I live in a town of ~35,000 and there's plenty of bad coffee but no tea. Anyone know the margins around this business type? Common pitfalls? Expected initial investment vs breakeven timeline? Im thinking 20 seat tea room, lite baked goods. Focus on hot tea in the winter, cold tea in the summer months. Also likely selling the loose leaf tea and a few pieces of accompanying tea merch.
Posted by furryfriend77
3 Comments
The coffee places don’t also sell tea?
The coffee places don’t also sell tea?
You’re onto something here. A dedicated tea house can absolutely work if you nail the atmosphere and community side of it.
Tea margins are great, most loose-leaf teas have a 300 to 500 percent markup. The challenge isn’t the product cost, it’s foot traffic and customer education. People don’t crave tea the same way they crave caffeine jolts, so you’ll need to create a reason to come in, like a cozy vibe, social space, maybe board games, book swaps, or local art.
Startup costs vary, but a small 20-seat tea room with basic equipment and decor could run anywhere from 80k to 150k depending on your lease, renovation needs, and local permits. Breakeven is usually 12 to 24 months if you run lean and have consistent customers.
The biggest pitfalls are underestimating how long it takes to build loyal regulars and not offering enough variety or events to keep people coming back. A tea house succeeds when it feels like the spot, not just a drink shop.
If you can make it feel warm, consistent, and local, you’ll do better than any chain trying to sell 6 dollar lattes.