Tea Shop Business Plan Template
If you want to start a tea shop or expand your current tea shop, you need a business plan.
The following Tea Shop business plan template gives you the key elements to include in a winning Tea Shop business plan.
Sample Tea Shop Business Plan Template
Below is a tea shop business plan example with each of the key sections to help you write a tea shop business plan for your own company.
I. Executive Summary
Business Overview
[Company Name] is a new tea shop located in the heart of [location]. We will offer a wide variety of delicious teas for our customers to enjoy. [Company Name] will provide many options to choose from, including a variety of black teas, green teas, herbal teas, white teas, and more. We also will have pastries and other delicious snacks on our menu and sell tea leaves and bags, so customers can brew it at home.
Products Served
[Company Name] will offer a wide range of teas so that every tea lover leaves our shop happy and satisfied. Though we plan to eventually have hundreds of options to choose from, a few options that will be on our initial menu include:
- Japanese green
- Oolong
- Chamomile
- Milk oolong
- Chai
- Early grey
- Darjeeling
- Sencha
- Matcha
There will also be select pastries and other snacks on the menu that customers can order with their drinks. Furthermore, customers who love our teas can buy select flavors, either loose-leaf in tins or in tea bags. We will sell these items on our website as well.
Customer Focus
[Company Name] will primarily serve the residents who live within a 2-mile radius of our tea shop and individuals who work within a half-mile radius. The demographics of these customers are as follows:
- 87,827 residents
- 4,750 commuters
- Average income of $64,700
- 42.9% married
- 54.6% in Management/Professional occupations
- Median age: 39 years
Management Team
[Company Name] is run by [Founder’s Name], who has been a tea aficionado for [X] years. She has worked in various coffee shops around town, where she has served thousands of customers various kinds of coffee and tea. However, [Founder’s Name] has always been a tea lover rather than a coffee lover. She noticed that [location] has very few tea shops even though there is a great demand for them. There is especially a lack of tea shops downtown, so she decided to open up her own tea shop that would rival the poor selections of tea found at local coffee shops.
Though she has never run a business of her own, she spent much of her time in coffee shops as a store manager and therefore understands the operations side (e.g., running day-to-day operations) and the business management side (e.g., staffing, marketing, etc.) of running a similar business.
Success Factors
[Company Name] is uniquely qualified to succeed due to the following reasons:
- There is very little competition as [location] has very few tea shops serving its large population. There are many coffee shops that serve tea, but their selection is limited and not of good quality.
- The shop location will be in a high-volume area and will thus be highly convenient to significant numbers of passersby each day.
- The tea shop business is a proven business and has succeeded in communities throughout the United States.
Financial Highlights
[Company Name] is currently seeking $420,000 to launch. Specifically, these funds will be used as follows:
- Store design/build: $250,000
- Equipment and initial inventory: $50,000
- Working capital: $120,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even
Top line projections over the next five years are as follows:
| Financial Summary | FY 1 | FY 2 | FY 3 | FY 4 | FY 5 |
|---|---|---|---|---|---|
| Revenue | $560,401 | $782,152 | $1,069,331 | $1,379,434 | $1,699,644 |
| Total Expenses | $328,233 | $391,429 | $552,149 | $696,577 | $776,687 |
| EBITDA | $232,168 | $390,722 | $517,182 | $682,858 | $922,956 |
| Depreciation | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 |
| EBIT | $225,168 | $383,722 | $510,182 | $675,858 | $915,956 |
| Interest | $6,016 | $5,264 | $4,512 | $3,760 | $3,008 |
| Pre Tax Income | $219,152 | $378,458 | $505,670 | $672,098 | $912,948 |
| Income Tax Expense | $76,703 | $132,460 | $176,985 | $235,234 | $319,532 |
| Net Income | $142,449 | $245,998 | $328,686 | $436,864 | $593,416 |
| Net Profit Margin | 25% | 31% | 31% | 32% | 35% |
II. Company Overview
Who is [Company Name]?
