1.0 Executive Summary
The purpose of this business plan is to secure $100,000 for the development of a bubble tea shop based in Prince George’s County, Maryland. Violet’s Bubble Tea LLC (“the Company”) was founded by Matthew Deutsch. Full-scale revenue generating operations are expected to commence in the fourth quarter of this year. The business will offer a number of unique bubble teas as well as a number of small food items for this highly populated area.
Operations
The primary revenue driver will come from the sale of bubble tea, which is a popular Asian specialty that has found immense a claim within the United States. The business will offer a number of flavors. It should be noted that the location will also use multiple online platforms to drive take-away and delivery orders. The business will generate contribution margins of 75% on each sale.
The location will also offer a number of small food options, including sandwiches, salads, and freshly prepared pastries to complement its primary bubble tea line.
The third section of this business plan will further discuss the operations of the business.
The Financing
At this time, Matthew Deutsch is seeking a $100,000 SBA loan in order to commence operations. This business plan assumes that the company will receive a 10-year loan carrying an 8.00% interest rate. The funds we principal used for the following:
• Location development in Prince George’s County
• Furniture, fixtures, and equipment
• Working capital
• Initial marketing
If it is financially prudent introduce so, the company could easily secure additional rounds a capital to establish additional bubble tea shop locations through other major metropolitan areas in Maryland or within the greater Washington DC metropolitan area. The Founder will contribute $25,000 towards the venture.
The Future
Violet’s Bubble Tea will further expand its operations through increased marketing efforts within the greater Prince George’s County area. This will include providing a number of delivery and takeaway options that people can place their orders prior to entering the facility or have their bubble teas delivered directly to their homes and offices. This will be a major source of revenue generation moving forward.
Market Overview
The estimated population of Prince George’s County is 967,000 people. Among these residents, the median household income is approximately $100,000. The significant population density, wealth, and proximity to Washington DC will ensure the economic viability of Violet’s Bubble Tea. This population dense market will also allow the Company to expand to include new locations with the potential for implementing a franchise program.
Revenue Forecasts
2.0 The Financing
2.1 Funds Required
As noted, a SBA loan of $100,000 is sought to develop the operations. Mr. Deutsch will contribute $25,000 towards the business. The funds will be allocated as follows:
2.2 Management and Investor Equity
Matthew Deutsch owns a 100% interest in Violet’s Bubble Tea LLC.
2.3 Exit Strategies
Although Matthew Deutsch has no long-term plans to sell this bubble tea location, food service businesses do command a significant price to earnings ratio given their substantial contribution margins and their relatively low risk. Generally, these businesses sell for three times the prior year’s earnings. In the event of a business sale, a qualified business broker will be hired to manage the sale of Violet’s Bubble Tea to a third-party. This event is not expected to occur for a substantial period of time.
3.0 Operations
As noted in the executive summary, Violet’s Bubble Tea will provide a broad range of bubble teas across many flavors to the Prince George’s County general public. The business will only use the freshest ingredients in order to create an offense differentiating factor. These beverages will have a pricing point of $5.00 to $7.00 per unit.
To complement these operations, small food items will be served as well. This will be an important secondary revenue center for the business. The scope of this fair will include sandwiches, salads, pastries, and other small food items that are common to bubble tea shops as well as cafés. Management anticipates at the contribution margin generate from these operations will be 65%. The business.
The business will maintain an expansive facility that will feature significant exterior signage will also having a number of e-commerce channels that allow for the facilitation of takeaway and delivery orders.
To further provide a wide range of options to customers, the business will offer coffees, teas, and bottled beverages.
4.0 Overview of the Organization
4.1 Registered Name
Violet’s Bubble Tea LLC. The business is registered as a limited liability company in the State of Maryland.
4.2 Commencement of Operations
Revenue generating operations will commence in the third quarter of this year.
4.3 Mission Statement
To provide an outstanding line of bubble teas at an affordable price to the Prince George’s County community.
4.4 Vision Statement
To become the preeminent bubble tea location in the Central Maryland market.
4.5 Organizational Objectives
• Properly implement marketing campaigns prior to the launch business to create brand name visibility.
• Adhere to all laws regarding the sale of food and beverages to the general public.
• Provide staff with a gainful place of employment.
• Leverage multiple forms of online marketing in order to create significant brand name awareness that will allow for the seamless development of new locations in the coming years.
• Always source high-quality ingredients for all inputs.
• Potentially implement a franchise program (after the fifth year of operations).
• Implement fiscally sound procedures to ensure that Violet’s Bubble Tea is able to remain profitable even during challenging business climates.
• Operate is a community minded enterprise by providing support for a wide range of charities and non-political organizations.
5.0 Market and Industry Analysis
5.1 External Environmental Analysis
This section of the business plan will focus on the current economic climate, the customer profile of Violet’s Bubble Tea, the competition that the business will face moving forward, and the industry.
At this time, the economic climate in the United States is moderate. As a result of continually changing trade policies, there has been a modicum of volatility in the market. However, central banks are taking the appropriate measures to implement fiscal policies that are keeping inflation in check will also ensuring ongoing economic growth.
