How does a drive-thru iced tea franchise sell 400+ franchises in five years and earn 9th place on our list of “Top New & Emerging Franchises”? We spoke to HTeaO’s Chief Development Officer, Andrew Hawes, to find out why franchisees see the brand as a great opportunity.
How did HTeaO come about?
Our founder, Gary Hutchins, has owned a hamburger restaurant in Amarillo, Texas called Buns Over Texas since the 1980’s. He started selling iced tea there in the mid-2000s. And around the time of the last recession in 2008, he noticed that people would come in and instead of spending $10 on a hamburger, they would only pay $2 or $3 on an iced tea. So in 2009 he expanded his hamburger restaurant by 1,200 square meters and launched Texas Tea, which offered eight flavors of iced tea in a drive-thru.
His son Justin, who is now our CEO, joined him and his mother in 2012 and launched the first prototype freestanding Texas Tea. And when we opened that up, we realized that maybe we had something special that we could franchise. So we spent five or six years building the franchise model, support system and infrastructure and then launched the franchise opportunity in 2018 at the same time as Texas Tea was rebranded to HTeaO.
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Do you think this is a concept that can be implemented nationwide?
I think it’s going to happen eventually, and crazy enough, we’ve even seen interest from places like North Dakota and Idaho. But for now, our focus is on the southeastern United States, what I would call “tea drinking country.” The barrier to entry is much lower as you don’t have to explain to anyone what ice tea is in Georgia. Therefore, while we are still an emerging young brand, our growth strategy is to expand our brand and awareness in the southern US. Once we have that footprint and have a thousand locations open, we can move into some of the more northerly states that aren’t as familiar with iced tea. And one of the main reasons we launched what we call our brewhouse offerings, which is our hot tea and coffee offering, along with increasing our morning traffic, was to eventually penetrate markets where hot beverages were more popular are.
What are your goals for the brand for 2023 and beyond?
We have 68 stores open and operational today, 93 are under construction, so we should open a total of about 160 stores over the next 12 months. In addition, we have already recognized a total of 430 franchise companies and plan to award a further 175 this year. By the end of 2026, 500 locations are to be opened.
What do you attribute this growth to?
It is a model based on the most profitable part of a restaurant. Any restaurant owner will tell you that drinks are where the money is made. We’ve eliminated all the frustration and equipment that comes with meal prep. And it doesn’t take a rocket scientist to realize that water, tea, and ice cream aren’t all that expensive, so the margins can be very lucrative. I think people can imagine hey i can do that I don’t need any culinary experience or restaurant management background.
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What types of franchisees has HTeaO attracted?
In the beginning there were a lot of people who wanted a second career – people who said, “I’d like to start my own business, but I need the support mechanism of a franchise.” So in the early years we focused a lot on individual operators as we grew , and they went fantastically. Now that we’ve built some brand awareness, we’re starting to attract multi-unit, multi-brand franchisees, which is extremely humbling. I still see us as a very young, unknown brand, so it means a lot to our team when someone with 20 or 30 years of franchise experience takes a leap of faith. We’ll still be welcoming single franchisees, but attracting multi-unit partners who can run five to 20 stores in less time because they already have the infrastructure in place will be really critical to our future growth.