The Coffee Bean & Tea Franchise in 2024: Costs, Fee & FDD
Explore the potential of owning a Coffee Bean & Tea Leaf® franchise, with details on costs, fees, and the support system that drives its success. Learn what it takes to join this global coffee leader.
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The Coffee Bean & Tea Leaf® was founded in 1963 by Herbert Hyman, initially starting as a coffee service for offices in Southern California. Three years later, Hyman opened the first retail store, introducing his neighborhood to a new world of coffee flavors. Over the next decade, the company expanded to 10 cafes and began adding exotic teas to its menu, offering a broader range of beverages. In 1987, The Coffee Bean & Tea Leaf® made history with the creation of its signature ICE BLENDED® drink, which quickly became a defining product of the brand. This innovation, along with a commitment to quality, solidified the company’s position in the coffee industry.
The brand specializes in premium coffee and tea offerings, with its core product being the ICE BLENDED® drink. Additionally, it provides hot coffee and espresso drinks, a variety of teas, and seasonal beverages. The company also offers baked goods, snacks, and retail products such as packaged coffee beans, tea leaves, and brewing equipment. The Coffee Bean & Tea Leaf® targets a wide customer base, from daily commuters and professionals looking for a quick caffeine fix to those seeking a relaxed environment to enjoy their drinks. The brand’s appeal spans across coffee and tea enthusiasts of all ages.
With more than 1,100 cafes in operation, The Coffee Bean & Tea Leaf® has become a global brand. It first expanded internationally in 1996, opening locations in Singapore and Malaysia, and now operates in several countries around the world. The company’s expansion has been driven through both corporate and franchise operations, with a large portion of its growth coming from franchising. Its global presence has helped the brand attract millions of daily customers, solidifying its place as a leader in the coffee and tea sector.
The Coffee Bean & Tea Leaf® provides its franchisees with robust support, including extensive training programs covering everything from beverage preparation to operations management and customer service. Franchisees also receive assistance with site selection and marketing. Additionally, the company emphasizes its commitment to sustainability and community involvement through initiatives like the Caring Cup® Global Charity Program, which aims to give back to local communities. The brand’s forward-thinking approach is showcased in the opening of HomeGrounds in Singapore, an Innovation Experience Centre that fosters creativity and new beverage concepts for the brand’s future.
The Coffee Bean & Tea Leaf Franchise Insights
- The Coffee Bean & Tea Leaf® has over 1,100 cafés globally, including locations in the U.S., the Middle East, Asia, and the Philippines, showcasing its strong international presence and growing customer base.
- In 1987, the brand revolutionized the coffee industry with its creation of the ICE BLENDED® drink, a product that continues to drive sales and is a signature offering at every location.
- The Coffee Bean & Tea Leaf®’s commitment to sustainability and community is evident through the Caring Cup® Global Charity Program, which supports educational and community development initiatives.
- The company’s HomeGrounds Innovation Experience Centre in Singapore underscores its forward-thinking approach to coffee culture, creating a space for developing new beverages and keeping the brand ahead of industry trends.
The Coffee Bean & Tea Leaf Franchise Key indicators
Growth YOY (%)
0%
vs industry 1%
Total U.S. Franchised Units
26
3-Year Failure Rate
22%
vs industry 10%
Sales-to-Investment ratio
0.7:1
How much does it cost to open a The Coffee Bean & Tea Leaf franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a The Coffee Bean & Tea Leaf franchise. These financial commitments, including initial franchise fees, equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.
Min & Max Investment
Opening a The Coffee Bean & Tea Leaf franchise involves several key costs, which are outlined in Item 7 of the Franchise Disclosure Document (FDD). you can see a breakdown of the costs to open a The Coffee Bean & Tea Leaf below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Initial Franchise Fee | $12,500 | $25,000 |
| Lease for Store | $2,500 | $13,000 |
| Design & Plans | $42,000 | $55,000 |
| Leasehold Improvements | $317,165 | $588,694 |
| Signage | $85,000 | $94,780 |
| Furniture, Fixtures, and Equipment | $350,000 | $353,703 |
| Point of Sale (POS) System | $30,000 | $30,000 |
| Initial Inventory | $8,000 | $32,000 |
| Grand Opening Promotion | $10,000 | $10,000 |
| Permits and Security Deposits | $4,500 | $25,000 |
| Insurance | $2,000 | $10,000 |
| Professional Fees | $5,000 | $78,000 |
| Training Expenses | $12,000 | $40,000 |
| Additional Funds – three month period | $60,000 | $75,000 |
| Total Estimated Initial Investment | $940,665 | $1,430,177 |
Item 7 in the Franchise Disclosure Document (FDD) is the “Estimated Initial Investment” section. It outlines the total costs a franchisee can expect to incur when starting a franchise, including the initial franchise fee, equipment, inventory, real estate, and other startup expenses. This section is crucial because it provides potential franchisees with a detailed understanding of the financial commitment required, helping them assess affordability and plan their investment strategy effectively.
