Iced Tea Business Plan: A Brewed Iced Tea Maker's First Year

Iced tea keeps a wide margin: a 16-ounce bottle of sweet tea costs about 60 cents in tea, sugar, bottle and label, and sells to a café for $2.75. A cup poured over ice at a market costs less still. What the plan has to cover is everything that isn't tea: kitchen hours to brew in batches, cold storage and a refrigerated van, since brewed tea without preservatives keeps only days, a helper and a driver, and market fees. It also has to decide what goes in the tea. A splash of lemonade or a peach purée makes it a juice beverage, which brings FDA's juice HACCP rule, and a business that sells to cafés and grocers doesn't get that rule's exemption for retail shops. Plain sweet and unsweet tea don't bring it. And iced tea is a summer drink, so the plan should expect the slow months. The plan below works per bottle, cup and gallon. In the example, a Savannah iced tea maker starts with $41,500, ends its first year about $22,000 ahead before the owner's pay, and makes about $5,800 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 business in a paragraph: the teas, who buys, where you'll brew, the goals.
• Cost each container: tea and sugar by the gram, the bottle or cup, the label, the card fee.
• Plan sales by channel: café and grocer bottles, market bottles and cups, gallons, events.
• Brewed tea keeps days, not months: cold storage and a refrigerated van are fixed costs.
• Lemonade or fruit purée makes it a juice beverage under FDA's juice HACCP rule.
• Plan for summer peaks and winter dips.
• TaroStack makes each tea a recipe and each brew a batch with its date, so the oldest bottles go out first. More below.

Part 1: the business description

Magnolia Sweet Tea Co., a made-up iced tea maker in Savannah, Georgia, writes:

Magnolia Sweet Tea Co. brews sweet, unsweet and mint iced tea in a shared commercial kitchen and sells it cold: in 16-ounce bottles to cafés and grocers, in bottles and cups at two farmers markets, in gallon jugs to restaurants and offices, and at events. In its first year it aims to reach $16,800 of sales a month.

Part 2: what a container costs

A sweet bottle is 6 grams of black tea and 30 grams of sugar; restaurants take their gallons unsweet and sweeten them themselves. The bottle, cap and label are three-quarters of a bottle's cost, so the bottle supplier's price matters more than the tea's. Bottles are dated 10 days from brewing, and cafés want at least a week left. How dates are worded on the label is in best by date format.

Part 3: customers and the juice question

Cafés and grocers take bottles twice a week; the markets run Saturdays; restaurants and offices take gallons on a weekly route. Customers asked for a half tea, half lemonade and a peach tea. The owner left them off: FDA's juice rule covers any juice used as an ingredient in a beverage, lemon juice and fruit purée included (21 CFR 120.1(a)), and its exemption for retail shops doesn't cover a business that also sells to other businesses (21 CFR 120.3). Adding them would mean a juice HACCP plan, in juice HACCP plan. The mint tea is tea and fresh mint only.

Part 4: what each product earns

At full speed the business sells $16,800 a month and keeps $14,107.50, 84.0%; market cups bring $5,340 of it and café and grocer bottles $4,300.

Part 5: the first year, month by month

Fixed costs are $8,300 every month: shared kitchen hours ($1,200), wages for a helper and a driver ($5,000), cold storage ($300), van fuel and upkeep ($400), market and event fees ($600), insurance ($250), software ($50), ads ($250), and other costs ($250). Sales start at 35% of full speed:

The year's sales are $145,151, and the business ends it $22,248 ahead, before the owner's pay. It breaks even at about $9,880 of sales a month, in the fifth month. The lowest cash point, −$7,350 in month 4, is covered by the $12,000 of working cash. The plan treats every month alike once sales are built up; iced tea sells far more in July than in January, so change the shares in the workbook's second row for the winter, and open in spring if you can.

Part 6: the startup budget

The $29,500 before working cash is earned back in about five months at full speed. A loose-leaf tea business, selling the tea itself, is in tea business plan, and another cold drink with a short shelf life in kombucha business plan.

Get the template

Download the iced tea business plan workbook. Four sheets: your products, each with its price, variable cost and units 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

Ten-day tea moves fast. Four brews a week in the cooler, two routes and two markets, and a case from last Monday's brew gets left behind the new ones until it's past its date.

How TaroStack does it

TaroStack makes each tea a recipe and each brew a batch with its date, so the oldest bottles go out first.

Teas as recipes. Each tea is a recipe by weight: tea, sugar, water, the bottle and label, so its cost moves with the bottle supplier's price.

Each brew a batch. A brew is a batch with its date, lot and use-by date, and how many bottles and gallons it filled.

First-expired-first-out. Orders take the oldest bottles first by default, and a café can be set to take only bottles with at least a week left.

Recipes, batches, lots and first-expired-first-out 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.

Questions people also ask

How much does it cost to start an iced tea business?

The example budgets $41,500, including $12,000 of working cash, brewing in a shared kitchen; the refrigerated van is the biggest item.

Is an iced tea business profitable?

It can be: the example makes about $5,800 a month at full speed before the owner's pay, with winter months to allow for.

How much does a bottle of iced tea cost to make?

In the example, about 60 cents for 16 ounces: 15 cents of tea and sugar, and 45 cents for the bottle, cap and label.

Do I need a HACCP plan to sell iced tea?

Not for plain tea under FDA's juice rule; adding lemonade or fruit purée makes it a juice beverage, which needs one when you sell to businesses.