Bubble tea has become a fashionable drink among the youth

A market analysis report showed that the price of property on some streets in HCM City had soared by 25-71 percent compared with last year. This was attributed to the boom of the bubble tea franchise model. 

Bubble tea first appeared in Vietnam in 2000s, but the boom has occurred only in the last four years. According to Euromonitor, Vietnam’s bubble tea market is growing by 20 percent per annum and was valued at $300 million two years ago.

Meanwhile, a survey by Lozi conducted in mid-2017 showed that there were 1,500 bubble tea shops. More than 53 percent of people said they had bubble tea at least once a week.

Operating bubble tea shops under a franchise contract is the quickest way to join the market. Market analysis firms said that more than half of the shops were built under this mode.

Besides initial investments in retail premises, shop setup and business equipment, franchised shops have to spend money on three other items – franchise fees, brand management and materials that franchised shops must buy from franchisers.

Franchise fees are valid for varying time periods. For instance, franchisees pay $20,000 for each shop bearing Ding Tea brand, while TocoToco sets the fee of between VND160 million and VND300 million for three years. KoiCha requires VND1 billion for every shop for five years.

While franchise fees are a fixed amount spent once for a certain period, the brand management fee is flexible. The figures will vary depending on the business results, about 3-10 percent of revenue of shops within one month. 

Some brands set fixed amounts of $100-300.

In general, using materials from franchisers is a must for franchised shops to ensure  equal quality among franchised shops. Ding Tea franchised shops, for example, have  to pay $20,000-30,000 on materials for three months, while TocoToco shops VND200 million for the first material order.

As such, the total investment for a franchised bubble tea shop, which includes the staff training cost, retail premises, supervision fees and provisioning, is not lower than several billions of dong.

With a big investment, the profits bubble tea shops can expect are very satisfactory. The business field is reportedly bringing a profit margin of 20-30 percent of sales in stable business conditions.

1US$ = VND23,500

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