Owning a Bubble Tea Franchise: Is It a Strong Investment?

Bubble tea franchises are popular spots for tea lovers, but is owning a tea room the right business move for you? Learn how these businesses earn profits, and whether it's a good investment.

What is Bubble Tea?

Boba tea, commonly referred to as bubble tea originated in Taiwan during the 1980s. The popular drink starts with green or black tea and is typically combined with milk, fruit, and chewy tapioca pearls. The novelty beverage is versatile — customers can customize their drinks with flavors, sweeteners, and toppings.

The popularity of specialty drinks by Gen Z and millennials is helping drive the bubble tea market in the U.S. Globally, the bubble tea market is forecast to reach $2.6 billion this year and jump to more than $4.7 billion over the next eight years, according to Fortune Business Insights. 

Can I Open a Bubble Tea Franchise?

As the bubble tea trend grows, boba tea franchises are cropping up across the U.S. Boba tea franchises earn profits by capitalizing on high margins for customizable drinks. The ingredients required to make boba tea are relatively inexpensive, allowing for healthy profit margins on beverages. You can also generate additional income by selling snacks.

One popular bubble tea franchise, Gong Cha, has 1,800+ locations worldwide and is aggressively expanding in the U.S. The average net sales at 140 Gong Cha locations were more than $450,000 in 2023.*

Downside of Bubble Tea Shops

Even though demand for bubble tea is strong, your audience is limited, and the drink doesn’t have widespread appeal yet in the U.S. Your business could suffer from decreased traffic and revenues when the trendy drink’s appeal diminishes.

To be successful, bubble tea locations need to focus on marketing and customer service. It’s important to stay abreast of current trends and have an active presence on social media. Millennials and Gen Z account for 62% of social media users. They rely on social media to supply them with news, sports, entertainment, and customer service issues. It’s also a go-to resource for new products and restaurant information.

The Spice & Tea Exchange Offers Timeless Appeal

While boba tea franchises are a growing trend, The Spice & Tea Exchange provides an alternative with broader appeal and simpler operations. We opened our first location in 2008 and now have 90 stores across the country. The Spice & Tea Exchange sells spices, teas, sugars, salts, gourmet gifts, and accessories.

Here’s how we separate ourselves from our competitors in the tea industry:

• Diverse revenue streams: The Spice & Tea Exchange offers a wide range of products, limiting our reliance on trends. As part of our “Hometown Wholesale Program,” we help you create relationships with other local businesses in your community, giving you access to untapped sales opportunities, including fundraising, corporate gifting, and sales at other local retailers.
• Low-cost labor model: Our business model is designed to allow you to maximize profits. Without the need for drink preparation or managing a foodservice operation, our franchise is easier to run and scale. The majority of our franchisees start out operating their store themselves, cutting down on the need to initially hire full-time employees.
• Timeless appeal: Tea and spices have been part of culture for centuries, offering a stable market that’s less vulnerable to fleeting fads.
• Strong franchise support: The Spice & Tea Exchange provides comprehensive training and support, helping franchisees succeed without prior experience in the tea industry. We also have an in-house supply chain to give franchisees greater purchasing power.

Get Started with The Spice & Tea Exchange!

To learn more about the benefits of owning a tea shop catering to a broad audience for years to come, request franchise information. A franchise expert from our team will contact you to answer your questions.

*See FDD for details.