[Company Name] is a new tea shop located in the heart of [location]. We will offer a wide variety of delicious teas that cannot be found in nearby tea shops or cafes. [Company Name] will provide many options to choose from, including a variety of black teas, green teas, herbal teas, white teas, and more. These teas will be offered as options to drink in the shop or can be packaged up to be brewed at home. Customers will also be able to choose from a simple snack menu that will offer pastries, cookies, and other treats to pair with their tea.
[Company Name] was founded by [Founder’s Name], who is an avid tea lover. She has been highly disappointed in the current selection of tea found around [location] since moving here several years ago. The city primarily offers a variety of coffee shops, but very few tea shops exist. Furthermore, coffee shops only offer about half a dozen or so tea options, and the current best tea options can be found in the tea/coffee aisles in grocery stores.
From her time working in coffee shops, [Founder’s Name] knew many of her customers were also looking for high-quality tea but couldn’t find many options. That’s when she saw a unique demand that she could satisfy. About a year ago, she began researching all the aspects of running a tea shop and started building her initial inventory and menu.
[Company Name]’s History
After doing thorough research, [Founder’s Name] incorporated [Company Name] on [date of incorporation] as an S-Corporation. She has been primarily running the business online from her home but has found a potential retail location to turn into a tea shop. Once the lease is approved, all operations will run from there.
Since incorporation, the company has achieved the following milestones:
- Found a retail location and signed a Letter of Intent to lease it
- Developed the company’s name, logo, and website located at [website]
- Created the menu
- Determined equipment and initial inventory needed
- Began building relationships with tea suppliers and local pastry chefs
[Company Name]’s Products/Services
[Company Name] will offer a wide range of teas for customers to taste and enjoy. A few options that will be on the initial menu include:
- Japanese green
- Oolong
- Chamomile
- Milk oolong
- Chai
- Early grey
- Darjeeling
- Sencha
- Matcha
There will also be select pastries and other snacks on the menu that customers can order with their drinks, such as scones and croissants. Furthermore, customers who love our teas can buy select flavors wholesale, either loose-leaf in tins or in tea bags. We will sell these items on our website as well.
III. Industry Analysis
Tea has been in global demand for thousands of years. From green teas to black teas, ancient and modern cultures all have a demand for this versatile and healthy drink. Many modern coffee lovers mistakenly believe that nobody drinks tea anymore. However, this is far from the truth, as there is still a great demand for tea in both the United States and worldwide.
In fact, according to Statista, tea is the most widely consumed beverage worldwide (besides regular water), with about 159 million Americans drinking tea every day. So although many people may think that coffee is the dominant drink, tea still stands as king. And according to Allied Market Research, the global tea market is expected to grow at a compound annual growth rate of 6.6% over the next five years. This is a healthy rate of growth that shows that tea shops have a good chance of succeeding. Therefore, this is a perfect time to start and run a tea shop.
IV. Customer Analysis
Demographic Profile of Target Market
[Company Name] will serve the community residents of [location] and its surrounding areas as well as individuals who are employed within a half-mile radius of the shop.
The area residents and commuters we serve are affluent and hard-working. They will be eager to come to a tea shop with a relaxing atmosphere and healthy teas to hydrate them throughout their day. This will be a perfect location for anyone who loves tea but is unsatisfied with the select options offered by most coffee shops.
Customer Segmentation
We will primarily target the following three customer segments:
Tea lovers: Tea shops are in short supply in [location]. Many tea lovers are looking for a cozy tea shop to unwind and enjoy high-quality tea blends. We will market ourselves as a comfy location for tea lovers to unwind and discuss their favorite teas with friends and strangers.
Professionals: Local professionals are hard-working and carry a lot of stress. They’re looking for a relaxing shop where they can unwind and sip on a comforting drink while taking a break from the workload. Approximately 4,750 individuals are employed within a half-mile radius of the shop, making this a major customer segment during working hours.
Millennials: According to The Tea Association of the U.S.A. Inc., the generation that currently drinks the most tea is millennials. They are focused on health consciousness and consuming drinks that support their well-being, so tea is often high on their list.
