.
Waste with a reason. Pearls thrown out after their four hours is recorded as waste with a reason, reported by item.
| The job | Notebook | In TaroStack |
|---|---|---|
| What a drink costs this month | Worked out once | True cost from the recipe |
| What to order before the weekend | A guess | The reorder list |
| What was thrown out | Not recorded | Waste by reason and item |
Recipes, counts and the reorder list are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.