Running a tea shop may sound fun, especially if you want to turn your love of tea into a business.
But like any other business, opening and successfully operating a tea shop is challenging and requires good planning and execution.
You need to have enough capital to start, set up your shop at the right location, have the right equipment, and get actual customers in through the door.
Here are some tips on how to run a tea shop, including what you need and how much profit to expect.
How to Start A Tea Shop Business
If you’ve done market research and decided that a tea shop is a viable business, here’s how to go about opening your business.
- Determine location. The success of your tea shop greatly depends on where you set it up. You need a place that receives enough foot traffic. If you want a slow paced tea shop, you can select a location further away from the high street, but make sure there’s decent foot traffic.
- Create a business plan outlining your business strategies such as the products you’ll sell (e.g. specific types of teas, any accompaniments etc.), pricing, competition, marketing and so on.
- Register your business as a legal entity. Also, check whether you need any additional licenses and permits to operate a tea shop.
- Decide if you need an employee or two. If you do, start looking for potential employees early on before you open the tea shop. You can place a job advert on an online job board, or ask friends and family if they know someone who can work in a tea shop.
- Make sure you have adequate capital to start the tea shop and operate it for at least six months. That way, even if you don’t turn a profit immediately, you’ll survive.
- Write a checklist of everything you need to operate the tea shop, including equipment, furniture, utensils, and so on. Start shopping early.
- As opening day approaches, start marketing your tea shop to make sure you have customers from the first day. You can put up an ‘Opening Soon’ sign outside the shop, and ask friends and relatives to spread the word.
- Once you open the tea shop, provide the best customer experience you can. This is the best form of marketing and will ensure people keep coming back.
How Much Does It Cost To Start A Tea Shop
The startup cost for a tea shop varies widely depending on how big it’ll be, how fancy you want to make it, your location, and the equipment you’ll need.
Considering the cost of equipment, furniture, rent, utensils, employee salaries, and initial operation costs, the minimum you should expect to spend is £20,000.
But this could easily rise to £100,000 for a big tea shop in an expensive location.
What Equipment is Needed for a Tea Room?
Unless you plan to serve coffee, you don’t need expensive coffee brewers and espresso machines for your tea room.
The most basic equipment needed are cooking and serving utensils, plus a stove. Instead of a stove, you can also get a commercial water boiler.
If you plan to serve other snacks, you may need additional cooking equipment like fryers, a griddle, oven, microwave, or toaster.
Don’t forget storage equipment to keep the tea bags, utensils, and other items. Customers will also need seats and chairs, and you’ll need a main counter from where you serve them.
You’ll also need cleaning equipment such as mops, buckets, brooms, and trash cans.
Other things you may need include a POS machine, security cameras and music system.
How Profitable Is A Tea Shop?
The math varies greatly from one tea shop to another depending on size, operating costs, and number of customers.
A big tea shop can make hundreds of thousands of pounds a year in profit, while a smaller one can make a few thousand or tens of thousands of pounds. You can also make zero profit, or run at a loss.
To increase your profits, minimise your operation and overhead costs. Don’t hire more employees than you need, don’t get a bigger space you need, and buy your cooking ingredients such as tea bags at a wholesale price.
It’s also important to keep customers coming in. Market your tea room, both on the ground and online in social media.
You can diversify your tea menu, and maybe even add other foods and snacks to attract a wider range of customers.
Just as important is pricing. You don’t want to overprice your products as it will drive customers away, but underpricing will kill your business.
Research how much your competitors are charging and match it, or undercut it by a little if you can.
Don’t expect to turn a profit immediately. It may take some time to figure out how to reduce your expenses and increase your income. That’s why it’s important to have at least six months of operation costs as part of your startup capital.
Once you turn a profit, decide how much to pay yourself (after paying wages if you have employees) and how much to plough back into business to grow it. It’s also important to set aside some money in a rainy day fund.