GOOD

You've Proven Your Start Up Can Work; Now What?

The Boba Guys evaluate their food start up after six months of iteration.

The past six months since launching Boba Guys have been a blast for us. As we wrote this post, we were reminiscing about the long nights of tastings, running around the city trying to find straws, and chance encounters with fellow food entrepreneurs. To say that this experience has been a dream come true would be an understatement.


Now, we are faced with our first major pivot. Our proof-of-concept period is over and we need to behave like a real, sustainable business. We thought we’d write our second-to-last post about our vision of our future and open up our entire hand—it is our way of thanking the GOOD community, especially for all of you who have stopped by to chat or emailed us about starting your own business.

After over six solid months of iteration, we are confident that a market for high quality bubble tea and other "chewable drinks" exists. Unfortunately, the food category and nature of the product—tapioca pearls last only a few hours—forced us to come to grips with the mechanics of our business. Andrew, along with our mentors, spent hours trying to find a sustainable business model should we ever branch out into a physical space. Around this time, we came across this article about the coffee industry that included eye-opening insight from one of our biggest inspirations, Blue Bottle Coffee. A common thread began to appear: volume vs. assortment.

In an effort to end with a bang on our transparency, we wanted to leave the public with a rough idea of how our business works and give entrepreneurs out there another data point when deciding to pursue a food startup. Not everyone wants to dig into the numbers, but we will highlight a several points:

    \n
  • After much tinkering, we reluctantly conceded that our business needs either a faster way to scale in volume, like finding more customers by catering, or supplement our product with alternative revenue streams, like selling food products such as egg puffs or kaya toast.
  • A full-service establishment is very risky given the high fixed costs. We have a separate sheet just to calculate overhead—to continue off of last week’s entry, if we put in the ideal rent and permitting fees, we would still be unprofitable on a per location basis.
  • Efficiencies exist in the model: If we sell more per day than expected, our margins will get better. We still need to sell A LOT more.
  • \n

We have also considered other business models such as licensing/franchising, bakery model (i.e. drop off boba kit to serve every day), or joining forces with other startups like us. As of today, we are not yet certain of which path we will take.

Some people have suggested that we improve margins by using cheaper milk, buying premade syrup, or raising our prices to offset the laborious preparation for tapioca. While those are legitimate solutions from a financial perspective, it ultimately goes against the mission of our business: "Bring the world quality boba milk tea." The counterpoint to our logic is more money can expand to the masses more quickly. As employees of larger businesses, we understand this logic; but as entrepreneurs who have a clear vision of what our ideal business should be, we cannot make compromises. It does us no good if we bring the masses a suboptimal product—something the world has already seen.

It all comes down to our answer to the profit problem. We decided against operating like a not-for-profit. Simply put, it would be very hard to achieve our mission if we dismiss conventional wisdom about how to run a business. However, we vowed to adhere to our ideals of what responsible businesses do. We admire businesses whose existence makes the community and those around them better. Yes, we sell bubble tea in a tiny corner of the United States, but if we can find a way to make our business work, so can others.

We wanted to end with our vision of the future. Food will always be the gateway to culture, so our dream is to see more diversity in food across the nation. Over the past six months, we connected with food entrepreneurs across the country with a similar story. Although the startup costs are rarely as astronomical as they are in our home in the San Francisco Bay Area, the initial proof-of-concept and build-out phase are two of the biggest hurdles to starting a new food business. As we evolve into a more localized mash-up food culture, removing these barriers will be critical for food innovation… and American culture. We hope the next generation of food incubators can help solve these problems!

The Boba Guys share their adventures in food enterprise every Monday.

Articles
via Douglas Muth / Flickr

Sin City is doing something good for its less fortunate citizens as well as those who've broken the law this month. The city of Las Vegas, Nevada will drop any parking ticket fines for those who make a donation to a local food bank.

A parking ticket can cost up to $100 in Las Vegas but the whole thing can be forgiven by bringing in non-perishable food items of equal or greater value to the Parking Services Offices at 500 S. Main Street through December 16.

The program is designed to help the less fortunate during the holidays.

Keep Reading Show less
Communities

For more than 20 years. Sen. Susan Collins (R-ME) has served the citizens of Maine in the U.S. Senate. For most of that time, she has enjoyed a hard-fought reputation as a moderate Republican who methodically builds bridges and consensus in an era of political polarization. To millions of political observers, she exemplified the best of post-partisan leadership, finding a "third way" through the static of ideological tribalism.

However, all of that has changed since the election of Donald Trump in 2016. Voters in Maine, particularly those who lean left, have run out of patience with Collins and her seeming refusal to stand up to Trump. That frustration peaked with the nomination of Brett Kavanaugh to the Supreme Court.

Keep Reading Show less
Politics
via Truthout.org / Flickr and Dimitri Rodriguez / Flickr

Bernie Sanders' presidential campaign looks to be getting a huge big shot in the arm after it's faced some difficulties over the past few weeks.

Alexandria Ocasio-Cortez, a leading voice in the Democratic parties progressive, Democratic Socialist wing, is expected to endorse Sanders' campaign at the "Bernie's Back" rally in Queens, New York this Saturday.

Fellow member of "the Squad," Ilhan Omar, endorsed him on Wednesday.

Keep Reading Show less
Politics
Photo by HAL9001 on Unsplash

The U.K. is trying to reach its goal of net-zero emissions by 2050, but aviation may become the biggest source of greenhouse gas emissions in the U.K. by that same year. A new study commissioned by the Committee on Climate Change (CCC) and conducted at the Imperial College London says that in order for the U.K. to reach its target, aviation can only see a 25% increase, and they've got a very specific recommendation on how to fix it: Curb frequent flyer programs.

Currently, air travel accounts for 2% of global greenhouse gas emissions, however that number is projected to increase for several reasons. There's a growing demand for air travel, yet it's harder to decarbonize aviation. Electric cars are becoming more common. Electric planes, not so much. If things keep on going the way they are, flights in the U.K. should increase by 50%.

Nearly every airline in the world has a frequent flyer program. The programs offer perks, including free flights, if customers get a certain amount of points. According to the study, 70% of all flights from the U.K. are taken by 15% of the population, with many people taking additional (and arguably unnecessary) flights to "maintain their privileged traveler status."

Keep Reading Show less
The Planet