It’s been just over two years since my wife and I opened the doors at Chai Cupboard, our loose leaf tea and spice shop in downtown Everett, and I thought it would be a good time to share how things are going for our little mom and pop shop. Can we call ourselves a mom and pop shop if we’re only in our 40s? Whatever, I’m going for it.
In short: It has been and continues to be difficult!
Let’s start with what it took just to open our doors. We spent about $32,000 of our own money (no investments, no loans) to start up. This included things like buying the initial inventory, all our jars and other supplies, furniture, and putting in new flooring.
Finding a good location in downtown Everett was a challenge. It seemed like every space we looked at was either way too large (2,000+ square feet), way too expensive ($2,000+ a month), or both. The space we eventually landed in is around 1,100 square feet and costs us just under $1,800 a month. Plus electricity and gas. Plus parking. Plus basic building maintenance, repairs, and real estate taxes. You would think that those last few things should be the responsibility of the landlord that owns the building, but this particular landlord owns such a large portion of downtown Everett that they are able to dictate the terms of the lease to dramatically favor them and there’s basically nothing you can do about it. Fun!
Keeping the lights on
Okay, so let’s talk about ongoing costs. All together, running the shop five days a week, we need to make about $100 a day in profit to pay our basic bills. That means we need around $200 a day in sales to break even after paying for our inventory and other supplies. So far in 2023 we’re making an average of $117 per day in sales. That’s up from $100 per day during the same period in 2022, but still far short of where we need to be in order just to break even—and these figures are with no employees, just us (mostly my wife) running the shop entirely by ourselves. If we wanted to hire just a single employee at $20 an hour for 20 hours a week, the wages, taxes, and other costs would add up to another $2,000 a month or more than $100 a day.
All of this means that we’re putting about another $1,500 into the shop every month out of our pocket to keep the doors open. To date we have made around $55,000 in revenue, but spent a total of about $128,000, meaning that over $70,000 has come directly out of our pocket to try to make this work.
Expanding our horizons
Since it has been difficult selling enough loose-leaf tea and spices to make ends meet, we have been working on a few different ideas to try to bring in more money. The biggest of these plans was to open a full tea bar, serving things like tea lattes and iced tea. Unfortunately, our space is not equipped with the proper kitchen to obtain the necessary permits from the health department.
Our landlord was open to letting us pay to upgrade their space (how generous of them!) and we were able to get a grant from the city for about $16,000 that we thought would cover the plumbing improvements and appliances we would need. Unfortunately again, once we opened up the walls we discovered that the existing drainage was nowhere near sufficient for the amount of sinks the health department requires. Fixing this would require considerably more work than we originally expected, including cutting a trench into the concrete floor. Between the extra drainage work and the extreme inflation that ratcheted up the cost of everything else while we tried to figure it all out, the total cost of the project ballooned to over $50,000. We applied for a second grant in hopes of still moving forward, but were denied. So the full tea bar idea is dead unless we find a whole new location with a proper restaurant kitchen, which would of course have much higher rent, somewhat negating the benefit of opening the tea bar at all.
Thankfully as long as we only serve hot tea in a to-go cup, we are not classified by the health code as a “food establishment,” so we can still do that without all of the extra sinks. We have been able to set up three tea brewers on a custom stand that I built out of hardwood, and at least provide a basic cup of tea to-go.
Building the physical and digital space
Speaking of building furniture, the shop has given me a good excuse to spend some quality time with my woodworking tools. I built our custom shelves that hold all the jars, as well as the custom main counter, and I’m quite pleased with how they all turned out.
Surprisingly, building physical objects like the furniture has been easier than building things in the digital space. While we have had a basic website set up since before we opened, building a proper online shop has been a bit of a pain. Aside from the challenge of synchronizing all of our inventory with an online storefront, to get it properly set up we need to take individual photos of all 200+ of the teas and spices we sell, which is a daunting task.
Once we do get the online side of the store set up with all the photos, another idea we’ve had to increase sales is to set up a tea sampler subscription box, but the economics of subscription boxes is pretty rough. There are competitors in the space that sell a tea box for $20 that includes shipping. It would be difficult for us to make and ship a box of teas for less than $20 in actual cost to us.
So, what’s next?
We have really enjoyed running the shop, learning more about teas and spices, and meeting all the lovely people who have come in over the past two years. To date we have had nearly 2,000 customers, about 25% of which are repeat customers. We have had zero problems with crime, and only one unpleasant run-in with an individual having a drug-induced psychotic episode. Downtown Everett is a great location, and we love the increasing number of events that are happening downtown like Sorticulture, Salty Sea Days, and the Wintertide Festival & Market.
We’re convinced that our shop is a valuable addition to Everett, but it’s tough to keep pouring thousands of dollars into it every single month, and to be so far away from even being able to hire a single person to help out. It is beginning to feel like running a small independent retail shop in downtown Everett may not be viable with the current cost of rent, lack of significant downtown foot traffic, and most people’s default mode of shopping online first. We’ve still got over a year on our current lease, so we’re going to continue trying to make this work, but looking around at the other businesses downtown, it’s easy to see why they’re mostly restaurants, breweries/bars, coffee shops, or retailers who have been around forever and own their own building.
And of course, I haven’t even mentioned the other big complicating factor: In just a few weeks we’re having a baby! This means we’re going to have to dramatically cut back how many hours the shop is even open, due to the aforementioned inability to afford to hire any additional help.
Anyway, if you fancy some tea, stop on by! We’re at 2809 Colby in downtown Everett. And if you have some brilliant idea for how to make this type of business actually turn a profit, please drop me a line and share it!