Therefore, we will actively target this generation by promoting the health benefits of our tea and offering an enticing atmosphere.
V. Competitive Analysis
Direct & Indirect Competitors
The following coffee/tea shops are located within a 2-mile radius of [Company Name], thus providing either direct or indirect competition for customers:
Tea Haven
Established in 1995, Tea Haven is a small bit of heaven for those needing a break from all the hustle and bustle of downtown life. It offers a nice selection of black teas, green teas, and white teas, as well as a cozy and calm atmosphere. For decades, residents have frequented this tea shop to get away from the craziness of modern-day life and enjoy all the benefits that tea can provide.
Though we expect Tea Haven to continue to thrive, its menu is far more limited than the menu we are currently developing. They focus primarily on black teas, white teas, and green teas, with no oolong, herbal, or other options. [Company Name] will offer a much greater variety so that all kinds of tea lovers can enjoy our tea shop. Tea Haven is also located on the outskirts of downtown, which is not as convenient as our proposed location.
Oaktown’s Organic Café
Oaktown’s Organic Café has been a powerhouse of coffee and tea for decades. This local café offers the works, from every kind of coffee you can imagine to a decent selection of teas. The café has been keeping its customers happy for decades with a long list of customizable drinks, fair prices, and an atmosphere that makes every visitor feel like one of the locals.
While Oaktown Organic Café will continue to thrive, the company’s tea selection is only slightly better than major chain competitors. They don’t offer any loose-leaf selections, and they only keep about twenty varieties. It is better than most coffee shops but still won’t be able to compete with [Company Name].
Starbucks
Starbucks has cafes in multiple locations throughout downtown [location]. Starbucks has been popular nationwide for decades but is also a victim of a backlash. Currently, its prices, low-quality offerings, and lack of respect for its employees have made many turns away from this coffee giant. Furthermore, it has never been a major player in the tea industry, only offering a select few options that are passable at best.
We expect that Starbucks will continue to thrive based on its location, convenience, and recognizability. However, we expect that more and more customers will frequent [Company Name] based on the high-quality ingredients we use for our teas, product selection, and the fact that we are independently owned and operated.
Competitive Advantage
[Company Name] enjoys several advantages over its competitors. These advantages include:
- Location: [Company Name] will be located in a high-traffic area that is easy for residents and professionals to access. The location is in the heart of downtown and is easily accessible by foot or car. Thousands of residents and commuters pass through the area every day, so many will notice our cozy new tea shop.
- Pricing: Local coffee shops price their tea quite high but offer little quality. Our prices will be more moderate, but our tea will be perfectly handled and curated to ensure the best quality possible.
- Variety: Since most of our local competitors focus on coffee, they typically only have a handful of tea flavors to choose from. We will offer dozens of options, which may grow into the hundreds as the tea shop becomes more popular.
VI. Marketing Plan
[Company Name] seeks to position itself as a high-quality, friendly, and convenient tea shop in the heart of [location]. Clients can expect to receive the highest quality tea from skilled professionals who use the best available ingredients to make the perfect drinks.
The [Company Name] Brand
The [Company Name] brand will focus on the company’s unique value proposition:
- Offering high-quality teas to drink or buy wholesale
- Offering a convenient location that offers both eat-in and take-out options
- Creating a cozy and calm atmosphere so our customers can unwind
- Providing excellent customer service
Promotions Strategy
[Company Name] expects its target market to be residents living within a 2-mile radius and workers within a half-mile radius of its location. [Company Name]’s promotion strategy to reach these potential customers includes:
Website/SEO
[Company Name] will develop a professional website that displays all the tea products we offer. It will also invest in SEO so that the company’s website will appear at the top of search engine results. [Company Name] will maintain a website and publish frequent newsletters and blogs to educate our customers on promotions, tea-making tips, and new products.
Social Media
[Founder’s Name] will create the company’s social media accounts and invest in ads on all social media platforms. The company will use targeted marketing to appeal to our target demographics.
Advertising
[Company Name] will initially advertise in local newspapers and sponsor community events in order to gain awareness.