Required Capital
When considering the investment for a franchise like The Coffee Bean & Tea Leaf®, it’s essential to understand the overall capital requirements, including liquid assets and net worth. Below are the key financial requirements typically associated with opening a franchise in the coffee and tea industry:
- Initial Investment For a traditional location, the total investment required to open a franchise like The Coffee Bean & Tea Leaf® generally ranges from $941,000 to $1,430,000. This figure includes costs for construction, equipment, inventory, signage, and initial working capital. Assuming that you will finance your franchise investment, you should plan to have 20% of the total investment amount in the form of equity (cash) for the investment.
- Liquid Assets Most franchises in the coffee and tea industry require liquid assets (cash or assets that can be quickly converted to cash) of around $300,000 to $500,000. These assets are crucial for covering initial expenses and ensuring the franchisee can meet the early operational costs without needing to rely entirely on financing.
- Net Worth The required net worth for opening a franchise like The Coffee Bean & Tea Leaf® can typically range from $1,000,000 to $2,500,000. This includes all assets, such as property, savings, and investments. A higher net worth requirement often reflects the ability to support multiple locations or a larger-scale operation.
How much does a The Coffee Bean & Tea Leaf franchise owner make?
Calculating the salary of a The Coffee Bean & Tea Leaf franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a The Coffee Bean & Tea Leaf franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.
The Coffee Bean & Tea Leaf Revenue & Gross Sales
The Coffee Bean & Tea Leaf® has demonstrated strong revenue performance, with median gross sales of $683,630 for its locations. This reflects the brand’s continued appeal and solid market presence, backed by a diverse menu and loyal customer base.
Which key factors impact the average revenue performance of The Coffee Bean & Tea Leaf franchisees?
The strong performance of U.S. franchisee median gross sales for The Coffee Bean & Tea Leaf® can be attributed to several key factors. First, the brand’s innovative product offerings, particularly its signature ICE BLENDED® drinks, have helped it stand out in a crowded market. The company’s ability to adapt to changing consumer preferences by introducing seasonal and specialty beverages keeps customers engaged. Additionally, The Coffee Bean & Tea Leaf® benefits from a well-established brand reputation, bolstered by its global presence and loyal customer base. Its commitment to sustainability and community involvement also resonates with socially-conscious consumers, enhancing brand loyalty. Furthermore, the ongoing support provided to franchisees through training, marketing, and operational guidance ensures consistency and efficiency across locations, driving overall sales performance.
The Coffee Bean & Tea Leaf Franchise Operational Costs
When opening a franchise like The Coffee Bean & Tea Leaf®, it’s crucial to understand the ongoing operational costs beyond the franchise fees. These expenses directly impact your day-to-day operations and can significantly affect profitability. Below are the key primary ongoing operational costs that you should consider:
- Cost of Goods Sold (COGS) This includes the purchase of coffee beans, tea leaves, milk, syrups, pastries, and other ingredients needed to prepare beverages and food items. As a coffee shop franchise, COGS will be one of your largest ongoing expenses.
- Labor Costs Employee wages, benefits, and training are substantial ongoing costs. This includes baristas, shift supervisors, and management staff, and can fluctuate depending on staffing needs and local wage regulations.
- Rent and Utilities Leasing retail space in prime locations comes with a significant rental cost. Additionally, utilities such as electricity, water, and internet services are necessary for daily operations.
- Equipment Maintenance Regular maintenance and occasional replacement of equipment like espresso machines, grinders, refrigerators, and HVAC systems are essential to keep operations running smoothly.
- Marketing and Promotions While there’s a national advertising fund, individual franchisees may also invest in local marketing efforts to attract new customers or promote seasonal products and promotions.
Understanding and managing these costs effectively will be key to running a profitable franchise and ensuring long-term success.
The Coffee Bean & Tea Leaf Franchise Fees
When considering opening a franchise like The Coffee Bean & Tea Leaf®, it’s important to account for the various fees that will be part of your ongoing operational costs. These fees are essential for maintaining the brand’s standards, marketing efforts, and overall franchise support.
