I can only assume they are being used as fronts to launder money or as a business investment to secure residency as there seems to be no possible way even a city of Melbourne's size could consume this much bubble tea. It's almost at the point where there are bubble tea sellers directly next to each other in the street. And I'm talking dozens, if not hundreds, of them.
I can’t say for sure that they’re all not fronts. However, I know someone who owns one in the CBD and it is definitely legitimate - not to mention makes money hand over fist.
There are tens of thousands of mainland Chinese living in the CBD, and it’s basically a daily staple for a huge chunk of them.
Some of these places are charging $7-$8 for something that costs all of 20 cents to make. The margins are huge - the biggest difficulty is securing the right location with the right footfall.
I can't speak for the rent but from what I was told the setup (machines) is very cheap, as are the ingredients like you say. I'll also go out on a small limb and say food businesses with predominantly foreign student workers tend to have a history of underpaid cash wages. My wife was offered $6 an hour cash in the early 2000s at one place in Sydney, I think she was 17 but still that's way too little.
It's almost at the point where there are bubble tea sellers directly next to each other in the street
That’s an example of Hotelling’s law [1]. Competing businesses are better off clustering together in high traffic areas rather than spreading out to cover the market in a way that serves customers more efficiently. It’s a weird phenomenon and a clear refutation of the invisible hand.
> It’s a weird phenomenon and a clear refutation of the invisible hand.
Actually it's the opposite: more choice is brought by the invisible hand where people naturally go to, even if it puts businesses in direct competition and thus reduce prices
Kind of interesting, I'm in the bay area and it's similar, but have you seen the pricing? And amongst young asian-americans its identical to Starbucks, just a place or thing to do.
I can only assume they are being used as fronts to launder money or as a business investment to secure residency as there seems to be no possible way even a city of Melbourne's size could consume this much bubble tea. It's almost at the point where there are bubble tea sellers directly next to each other in the street. And I'm talking dozens, if not hundreds, of them.