Tea Room SWOT Analysis

Tea rooms have become very popular over the past 10 years, as more people have taken an interest in specialized food. Although the custom of having tea at four o’clock has somewhat waned given people’s busier schedule these days – these businesses have seen a resurgence in popularity. One of the key strengths of a tea room is at the operating costs associated with these types of businesses are typically much lower than their coffee shop counterparts. This is primarily due to the fact that tea rooms are open during a shorter period of time. The startup costs that are typically associated with these types of businesses ranges anywhere from $50,000 to $150,000 depending on the venue, and whether or not the business is located in a major metropolitan area. The gross margins generated from beverage sales typically ranges from 85% to 95% while food sales generate gross margins of 60% to 80%. These businesses are often operated for about 5 to 6 hours per day. Another key strength of these businesses is that there is very limited competition in most markets for specialized tea room.

For weaknesses, these businesses are not often open for an extended period of time to their profitability can be somewhat on the lower end as it relates to a specialty beverage location. Additionally, as with any type of eatery – inventory spoilage is always a risk. However, most of the fair that is offered by a tea room consist primarily of small sandwiches that are low-cost. As such, inventory spoilage issues are usually not a major problem for most tea room locations.

As it relates to opportunities, these businesses can readily expand by simply expanding their hours of operation. Many businesses that operate as a tea room will also provide a substantial number of other beverages including specialty coffees. These businesses will also strive to stay open later by opening earlier and closing their doors at a much later hour. This is the quickest way for a tea room to expand their operations from their initial location. Many entrepreneurs will also seek to develop additional locations with the accrued profits of the business on an ongoing basis. These types of businesses typically do not make very good mobile focused food and beverage service businesses given their limited selection. However, if the owner is able to expand the number of food products offered and they can very readily expand the amount of revenue that they generate on a day-to-day basis.

For threats regarding a tea room, there’s really nothing that can impact the way that these businesses conduct themselves moving forward. The tradition of having tea at a specific time a day has been in existence for hundreds of years and will continue to be that way in the upcoming future. However, people are becoming busier these days in the tradition of having a mid afternoon break at a tea house has declined sharply even in areas where this tradition is very popular. As such, it is incumbent upon the founder or the entrepreneur to find ways that make this ongoing public. Many tea rooms have taken to offering a number of specialty iced tea beverages which are especially popular during summer months. This is one of the ways that these businesses can readily expand in a highly competitive market space. The other major threat faced by tea houses is that many traditional coffee shops haven’t provided similar services these days. As such, amenities like wireless Internet and related services need to be incorporated into the tea house operations.

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