What Is The Cost Of Franchising A Bubble Tea Outlet In Singapore?
 
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What Is The Cost Of Franchising A Bubble Tea Outlet In Singapore?

Ming Feng
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Bubble Tea Addiction

It’s been a week ever since my return from Taiwan, and I am already feeling the withdrawal of my mild sugar addiction from Bubble Tea.

Withdrawal

Me right now, shivering while trying to focus.

Talking about addiction, as someone who is not really into sugar and sweet stuff, that bubble tea hype still manages to creep in on me.

Forget world domination, new wars will be fought over sugar.

Sugar addiction
Source: giphy

Oh, wait! It is already happening…

Just Tampines alone, we have 14 bubble tea brands battling out for market share. Depending on the severity of Singaporeans addiction to bubble tea, these brands may be able to co-exist and serve the increasing demand. As a Personal Finance website, we strongly suggest you kick the addiction to save your wallet.

Quitting that bubble tea habit can help you save

If not, one can either continue to spoilt for choice by the number of bubble tea brands or jump on this business opportunity to make some money.


How Much Does A Bubble Tea Franchise Cost In Singapore?

Cost of a bubble tea franchise in Singapore

Costs InvolvedHow Much?Depends On
Initial Franchise Fee$30,000 - $255,117Depending on Brand/ type of franchise rights. Is it for an outlet or for an area?
Equipment and Furniture$44,000Brands, how big is your outlet
Space Rental$3,500 - $14,500 per monthLocation and size of property
Cost Of Ingredient$10,000 per monthDemand of your bubble tea
Types of bubble tea you sell
Monthly Franchise Fee
(Profit Sharing)
A percentage of sales every monthSome bubble tea franchises adopt such model
Marketing And Advertising Fee
Staff Salary$5,000 - $8,000 per monthDepending on the number of staff you hire

Your dream of setting up a bubble tea outlet can range from a minimum of $80,000 to more than $461,896 per outlet.

With that, I think I will stick to my dream of franchising a 7-11 or Singapore Pools.


Initial Investment Required When Franchising A Bubble Tea Outlet

Each brand of bubble tea comes with different franchising and set-up cost. On top of that, some of the brands come with various franchising conditions to be met as a distributor of the brand.

We managed to find out some of these numbers for some of Singaporean’s favourite bubble tea.

Gong Cha Singapore
Source: AsiaOne.com

Franchising Cost Of Gong Cha In Singapore

The only available franchise cost online is with regards to Gong Cha’s franchise in the USA. Assuming that the price is the same worldwide, we look at how much it costs to franchise Gong Cha in Singapore.

FeesHow Much it Costs?
Initial Franchise FeeSingle Franchise Fee: S$54,398 for one outlet

(S$255,117 for the rights to an area)
Estimated Initial InvestmentS$244,347 to S$461,896 per unit
Agreement Duration10 Years
Franchise Fee4.5% of sales every month
Marketing and Advertising Fee1% of Sales for National
1% of Sales for Local

Franchising Gong Cha in Singapore can cost you S$244,347 to S$461,896 per Gong Cha outlet.

If you are keen to franchise Gong Cha in Singapore, we have bad news for you. Gong Cha Singapore now belongs to master franchisee, Mr Kang Puay Seng, who founded Mr Bean.

Franchising Cost Of A Bubble Tea Outlet At Orchard

While we were researching, we chanced upon a business for sale listing which has an asking price of $150,000 for a bubble tea outlet at Orchard.

Here’s a breakdown of the costs:

FeesHow Much It Costs?
Rental Deposit$66,000
Franchise Fee$30,000
Cost of Stock$10,000
Equipment and Furniture$44,000
TOTAL$150,000

On a brighter note, it promises a monthly revenue of $40,000 and a net profit of $5,000.

How Much To Set Up A Bubble Tea Outlet

A discussion forum worked out the price to be at least $80,000.

Here’s the breakdown of the cost:

ExpensesHow Much Does It Cost?
Franchising Fee$30,000
Ingredients$10,000
Machines$10,000 - $15,000
Promotional Materials$5,000
Staff Salary$5,000 - $8,000 per month
Rental Of Shop Space$10,000 per month

Factors Affecting The Cost Of Franchising A Bubble Tea Outlet

Initial Franchise Fee

Initial franchise fee can be broken down into two main types.

The Single Franchise Fee applies for someone looking to only franchise one outlet.

The Franchise Rights to an area for someone looking to own the full distribution rights to a country or city.

Recurring Franchise Fee

For some franchises, they look to incur recurring revenue by having a monthly franchise fee that is pegged to a percentage monthly sales of the outlet.

Marketing And Advertising Fee

Marketing and advertising efforts are placed behind the brands to drive awareness and making sure that their franchisees make money.

This is also the reason why bigger brands such as Mcdonalds and Gong Cha usually have a coordinated marketing campaign that affects all the outlets, islandwide.

Space Rental

The cost of renting a space is going to be a big bulk of your recurring expenses. This is especially so in Singapore due to land scarcity, and also the biggest deterrence to Singaporeans entrepreneur spirit.

Depending on the location and the size of the space is, this cost adjusts accordingly. A bubble tea outlet will need a minimum of about 700 square feet which can cost as low as $3,500 per month in Toa Payoh, to $14,500 per month at Marina Bay Link Mall.

Cost Of Equipment

The process of making bubble tea requires certain pieces of equipment. These are usually included in the cost of setting up a bubble tea outlet.

Renovation and Furniture

The reason why every outlet of Gong Cha, LiHo, etc. look alike is due to the franchise standardising the look of all their outlets. All this comes with a price.

Ingredient Costs

While the franchise helps you out by linking you up with their official suppliers for the ingredient, the cost of the ingredients are totally on you!

Staff Salary

Do not expect your business to breakeven within the first few months. The salary of the staff until your business becomes profitable is totally on you!


Why Franchise?

Before one even kicks off their entrepreneurship journey, it is important to ask a few questions before deciding if they should franchise a business or create one from scratch.

Here are the questions:

  • Do you know the best location for your business?
  • How much will your rental cost?
  • Do you have connections or contacts to the best vendors to get the equipment from?
  • Do you have connections or contacts to the best vendors to get the ingredients from?
  • How much should you pay for products, supplies, advertising, etc.
  • When it comes to hiring, what is the best type of employee for your business?
  • Do you have the necessary skills and experience to impart to the employee, for them to be successful for the business?
  • What legal issues that come with this business?
  • Types of insurance and coverage required
  • Do you know how to market your product?
  • What type of logo and branding will you create?
  • Have you researched the market enough to formulate a good price to charge your consumers?
  • Do you have the necessary skills to market your product?
  • How much capital do you need before you break even?

Should you be able to have a good answer and solution to all the questions, you are ready to set up your own brand. If not, franchising will be an alternative.

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About Ming Feng
A stint in Bloomberg gifted me with a beer belly, which only grew larger when I moved on to become a Professional Trader. Now I turn caffeine into digestible finance-related content.
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