Tea Room Business Plan, With a First-Year Projection

A tea room sells an afternoon: a pot of tea, scones with clotted cream and jam, finger sandwiches and small sweets on a tiered stand, served by reservation. A full afternoon tea costs about $9.40 a guest in food and tea and sells for $38. Tables turn slowly, so the plan turns on reservations, private parties like bridal showers that fill the room, and tins of loose-leaf tea sold at the counter. Wages for the kitchen and servers, and rent for a room with charm, are the fixed costs. In the example, a Savannah tea room starts with $149,000, ends its first year about $15,800 behind before the owner's pay while sales build, and makes about $3,500 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 tea room in a paragraph: the room, the guests, the occasions, the goals.
• Cost each tea service: tea, scones, sandwiches, sweets, cream and jam.
• Plan sales by product: afternoon tea, cream tea, private parties and retail tins.
• Reservations and private parties fill a room where tables turn slowly.
• Bake scones and sweets to the day's bookings.
• Budget working cash for the slow first months, and check it against the lowest cash point.
• TaroStack makes each tea service a recipe, so its true cost follows the price of what's in it. More below.

Part 1: the business description

Willow & Thistle Tea Room, a made-up tea room in Savannah, Georgia, writes:

Willow & Thistle Tea Room seats 36 in a restored house, serving afternoon tea and cream tea by reservation, hosting bridal and baby showers on weekends, and selling loose-leaf tea in tins. In its first year it aims to reach $31,900 of sales a month.

Part 2: what a tea service costs

Clotted cream and good jam are most of the scone course; the sandwiches use the most labor. Loose-leaf tea in tins is in tea business plan.

Part 3: guests and staffing

Seatings at 11:30, 1:30 and 3:30, Wednesday to Sunday. A private party takes the whole room for three hours at a set price for up to 30 guests. A baker starts at 7 for scones and sweets; three servers on weekends.

Part 4: what each product earns

At full speed the business sells $31,920 a month and keeps $23,529.20, 73.7%; afternoon teas bring $14,872 of it.

Part 5: the first year, month by month

Fixed costs are $20,000 every month: rent ($4,500), wages ($13,000), utilities ($900), insurance ($300), linens and china replacement ($300), register and software ($150), ads ($400), and other costs ($450). Sales start at half of full speed:

The year's sales are $304,084, and the business ends it $15,846 behind, before the owner's pay. It breaks even at about $27,130 of sales a month, in the eighth month. The lowest cash point, −$29,016 in month 7, is covered by the $35,000 of working cash with about $6,000 to spare. Four private parties a month bring $3,120 of contribution with the room's fixed costs already paid; they're the cheapest sales to add.

Part 6: the startup budget

The $114,000 before working cash is earned back in about two and a half years at full speed. The license for selling tea itself is in tea business license, and baked goods pricing in how to price baked goods.

Get the template

Download the tea room 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

The plan uses one cost a guest. The kitchen bakes to bookings that change: no-shows on a rainy Thursday, a party that grows from 20 to 28, and clotted cream bought at a new price.

How TaroStack does it

TaroStack makes each tea service a recipe, so its true cost follows the price of cream, butter and tea.

Tea services as recipes. Each tea service 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. Scones and sandwiches left after no-shows is recorded as waste with a reason, reported by 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.

Questions people also ask

How much does it cost to start a tea room?

The example budgets $149,000, including $35,000 of working cash; the build-out is the biggest item.

Is a tea room profitable?

It can be: the example makes about $3,500 a month at full speed before the owner's pay, after a first year that ends behind.

How much does an afternoon tea cost to make?

In the example, about $9.40 a guest: tea, scones with cream and jam, sandwiches, sweets and the card fee.

How do tea rooms make money?

In the example, from reservations at $38 a guest, private parties that fill the room, and tins of tea sold at the counter.