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.
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.