- Royalty Fee The franchise requires a royalty fee of 5.5% of gross revenues, or the monthly Guaranteed Minimum Royalty. For a full-service store, this would amount to 1/12th of $25,000, while for a kiosk, it’s $12,500 per month. This fee is critical for supporting the ongoing brand development, operational support, and use of The Coffee Bean & Tea Leaf®’s established business systems.
- Central Marketing Fee Franchisees must pay a 2% fee on gross revenues for national marketing efforts. This fee may increase to 4%, depending on the company’s strategic marketing needs, and contributes to the brand’s overall advertising and promotional campaigns aimed at driving traffic to locations across the country.
- Additional Fees In addition to the royalty and marketing fees, franchisees may incur additional costs for training programs, technology, and other support services provided by The Coffee Bean & Tea Leaf®.
Being mindful of these ongoing fees is essential to understanding the total financial picture of owning a franchise. By budgeting for these costs alongside other operational expenses, you’ll be better positioned to run a successful and profitable franchise.
The Coffee Bean & Tea Leaf Franchise Earnings
The earnings potential for a Coffee Bean & Tea Leaf® franchise owner can vary depending on several factors, such as location, operational efficiency, and management strategies. Based on recent data, the median gross sales for a franchise location are approximately $683,630. For an owner-operator, this typically translates to an estimated operating profit of around $103,000, which reflects an operating profit margin of approximately 15%.
Franchise owners who take a hands-on approach can benefit from more efficient cost management and greater control over business performance, leading to higher returns as the business scales. While earnings will depend on various market conditions, the estimated earnings for an owner-operator demonstrate the strong potential for profitability in a well-run Coffee Bean & Tea Leaf® franchise.
How to Open a The Coffee Bean & Tea Leaf Franchise
Becoming a franchisee with The Coffee Bean & Tea Leaf® involves a detailed process designed to ensure both the franchisor and franchisee are well-prepared for a successful partnership. The steps below outline the typical journey from initial inquiry to the grand opening of your business, giving you a clear understanding of what to expect along the way.
- Initial Inquiry You or your franchise specialist submits an initial inquiry basic information about your interest and background. You should also conduct thorough research on the franchise, including seeing all of the information available on the Vetted Biz franchise intelligence platform, including access to the most recent Franchise Disclosure Document (FDD).
- Franchise Application Once you’ve reviewed the available information, you’ll complete a formal application. This will include providing personal and financial details to ensure that you meet the necessary requirements for opening a franchise.
- Interview and Discovery Day If your application is approved, you will be invited to attend a Discovery Day. This is an opportunity to meet with the franchisor, learn more about the business, and ask specific questions about the brand, support system, and operational requirements.
- Final Approval and Signing the Franchise Agreement Once you’ve completed the necessary steps and both parties are ready to move forward, you will sign the franchise agreement. This legally binding contract outlines your obligations as a franchisee and the franchisor’s support.
- Training and Site Selection After signing the agreement, you’ll begin the training process, which covers all aspects of running the business. During this time, you’ll also work with the franchisor to secure a location and begin the build-out of your café.
- Grand Opening and Ongoing Support With your café ready to go, you’ll launch your new business! The Coffee Bean & Tea Leaf® will continue to offer ongoing operational support, marketing assistance, and guidance to help ensure your success as you begin serving customers.
Pros & Cons
Pros
Strong Brand Recognition: As one of the most well-known coffee and tea brands globally, The Coffee Bean & Tea Leaf® offers the advantage of a recognizable name that attracts a loyal customer base, which can drive foot traffic and sales.
Proven Business Model: The franchise has a successful track record, with over 1,100 locations worldwide and strong customer demand for its high-quality products, including coffee, tea, and innovative beverages like the ICE BLENDED® drinks.
Growth Potential: With continued expansion both domestically and internationally, The Coffee Bean & Tea Leaf® presents an opportunity to be part of a growing and evolving brand, especially with the backing of the Jollibee Group.
Product Diversification: The franchise offers a wide range of products beyond just coffee and tea, including pastries, blended drinks, and seasonal items, allowing for flexibility in targeting different customer preferences.
Cons
High Initial Investment: The initial investment range of $941,000 to $1.43 million can be significant, especially for new franchisees with limited capital. This includes both setup costs and the necessary liquid capital to cover ongoing operational expenses.
Intense Competition: The coffee and beverage industry is highly competitive, with numerous local cafes and other national brands vying for market share. This may require extra effort in marketing and customer retention to stand out.
Location Dependency: Success is heavily reliant on the right location. Choosing a high-traffic area with the right demographics is critical, but it also comes with higher rental costs.