It should be immediately noted again that this bubble tea shop is operating in the population dense and wealthy market of Prince George’s County. This will drastically reduce the ongoing economic risk associated with the business. Furthermore, the Company will generate substantial contribution margins from the ongoing sale of bubble teas as well as small food items
5.2 Industry Analysis
As of this year, there are 7,000 locations that operate in a bubble tea shop capacity. These businesses generate $2.5 billion your revenue. Aggregately, these businesses employ 41,000 people.
This type of food service business has gained substantial popularity over the past 20 years. The concept of bubble tea is not new and it has become extremely popular in Asia, which is seen similar success within the United States. Violet’s Bubble Tea will be able to benefit from the popularity of this type of beverage in the coming years.
5.3 Customer Profile
The following demographic profile will be used during the course of marketing operations:
• Household income of $50,000+
• Will spend $10 per visit (per person)
• Lives within 3 miles of the Violet’s Bubble Tea location
5.4 Competitive Analysis
As this business plan has been written as a sample only, no formal competitive analysis has not been completed. If this business plan had been developed specifically for a client engagement, then a full analysis of all competitors within the target market radius would have been completed. This would have included an overview of their online reviews, length of time and business, and ways that Violet’s Bubble Tea would be able to differentiate itself from existing competition in the market.
6.0 Key Strategic Issues
6.1 Sustainable Operations
Violet’s Bubble Tea will have sustainable operations as a result of the following:
• The Company will source high-quality ingredients for its bubble teas as well as related fare.
• The business will use a number of online marketing strategies that will create significant brand name awareness.
• The location will have moderate fixed operating costs that will allow for ongoing reinvestment into expansion.
• The operations of this bubble tea shop are highly scalable.
• Management will have access to capital on an as needed basis to further growth given substantial contribution margin generated.
6.2 Basis of Growth
The Company will expand via the following methods:
• Develop additional locations within Prince George’s County or other markets within Maryland.
• Continued expansion of the company’s marketing operations.
• Introduction of new menu items in order to further repeat patronage.
7.0 Marketing Plan
7.1 Marketing Objectives
• Maintain an expansive online presence.
• Implement a large-scale pre-launch marketing campaign in order to create significant brand name awareness.
• Established relationships with well-known personalities within the greater Prince George’s County area in order to further create a well-known name.
7.2 Revenue Forecasts
7.3 Revenue Assumptions
Year 1
• First year revenue will reach $449,000.
• Gross profits will reach $331,000.
Year 2
• Through greater marketing efforts, revenue will reach $503,000.
• Gross profits will reach $371,000.
• Revenue will increase by 12%.
Years 3-5
• By the fifth year of operation, total revenue will reach $651,000.
• Gross profits will reach $480,000.
7.4 Marketing Strategies
Violet’s Bubble Tea will use a number of marketing strategies that will create a wide range of brand name awareness for the business. Most importantly, a significant portion of the Company’s marketing operations will occur prior to the full scale launch. This will include having the business; online presence established during the development.
As it relates to the exterior of the facilities, the locational feature a substantial amount of signage that showcases the premium bubble teas as well as other menu items available. The Company will coordinate these efforts with the business’ landlord. At this time, Matthew Deutsch is working with a qualified commercial real estate brokerage in order to find an appropriate location, which is expected to occur within the next three months.
As it relates to facilitating takeaway and delivery orders, the business will enroll among numerous platforms that allow for the placement of orders for pick up as well as for delivery. This will generate substantial revenues in the coming years, given the level of convenience that afforded to the Company’s patrons.
The business will also leverage multiple social media channels in order to promote the business from the on-site of operations as well as throughout the life of the business. New menu items will be frequently introduced through social media platforms. Additionally, live events will be frequently held at the facilities. Among all social media, pages, these events will be promoted in order to drive additional traffic.
The Company will also provide support for non-political organizations, civics, groups, and related associations and worship position, Violet’s Bubble Tea as a community minded enterprise.
8.0 Organizational Plan
8.1 Organizational Hierarchy
8.2 Personnel Costs
9.0 Financial Plan
9.1 Underlying Assumptions
• The business will have a compounded annual growth rate of 10%.
• Violet’s Bubble Tea will acquire $100,000 via an SBA loan (carrying a 10-year term and an 8% interest rate).
• Matthew Deutsch will contribute $25,000 toward the venture.
9.2 Financial Highlights
• Profitability will be achieved quickly given the substantial contribution margins of Violet’s Bubble Tea.
• Gross profits of 73% on all sales.
• The operations of the business are highly scalable through new location development and delivery operations.
9.3 Sensitivity Analysis
The revenues of the business are only modestly sensitive to negative changes in the economy. Given the substantial contribution margins generated from bubble tea sales as well as small food items – the business will be able to satisfy all underlying operating costs on a monthly basis including the SBA loan sought in this document.
