Buying a Boba Shop - What Am I Missing?

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Speaking as someone experienced in boba shops, don’t buy it. The current boba trend is changing, because a lot of Chinese franchises are entering the US market. Competition is getting tougher and the market is over saturated. There’s a reason the owner wants out, figure out what that is before buying. 20k a month would give you margins of 40%. That’s very high margins. Don’t both with the pnl and tax forms, those numbers can all be fudged. 1. Ask to see their monthly credit card processing statements. 2. Ask to see their supplier list and supply cost and inventory statements. 3. Ask to see their monthly payroll info. 4. And sit down in the store for a week from open to close and tally every drink and order made and use that to estimate the ratio of cc and cash payments and use that to estimate the average revenue.

Current boba shop owner. We’ve been in business over 3 years now. I’m trying to sell mine. Don’t do it. Walking away from semi-passive $20k/month is suspect. Market is saturated and it’s becoming increasingly expensive to operate given most boba supplies are imported and subjected to higher tariffs, which reduce your margin. Plus, the 3% annual increase on a lease with 9 years remaining. Idk your financial situation but if you have $250k to invest and an itch to get into the boba or cafe business, I’d suggest starting smaller with popups or food truck/cart. It’ll allow you to be more agile and minimize your startup costs.

Two rules of life to consider when considering this transaction. 1. If it's too good to be true, then it is. 2. Don't do business with family and friends. Last, but not least, if I had a business that was generating a nearly 50% profit on gross revenue and I didn't have to lift a finger I wouldn't sell it for the life of me; makes me wonder why this individual is.

I don’t know much about running boba/coffee shops, but I’m a chef whose is pretty familiar with the foodservice world. 40% margins (relying on someone else’s math here) sounds SHOCKINGLY high to me. Maybe it’s more common in a field like Boba, but I would have killed for any of the places I ever managed to get anywhere close to that. But the bigger thing that I feel I can speak better about is the staffing- you are correct, no income is passive, and foodservice is the least passive out there. It may be fully staffed now, but what about when the workers have to go back to school? Or, sadly in today’s environment, when some of them don’t come to work because they are suddenly unable to or feel afraid to at risk of deportation? (It’s a real thing that restaurants are dealing with right now, and even if it’s not your labor market, it will heavily affect your labor market) What happens when your manager, who is good and loyal, but not an owner and not owner level, wants a significant raise or they walk? Are you able to do their job? Do you know what their job is? Could you hire and train someone who could replace them? Because if the manager leaves and you don’t know what you are doing or how to do their job, then you have just started the hardest thing to get out of- a slow slide downhill. (You don’t need to be as good as the manager is- you do need to be able to do the job and organize what is done so that you can train people on it, and in an ideal world, be better at it than you are) All this to say that I would not expect this to be anywhere near a passive income. I am a good chef and a pretty damn good manager of restaurants, but even with me I don’t think I ever went 1-2 months without a period of regularly seeing the owners multiple times a week. Part of that is that the owners I’ve worked for have largely been chefs and they like being in the restaurants, but part of it is that, especially at a small business scale, the owners just have to be involved.

Numbers are too good to be true especially for a semi passive owner Boba is overplayed