How much does it cost to open a tea shop in Singapore?
According to founder of local milk tea brand Amacha, Sebastian Ang estimates that it comes up to about $209,000.
Sebastian broke down the costs in an Instagram video posted on Saturday (Sept 26).
The 35-year-old begins by sharing the rental costs.
“Our rent here is about $15,000 a month. We have to put down three months of rental deposit plus the first month’s rent,” said Sebastian, which adds up to about $60,000 up front.
“Then comes one of our biggest costs: Renovation,” he said.
The store’s wooden structures and carpentry cost around $15,000 and the storefront walls as well as nooks in the shops cost another $10,000.
Flooring and tiles also came up to about $10,000.
“Then you still have the electrical, plumbing, aircon, ceiling and everything else [which] cost us an additional $50,000,” he explained, bringing the total cost of renovations alone to about $85,000.
He then highlighted how expensive the equipment needed can be with a $10,000 automated milk tea machine and $13,000 gelato machine.
Not to mention the ice makers, tea brewers, fridges and sealing machine, which amount to around $17,000.
Meanwhile, the cashier’s point-of-sale system cost around $4,000.
Sebastian added that the three display televisions for the store’s menu comes up to $5,000.
“And we’re not done,” he said.
Before the store can fully open up, it still has to consider the first round of ingredients and packaging, staff salary, insurance and utility deposits that add up to about $15,000.
“So before we even sold our first cup, we have already spent $209,000. And that’s just enough to get the doors open,” he said teasingly.
Sebastian reminded viewers that it’s important to also factor in running capital to keep the business going.
“So tell me, would you do it?,” he asked viewers.
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Still worth doing
Sebastian told AsiaOne that the figures he calculated in the video were based on their Parkway Parade outlet, adding that the cost can vary significantly between outlets depending on the “size and condition of the unit, landlord requirements, renovation works, equipment needed and rental deposit”.
He also shared that the running costs per month depends on the outlet, with monthly operating costs for the Parkway Parade branch being in the $40,000 to $50,000 range.
He emphasised that the two biggest costs are generally manpower and rental, followed by other operating expenses including utilities, payment processing fees and delivery platform commissions.
“This is also why having enough money to open the store is only half the equation. You need sufficient working capital to keep operating while the store builds up its sales,” Sebastian advised.
He said: “The $209,000 gets you to opening day, but you still need cash to run the business from day one.”
Sebastian added that spending everything you have on renovation and equipment with little cash left to operate the business is a “risky” move.
When asked about breaking even, he shared that it is not meaningful to give an average of how long a store takes to do so because “every outlet performs differently”.
“Location, rent, traffic and opening cost all affect the payback period,” he shared, while highlighting that it is a factor they closely evaluate when deciding on a new location.
When asked what it takes for a store to be profitable, he shared that the answer is more complex.
“It’s not as straightforward as taking our monthly expenses and dividing them by the price of a cup,” Sebastian said, explaining that every drink has different ingredient and packaging costs, payment fees and delivery commissions which are dynamic.
He intends to upload another video sharing more about many cups they need to sell just to breakeven and cover its monthly operating expenses.
However, Sebastian said that the expensive barriers to entry weren’t demoralising to him.
“I don’t think high costs alone mean a business isn’t worth doing.”
He shared that it’s their responsibility as business owners to do the math and decide whether the expensive rental and manpower costs, which are made known before they sign a lease, are feasible.
Sebastian added: “Seeing younger customers enjoy Amacha with their parents is exactly the bridge we wanted to create.”
“F&B is challenging, but the costs are part of the equation. Our job is to build a good enough product and experience to make that equation work,” he concluded.
Amacha is Singapore’s first Traditional Chinese Medicine (TCM)-inspired herbal milk tea and gelato brand, opened in 2025.
It has five outlets island-wide in Chinatown, Tampines 1, Capitol Singapore, AMK Hub and Parkway Parade.
Other than Amacha, Sebastian also runs speakeasy bar Mama Diam and TCM-themed restaurant and bar Synthesis.
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laili.abdeen@asiaone.com
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