How a drive-thru iced tea franchise sold over 400 franchises in five years and ranked #9 on our Top new and emerging franchises list? We spoke to HTeaO’s Chief Development Officer Andrew Hawes to find out why franchisees see the brand as a sweet opportunity.
How did HTeaO start?
Our founder, Gary Hutchins, has owned a hamburger restaurant called Buns Over Texas since the 80’s in Amarillo, Texas. He started selling iced tea there in the mid-2000s. And time around The last recession In 2008, he started noticing that people were coming in and instead of spending 10 bucks on a hamburger, they were only spending two or three bucks on an iced tea. So in 2009 he added 1,200 square feet to his hamburger restaurant and launched Texas Tea, offering eight flavors of iced tea from the drive-thru.
His son Justin, who is now our CEO, joined him and his mother in 2012 and that’s when they launched the first prototype of the freestanding Texas Tea. And once we opened that, we realized we had something special that we could franchise. So we spent five or six years making it Franchise model and support system and infrastructure, and then launched a franchise opportunity in 2018, at the same time we rebranded Texas Tea to HTeaO.
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Do you think this is a concept that can go nationwide?
I think at some point it will, and we’ve even had some interest, crazy, from places like North Dakota and Idaho. But right now our focus is the southeastern United States, which I’ll call “tea drinking country.” This barrier to entry A lot less because you don’t have to explain what iced tea is in Georgia. So our growth strategy, is still an emerging young brand Build our brand And our awareness in the southern US, and then once we get that exposure and a thousand locations open, we can get into more northern states that aren’t familiar with iced tea yet. And one of the main reasons was to increase our morning traffic with what we call our brewhouse offerings, which are our hot tea and coffee offerings, to ultimately go into markets where hot beverages are more popular.
What are your goals for the brand in 2023 and beyond?
We have 68 locations open and operating today, and 93 under construction, bringing our total to 160 stores opening in the next 12 months. Apart from that, we have already awarded a total of 430 franchises, and we are planning to award 175 more this year. The plan is to open 500 locations by the end of 2026.
To what do you attribute that growth?
It is a model built around The most profitable part of the restaurant. Any restaurant owner will tell you where the money is made. We eliminated all the frustration and equipment that goes with food preparation. And it doesn’t take a rocket scientist to figure out that water, tea and ice aren’t too expensive, either margin Can be very profitable. I think people can imagine, Hey, I can do this. I do not need culinary experience or background in restaurant management.
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What types of franchisees has HTeaO attracted?
At first, it was a lot of other career-type people—people who said, “I’d love to build a business for myself, but I need that franchise system.” So for the first few years, our growth was heavily weighted towards single-unit operators, and they’ve been fantastic. Now we have built some Brand awareness, we are starting to attract multi-unit, multi-brand franchise partners, which is extremely humble. I still see us as a very young, unknown brand, so having someone with 20 or 30 years of experience in the franchise space take a leap of faith means a lot to our team. We are still going to welcome single-unit franchisees, but bring it forward multi-unit Partners who can do 5 to 20 stores in a short period of time because they already have the infrastructure are going to be really key to our growth going forward.
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