A Financial Feasibility Analysis of Investment on Bubble Tea Collagen Colla Tea Franchise

Abstract

This study aims to investigate the costs and returns, along with the financial feasibility and sensitivity analysis of investment on bubble tea collagen Colla Tea franchise. The study used data from interviews with three Colla Tea franchisees in Pak Kret District, Nonthaburi Province, and included information from relevant business websites. The collected data is presented as descriptive narratives and analyzed for financial feasibility and sensitivity of the investment project. The results showed that in operating a franchise project with a 5-year project life and employing 2 staff members, the store will be open for both in-store and delivery services every day. The project has an initial investment cost of 548,000 Baht and incurs various operating costs. The initial return is 985,500 Baht per year, with a sales growth rate of 5 percent per year. Financial feasibility analysis when the weighted average cost of capital (WACC) for the project is 9.34 percent per year showed that the project is worth for the investment. The project has a net present value (NPV) of 96,886.39 Baht, a benefit-cost ratio (BCR) of 1.02, an internal rate of return (IRR) of 14.92 percent per year, a payback period (PB) of 3.81 years, and a break-even point (BEP) of 34 cups per day. Sensitivity analysis showed that if either cost increases up to 2.36 percent or returns decrease as much as 2.30 percent, it is still worth for the investment project. And net present value (NPV) of the project is most sensitive when there are changes in raw material costs. Therefore, entrepreneurs interested in investing in a franchise of brand Colla Tea or similar brands should consider the potential changes in raw material costs. And they should prioritize the store's location, with suitable rental costs to maximize sales and minimize costs.