Sampling
[Company Name] employees will initially give free tea samples to passersby to allow them to taste the quality of our products and learn about us.
Pre-Opening Events
Before opening the shop, [Company Name] will organize pre-opening events designed for prospective customers, local merchants, and press contacts. These events will create buzz and awareness for [Company Name] in the area.
Direct Mail
[Company Name] will blanket neighborhoods surrounding its locations with direct mail pieces. These pieces will provide general information on [Company Name], offer discounts, and/or provide other inducements for people to frequent the tea shop.
Customer Loyalty Programs
[Company Name] will create a winning customer loyalty program to keep its best clients coming back again and again. The program will include discounts, deals, and promotions that non-loyalty customers will not have access to.
Pricing Strategy
[Company Name] pricing will be moderate, so customers feel they receive great value when patronizing the tea shop. We aim to be slightly cheaper than the nearby expensive coffee and tea shops but still remain competitive.
VII. Operations Plan
Functional Roles
In order to execute [Company Name]’s business model, the company needs to perform many functions, including the following:
Administrative Functions
- Bookkeeping
- Marketing
- Website maintenance
- Hiring and training staff
- Sourcing and storing products and ingredients
Service And Retail Functions
- Customer service
- Tea and drink preparation
- Web order fulfillment
- Maintenance functions
Milestones
The following are a series of steps that lead to our vision of long-term success. [Company Name] expects to achieve the following milestones in the following [xyz] months:
| Date | Milestone |
|---|---|
| [Date 1] | Finalize lease agreement |
| [Date 2] | Design and build out [Company Name] |
| [Date 3] | Hire and train initial staff |
| [Date 4] | Kickoff of promotional campaign |
| [Date 5] | Launch [Company Name] |
| [Date 6] | Reach break-even |
VIII. Management Team
Management Team Members
[Company Name] is run by [Founder’s Name], who has been a tea aficionado for [X] years. She has worked in various coffee shops around town, where she has served thousands of customers various kinds of coffee and tea. However, [Founder’s Name] has always been a tea lover rather than a coffee lover. She noticed that [location] has very few tea shops even though there is a great demand for them. Therefore, she decided to open up her own tea shop that would rival the poor selections of tea found at local coffee shops.
[Founder’s Name] will serve as the Store Manager but will hire an Assistant Manager to run the shop while she isn’t available.
Hiring Plan
[Founder] will serve as the Store Manager. In order to launch the tea shop, we need to hire the following personnel:
- Tea House Team Members (4 to start)
- Assistant Manager (1 to start)
- Administrative Staff (1 to start)
IX. Financial Plan
Revenue and Cost Drivers
[Company Name]’s revenues will come from the sale of tea drinks, food, and loose-leaf and bagged teas to its customers. Drinks and food items will be ordered in the store, but loose-leaf and bagged teas and accessories can be purchased online, which widens our customer base.
The major costs for the company will be food and drink supply costs, salaries of the staff, and rent for a small but prime location. In the initial years, the company’s marketing spending will be high as it establishes itself in the market.
Capital Requirements and Use of Funds
[Company Name] is currently seeking $420,000 to launch. The capital will be used for funding capital expenditures, labor, marketing expenses, and working capital.
Specifically, these funds will be used as follows:
- Store design/build: $250,000
- Equipment and initial inventory: $50,000
- Working capital: $120,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even
Key Assumptions
The following table reflects the key revenue and cost assumptions made in the financial model:
| Number of customers per day | Per location |
|---|---|
| FY 1 | 100 |
| FY 2 | 150 |
| FY 3 | 180 |
| FY 4 | 220 |
| FY 5 | 300 |
5 Year Annual Income Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
| Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
| Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
| Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
| Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
| Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
| Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
| Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
| EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
| EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
| Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
| PRE-TAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
| Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
| Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
| NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
| Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
5 Year Annual Balance Sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
| Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
| Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
| Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
| Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
| TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
| Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
| Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
5 Year Annual Cash Flow Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
| Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
| Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
| CASH FLOW FROM INVESTMENTS | |||||
| Investment | ($246,450) | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 |
| Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| SUMMARY | |||||
| Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
| Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
| Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
