Thinking of Buying a Tea Shop in Australia? Here Are 3 Vital Questions to Ask

The Australian bubble tea and specialty tea shop industry generated $481 million in revenue in 2025, with profit margins averaging 7.2%. The sector employs about 1,536 people across 302 enterprises and 769 establishments.

Revenue grew at 0.5% annually over the past five years, supported by multicultural influences, premiumisation, and younger demographics seeking healthier non-alcoholic beverages. Industry revenue is projected to increase by 1.9% annually through 2030, reaching $528.3 million. Growth will be fuelled by rising discretionary incomes, migration-driven demand, and healthier product innovation, though competition from coffee, juice, and soft drinks remains strong.

1. Is the Business Financially Resilient in a Competitive Market?

Why It Matters

Tea shops operate in a discretionary spending category, making them sensitive to shifts in consumer confidence. Profitability depends on managing purchase costs such as milk and tea leaves, which have been volatile. Strong branding and economies of scale allow leading chains like Gong Cha, Chatime, and Sharetea to capture larger market shares.

What to Check

• Profitability – Benchmark against the industry average margin of 7.2%.
  
  

• Revenue sources – Review reliance on premium-priced teas versus value-oriented offerings.
  
  

• Cost pressures – Assess exposure to milk and ingredient price volatility.
  
  

• Cash flow resilience – Consider how the business manages downturns in discretionary spending.
  
  

2. Does the Shop Have Strong Market Positioning and Customer Appeal?

Why It Matters

Demand for tea shops is strongest among younger demographics, particularly Gen Z and millennials, who are substituting alcohol for healthier alternatives. Shops located in high-footfall areas like CBDs, shopping centres, and near universities achieve higher sales. Reputation, loyalty programs, and differentiated menu offerings drive repeat business.

What to Check

• Target demographics – Review reliance on younger customers and multicultural communities.
  
  

• Location strength – Confirm positioning in CBDs, retail hubs, or high-traffic suburbs.
  
  

• Reputation – Assess online reviews, social media presence, and customer loyalty programs.
  
  

• Product range – Evaluate whether offerings include healthier teas, dairy-free options, and seasonal innovations.
  
  

3. Is the Business Aligned with Industry Trends and Innovation?

Why It Matters

The industry is evolving rapidly, with consumer demand shifting toward healthier, customisable, and visually appealing drinks. Businesses that embrace sustainability, online ordering, and digital engagement are better positioned for long-term growth.

What to Check

• Menu innovation – Confirm range includes fruit teas, matcha, herbal infusions, and low-sugar options.
  
  

• Technology adoption – Review use of mobile apps, online ordering, and digital loyalty systems.
  
  

• Sustainability practices – Assess packaging choices and use of eco-friendly ingredients.
  
  

• Competitive readiness – Consider ability to differentiate against substitutes like coffee and juice bars.
  
  

Ready to Invest in a Thriving Tea Shop?

With growing demand from younger demographics, cultural diversity, and a shift toward healthier non-alcoholic beverages, tea shops represent a strong opportunity in Australia’s food and beverage sector.

Success will depend on financial management, market positioning, and alignment with consumer and industry trends.

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