HTeaO has made a big business out of one item — tea. The founders started with a burger joint, and saw how many people came in specifically for tea. They decided to make a business out of the popular beverage and opened their 50th unit in September.
There’s a sweet player in the QSR field you might not have heard of. HTeaO has entered the market with a bang. The concept? Tea, and tea only. It’s a simple brand, founded by Gary and Kim Hutchens, but it’s garnered a lot of attention. To date, HTeaO has 50 operating locations and 400 signed franchise agreements.
People, it seems, like their tea.
HTeaO offers 26 proprietary flavors with seasonal rotations. All ingredients are fresh and 100% natural. In addition, each unit has its own water plant with a charcoal-based filtration system.
The brand has created its own supply chain, lowering the cost of goods and offering a more sustainable option.
QSRweb talked to Andrew Hawes, HTeaO’s chief development officer, to learn what makes the brand tick, how it leverages its own water filtration system and how the concept is ready for growth.
Q. Tea is a big business. How did you know HTeaO would work?
A. The founders owned a hamburger restaurant called Buns Over Texas, and began introducing their six iced tea flavors to their guests. When the recession hit, they were expecting to see a decline in sales, but to their surprise they saw sales increase significantly in the first year due to the addition of iced tea. The number of people who came in specifically for iced tea revealed the untapped market within the specialty beverage industry. From there the visionaries decided to create a prototype stand-alone tea drive-thru concept called Texas Tea. Once proven, they took their learnings and founded HTeaO in 2018.
Q. Why was HTeaO founded?
A. You could find plenty of coffee shops and smoothie bars but there wasn’t anyone doing quick-serve iced tea like us. Tea has been around for centuries, but we saw the potential to be at the forefront of the beverage category with consumers seeking alternative caffeinated drinks and flavorful options.
Q. Tell us about the proprietary flavors. Why offer more than just a few?
A. We started off with four flavors offered in both sweet and unsweet including regular, raspberry, mango and peach. We then added mint and blueberry, and continued expanding our flavor profile. These flavors allow people to try all sorts of different healthy and natural options. All of our teas are made with broad leaf green and black tea leaves and dried fruit. We’ve tested hundreds of flavors, and attribute our growth to our level of quality and variety of offerings.
Q. Each location has its own water plant. How does it work and how does it affect the tea?
A. Water across the country tastes different out of the tap, and it was important to us to provide a consistent and high-quality product across all of our locations. The HTeaO water plant pumps water from the city into the system, and then pumps the filtered water into the tea machines. We also use this system to filter the water we use for our ice, with the goal that everything touching the customers lips has been filtered through the water plant, resulting in the highest quality product.
Q. Tell us a little more about the current state of the iced tea market.
A. People are becoming more health conscious as they think about what is going into their bodies, making iced tea a growing option over things like soda and coffee. As the demand strengthens, HTeaO will continue to innovate our flavor and seasonal offerings. Our products use only tea leaves and raw ingredients, which consumers appreciate. The industry as a whole is not introducing anything new, rather perfecting a product that consumers enjoy, and making it just as conveniently available as other quick-serve beverages.
Q. How did HTeaO approach an untapped market in the QSR industry?
A. In 2015, we saw several large coffee brands invest in iced tea, indicating we were on to something special. While we saw brands utilize more syrup-based teas, there was no real option to get a cup of natural iced tea. There are several restaurants that offer one or two options, but they tend to be more syrup-based iced teas. It was difficult to find fresh brewed iced tea, which was important for our team. We had some early success with a prototype store in 2014, and launched a franchise option in 2018. We found that people were happy to line up to spend a few bucks on a cup of iced tea, similar to what many people do for coffee. Quickly we hit success, establishing a cult-like following. Although most people seem to think iced tea seems very simple, it’s quite the opposite. Iced tea with HTeaO understands the effort and high-quality ingredients that go into our products until they go to the store and see the operation we have built. Looking back, none of this would have been possible without the 2008 recession which forced us to think outside of the box and changing the QSR industry forever.
Q. What does expansion look like for the company? How many units are under contract/construction/in the pipeline?
A.We have currently awarded 400 signed franchise and development agreements across 13 states. In September, we opened our 50th location and by year end, we hope to open 10-12 more stores. In 2023, we anticipate opening 60-75 additional locations. The goal is to have 500 locations open by the end of 2027.
Q. Where are you looking to expand?
A. The Southeast United States, including: Alabama; Mississippi; Georgia; Tennessee; North and South Carolina and Florida. We also are seeing extensive growth in the Arizona and Colorado markets as well as the Kansas and Missouri markets.
Q. What areas are HTeaOs located in currently?
A. HTeaO currently has stores open and operating in Florida, Kansas, New Mexico, Oklahoma and Texas. The following states have signed franchise agreements with sites secured and/or under development: Alabama; Arkansas; Arizona; Colorado; Georgia; Louisiana, Missouri and Tennessee.
Q. What do you want our readers to know about the tea industry and HTeaO?
A. The tea industry is just beginning and will become the next quick-serve beverage option across the United States in years to come. We are offering something that is clean and completely natural compared to most of our competitors. We have styled our locations with more of an open kitchen, to showcase our brewing process and provide full transparency to our customers. Our customers physically see the ingredients we use and how it is made, and do not have to question what’s inside the beverage they are consuming. We pride ourselves on the cleanliness of our shops, and the family-friendly environment we create. Our goal with HTeaO revolves around community involvement and how we can make an impact in a positive way. Offering a strong product opens the door for many possibilities, and we take the initiative to give back to the communities we operate in as much as we can.