Starting Your Own Mobile Tea Business, Part 2: Pre-flight

In our last post, we talked about some of the advantages and disadvantages of owning and operating a mobile tea/coffee business. Today we’ll go over some of the things you’ll need to take care of before you get going.

How Mobile Do You Want to Be?

Even within the label “mobile,” there is a lot of room for interpretation. A “mobile home,” for example, isn’t as easy to move as an RV. So the first thing you need to decide is what type of unit you’d like to operate from. For example:

  1. Pushcart The most mobile of set-ups would probably be a food cart, one that is small enough to be pushed and maneuvered by a single person. It can operate out of just about anywhere, but your offerings will have to be limited by necessity. Weather is a consideration, as well.
  2. Booth Another option would be an easily assembled tent, stall, or gazebo that you could operate at a local street fair or flea market. This can allow you more shelter from the elements, more counter space, and a wider variety of products. On the flip side, setting up will take longer, and you may have to lug your stuff from a vehicle to your station.
  3. Trailer Having your business in a towable trailer opens up a lot of options in terms of storage space and room to operate. Depending on the size of the trailer, you can stock a wide variety of teas and coffees and perhaps even some food items. You can even have head and air conditioning. The downside is that you’ll need a truck to pull it … and you’ll need to learn how to drive with a trailer (including backing it into spaces). Depending on your location and the type/weight of the trailer, you may even need a special license.
  4. Truck A drivable vehicle seems to offer the best of all worlds: comfort, space, ease of set-up, and more. Set out some folding chairs and small tables, and you’ve got an open-air café. Quitting time? Throw everything in the back and drive home. It’s perfect … but perfection will cost you: purchasing even a used vehicle is your most expensive option, as far as startup costs.

Legal and Protected

So you have your operating unit. Now all you need is the actual product, and you’re in business, right?

Well, not quite. There are a few other things you’ll need to acquire before you actually start serving.

  1. License When you provide food for others there are rules to follow, and one of the first is getting a license to operate. Every state, every county, every town–each will probably share at least some of the same licensing requirements, but specifics can differ based on any number of variables. You’ll need to register your company. (Hint: if you’re the sole owner you’ll pay less in registration fees by setting up a sole proprietorship instead of an LLC.) And as we mentioned, every location could be different, so you might need to apply for local business licenses, as well.
  1. Insurance Don’t even THINK about trying to get by without insurance. In many places, it’s illegal, but in any situation it may be your most important expense. First off, you’ll need liability insurance. Our society has gone lawsuit-crazy, so be sure that you (and any employees) are covered if someone gets injured in your space. With the right liability insurance policies in place, you’ll be covered for the costs of damage correction, medical fees for injuries, legal representation, and other related expenses. Beyond that, you’ll need to insure your unit or vehicle–plus all the equipment–against loss, theft, or accidental damage, including acts of God. This is typically straight-forward, but there are some policies specifically designed to insure caterers. 
  1. Other stuff You’ll need a separate bank account, of course, and a separate credit card that you use just for the business is a good idea. If you’re going to take credit cards and/or mobile payments, you’ll need to set up with a processor–your bank can probably help there, as well.

It’s a hassle and an expense, but trying to skip the necessary paperwork will cause way more trouble than it’s worth. Short cuts in this area could put you out of business–and worst case scenarios, land you in serious legal trouble.

In part 3, we’ll start looking at the equipment you’ll need.

Starting Your Own Mobile Tea Business, Part 1: Why Not?

Selling tea. It sounds like a wonderful idea: would could be better than making a living doing what you love? But opening a tea room is a risky business venture, with a lot of upfront costs. OK, fine … so what about just selling tea online, right from your own kitchen? It could work, but … well, face it: working from home has its perks, but it’s a pretty lonely existence. For most of us, much of the appeal of opening a tea room is being able to share with other tea lovers.

If you were thinking of opening a tea or coffee shop but are scared by the commitment and the set up costs, here’s an alternative idea: why not open a mobile tea room? A mobile coffee/tea business sells the same types of products sold by storefront shops; the big difference is, you’re working from a vehicle fitted with equipment for brewing and steeping. You’ll be able to mingle with your customers, like you would in a static tea room, but you’ll have a fraction of the investment.

In the first post of this multiple-part series, we’ll be looking at the advantages–and disadvantages–of operating your own mobile tea room business.

Advantages

As we’ve already mentioned, one of the main advantages of going mobile is the low start-up costs. You can go into the mobile coffee/tea business with very little upfront. There are plug-and-play packages that can be had for as little as $10,000, or franchises that include monthly support payments. Other advantage include:

  1. High Profits – The tea and coffee business is growing. Specialty stores like Starbucks have conditioned customers to demand higher quality products, and teas can offer gross profit margins over 75%. Having a mobile shop means you control the location, and that location can change based on conditions.
  2. Non-seasonal Products – Some products–Halloween supplies, or plant nurseries, for example–are very seasonal; the demand for coffee and tea goes year-round. If you operate in an area with dramatic season changes, you may need to change your offerings from time to time, but the market will still be there.
  3. Flexibility – Many people choose to run a mobile business, because it can fit around their lifestyle. You can have a daily route or a specific location on days of the week, or only open at flea markets, concerts, or other events. The minimal investment makes it easier to operate part time, if that’s what you need.

Disadvantages

The big disadvantage here is that this is not a new idea. While more people are willing to spend more money on tea or coffee, there’s also a good deal of competition for that business. Your product will either have to be competitively priced, of a higher quality, or operate in an under-served location. Even at exclusive events, you could see issues: you may have the sole coffee concession at a show, but that doesn’t stop the burger van next to you from selling instant coffee or generic teabags at half your price. A few other disadvantages:

  1. Skill Level – It takes skill to make a consistently good cup of coffee or brew an excellent tea. And if you’re running the concession, YOU are the barista. You’ll need to do a lot of research and get in a lot of practice before you open. Your level of skill and understanding of your products are key to ensuring that your business is successful.
  2. Limited Sales Times – Even in our coffee-crazy world, the vast majority of coffee and tea sales take place in the mornings. Sure, there’s a growing acceptance of “afternoon tea,” but there is still an element of formality to those occasions–something not easily supplied by a mobile unit. This means to be profitable, you’ll need to start early and keep regular morning house so your customers can get their morning fix on their way into work or shortly thereafter.
  3. Many Hats to Wear – Not only will you need to be a top-notch barista, you’ll also be the driver AND the sales rep AND the buyer AND the bookkeeper … you get the idea. That means you’re in charge of acquiring licenses, purchasing supplies, and doing all the financial work, from applying for loans to dealing with customer chargebacks. It’s a lot to consider.

Owning and running a mobile tea shop business can be great, but it can also be very difficult. Our job here is to make sure you don’t go into it blind. In our next post, we’ll take a look at the various components you’ll need to get started.