9.4 Source of Funds
9.5 Financial Proformas
A) Profit and Loss Statement
B) Common Size Income Statement
C) Cash Flow Analysis
D) Balance Sheet
9.6 Breakeven Analysis
9.7 Business Ratios
Appendix A – SWOT Analysis
Strengths
• Modest competition in the greater Prince George’s County market area among businesses that operating a similar capacity.
• The business will only use the best ingredients within the course of its operations, which will provide a significant differentiating factor.
• Use of online delivery applications will drive substantial revenue.
• The operations of the business are highly scalable, and the company can establish additional Violet’s Bubble Tea branded locations relatively easily.
• Many new items can be entered into rotation with a relatively low cost.
Weaknesses
• Operational complexities given that this is a food and beverage service business.
• Competition can enter the market relatively easily.
Opportunities
• Development of additional locations within the greater Prince George’s County Politan area.
• Continued expansion of the online operating operations to the business.
• Continued development of new menu items which will foster repeat patronage.
• Potential implementation of a franchise program.
Threats
• The ongoing issues with inflation can cause the inventory input costs to increase.
Bubble Tea Shop Startup Questions
What are common trends in the bubble tea shop industry?
Most importantly, the use of delivery application suites has become an incredibly important part of the food service industry. Many bubble tea shops have integrated online ordering with major platforms such as Uber Eats in DoorDash so that bubble teas can be delivered directly to customers at their homes and offices. As bubble teas can easily be transported, this is an outstanding methodology for increasing sales.
Additionally, fully integrated point of sales systems has also become an extremely important part of the bubble tea shop in industry. Entrepreneurs in this field are able to have a fully integrated solution as a relates to managing their inventories, accounting, and understanding the efficacy of their marketing campaign through one software suite.
How important is it to have a bubble tea shop marketing plan?
Beyond ensuring that you are developing your bubble tea shop in an economically viable market, there is an immense need to have well defined marketing plan that ensures that customers are well aware of your location. Most importantly, most entrepreneurs in this industry will work with a commercial real estate brokerage in order to find an appropriate location for the business.
However, it is also imperative to maintain an expansive online presence so that when searches for bubble tea shops are conducted within the target market radius, the business can be quickly found among numerous search engines. A well-defined marketing plan specific for this type of business will focus heavily on leveraging both search engine optimization as well as social media marketing in order to develop an ongoing following. If the bubble tea shop entrepreneur intends to develop multiple locations, then it is absolutely vital that a wide-ranging audience is maintained among all social media platforms.
As it relates to local search engine optimization, these efforts can be coordinated quite easily with a regional firm that specializes in food service businesses. It typically takes three months to six months for the full benefits of this type of marketing to become effective for a bubble tea shop location. In the interim, specialized advertisements that are placed on social media platforms can be used in order to drive immediate interest in the business’ offerings.
One of the most important things when developing a marketing plan for bubble tea shop is a focus on the return on advertising expenditures. In order to understand which channels are producing the best results, there are numerous software suites that can assist an entrepreneur with understanding how traffic was driven to their location and what the return on investment was for each type of marketing or advertising expenditure.
Are bubble tea shops scalable enterprises?
Yes, absolutely. The cost of establishing a bubble tea shop is relatively low given that the primary expense is to build out of a location as well as a moderate amount of furniture, fixtures, and equipment. Unlike other food service businesses, the production of bubble tea is a relatively straightforward process. As such, the substantial contribution margins generated from these enterprises easily allows entrepreneurs to establish additional locations once their initial location has reached maximum capacity. Generally speaking, most entrepreneurs will keep subsequent locations within a 10-mile radius of their initial location.
What is one piece of advice that you would give to someone that is starting a bubble tea shop?
Most importantly, it would be recommended that the business immediately begin to establish its marketing operations during the development. This will allow individuals to have a deep understanding of the unique bubble teas and related fare that is being offered at the location. Furthermore, this will drive significant interest prior to the grand opening so that patrons are well aware of the location and its offerings during the development process. It will substantially reduce the need for having a large scale grand opening budget.
One of the other ways that these businesses can become successful is by providing a full week of free bubble tea to the general public in order to familiarize people with a location. For any food service businesses, offering a period of time where all inventories are offered either at no cost for a low cost is a fantastic way of establishing community trust as well as brand visibility.
How can an economic recession impact the demand for bubble tea?
This type of quick service restaurant enjoys relative economic stability given that the cost of bubble tea is a relatively low-cost item. For many foods for service businesses, especially businesses such as high-end restaurants, their revenues can face downward pressure during a very severe economic recession. As most bubble teas have a pricing point of three dollars to seven dollars, this typically remains affordable to the general public even during challenging economic climates. The substantial contribution margins that are generated from the sale of each bubble tea order are sufficient to cover the underlying operating cost of the business.
When establishing a bubble tea shop, what professionals should I retain to it to help?
Most importantly, is it imperative that you have a certified public accountant or enrolled agent work with you in order to establish your accounting systems as well setting up your point of sales systems. This will allow for a much more streamlined method of tabulating daily sales as well as underlying costs. Most point of sales systems also have integrated inventory management systems which can assist you adjusting your buying needs based on historical sales data.