The tea industry generates $52.1 billion in annual revenue. That number is projected to grow to as much as $81.6 billion by 2026. Additionally, tea consumption is a growing trend for millennials, which bodes well for the future of the industry moving forward.
Given this, you might be interested in getting in on the action and opening up your own tea shop. This is a complicated process that will take a serious amount of time and effort. But it’s not impossible.
The most important steps when starting a tea shop are to identify your target audience, decide on the number of product SKUs you are going to carry and find reliable suppliers.
That’s why we’ve put together a detailed guide on how to open a tea shop. Keep reading to see what the process looks like.
How to Open a Tea Shop
1. Write A Business Plan
This is the first thing that you should do before moving forward with your plans to start a tea shop. You need to understand who you’re going to be targeting with your products and what type of competition you’ll face. Here’s what you need to keep in mind.
Know Your Target Audience (Product Users)
To figure out where you’ll fit into the existing beverage market, you need to know who drinks the most tea. This will give you a better sense of the type of marketing that you should. It will also tell you which types of products will perform best in your store.
Tea consumption is currently the highest among older adults. But a growing percentage of Millenials are displaying a passion for the stuff. So you have a choice here. You can target your store to meet the demands of older clients or Millenials. Or, you could follow a more generalized strategy and appeal to both age groups.
Competition in the Tea and Beverage Industries
One thing to keep in mind is that you won’t just be competing with other tea stores. You’re also competing with other beverage stores. For example, your customers will choose between buying tea at your store or getting coffee.
To perform well in this marketplace, you need to establish a niche for your store. Doing this will help your tea shop stand out from the competition and will increase your revenue.
2.Apply For Local Permits & Business License
All stores that serve food and beverages need to maintain licenses that allow them to do so. Tea shops are no exception to this rule. Your shop will need licenses from the local health department in order to get started with its operations.
How to Find Out Which Licensing Permits You Need
The exact licenses that you need will vary from state to state and even city to city. The best way to figure out which ones you need is to check with your local health authority. They’ll tell you exactly what you must have in order to open up your doors to customers.
3.Obtain Adequate Liability and Insurance
There’s always a risk that something could happen to your store, your employees, or your customers. Insurance protects you from this threat. That’s why it’s essential to sign up for it before opening up your shop.
The most important thing to get is general liability insurance. This protects you from the financial ramifications of the following risks:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
There are other types of insurance you may want as well. Here are some examples of what can be useful for a tea shop:
- Commercial property insurance
- Workers’ compensation insurance
- Product liability insurance
- Data breach insurance
4.Work on Branding and Advertising
The only way to turn your tea shop into a successful one is by making the public aware of it. The best way to do this is through branding and advertising. Here are some tips on how to do that effectively.
Tips for Boosting Your Brand Awareness
Brand awareness will be key to making your tea shop stand out from the competition. There are a few ways you can build it. The first is to provide your customers with an ideal experience when they visit your shop. Do this and your brand will begin spreading via word of mouth advertising for free.
Another method is to get active on social media. You can even partner with other local brands that your customers love to spread awareness of your company. More tips on how to advertise your store are included below.
The Best Marketing Methods for Tea Shops
There are tons of different ways to market your tea shop. Here are some of the most popular methods that industry leaders use to stand out:
- Create a standout logo and killer branding
- Offer samples to your customers to get them talking about you
- Offer limited edition and exotic teas to get customers in the store
- Get active on Twitter, Instagram, and other social media sites
- Offer first-time discounts to attract new customers
- Set up booths and hand out samples at local farmers markets and trade shows
5.Decide If Franchise or Not
Instead of creating your own brand, you can also open up a franchised store. This is a good option for business owners who don’t want to have to establish a tea shop from scratch.
But franchising limits the amount of control that you have over your store. If you want total freedom to be creative, franchising isn’t for you.
6.Purchase Tea Shop Equipment
You’ll need to invest in a bunch of equipment when first opening up your tea shop. Here’s what you’ll want to purchase:
- Commercial grade brewers
- Wholesale tea leaves
- Local ingredients like honey and milk
- Teacups and to-go cups
- Decorations for your store
- Tables and chairs
- Cash register
7.Decide on Which Software You Need
You’ll also need some software to get your tea shop up and running. This section will explain what you need to get your store started.
Do you need an appointment scheduling system?
No, tea shops don’t need any special appointment scheduling system because you won’t be scheduling any appointments.
Do you need credit card processing?
Yes, tea shops do need credit card processing systems. Ideally, you should choose a provider that lets your customers pay in as many ways as possible. For example, many customers like to pay with Apple Pay so it would be good for your business to support that.
What about accounting software?
Yes, tea shops need accounting software to stay on top of their business expenses. But you don’t need any specialized software. You can just use something like Quicken to keep track of your expenses and your income.
How Much Does it Cost to Open a Tea Shop?
The costs of opening up a tea shop can vary quite a bit. The exact amount that you’ll have to pay will vary based on the nature of your business.
For example, you might just want to open up a small tea kiosk in a mall. In that case, you may only need to spend a few thousand dollars to do so. But you should expect to pay much more than that if you’re opening up a standalone shop. Industry experts say that it can cost as much as $100,000 to build a new store from scratch.
8.Obtaining Financing For a Tea Shop
Thankfully, you don’t have to pay all of the costs of starting a tea shop on your own. You can get a loan from a bank to cover the bulk of your upfront costs.
There are several different types of loans that you may want to look into. Here’s an overview of what’s available to you:
- Business lines of credit – $1,000 – $500,000
- SBA loan – $50,000 – $5,000,000
- Short-term loan – up to $500,000
- Business term loan – $5,000 – $2,000,000
- Merchant cash advance – $5,000 to $200,000
Each of these types of loans can help you get your tea shop up and running. But in order to qualify for them, you will likely need to have a solid personal credit score.
If you don’t have a good personal credit score, you may still be able to get a loan. However, you may need to put some type of collateral in order to get it approved.
What’s the Bottom Line? Is It Worth Opening a Tea Shop?
Opening up a tea shop can absolutely be worth it. A successful small tea store can have annual sales of around $500,000. Keep in mind, much of that revenue will go back into your operating costs. But you could still make multiple hundreds of thousands per year if you’re successful.
That being said, tea shops need a strong customer base to be successful. The average order size for new shops can be as low as $10. That means you’ll need to get a lot of customers through your doors in order to see a profit.
When opening a new business like a tea shop, you likely won’t be profitable right away either. You should be able to support yourself financially for a few years with minimal additional income. But if you meet all of these requirements and dream of running a tea shop, it can really pay off. You may just have to wait a few years and spend some time growing in order to see the benefits.
Ruben has been doing online marketing for the last 4 years. Prior to that, he spent 15 years managing different brick-and-mortar businesses, in the home improvement and logistics industries. Overall, he has 20 years of business experience under his belt. Recently, he added SEO, affiliate marketing, and link building to his business skills.