For many Americans, there’s nothing like drinking a tall, cold glass of iced tea on a hot summer’s day. Whether plain, sweetened, infused with fruit flavors, or part of a specialty beverage, iced tea is increasingly popular nationwide.
Limited-service restaurants have seen solid growth with iced tea—freshly brewed, fountain dispensed, or bottled—the past few years, according to market research firm The NPD Group. Regular iced tea servings declined during the recession, but since 2009 have risen about 25 percent at quick-service eateries. Sweet iced tea had a slightly larger gain. Meanwhile, restaurant beverage servings have overall been flat.
“Iced tea is a growth market, and there are good opportunities” in foodservice, says Bonnie Riggs, restaurant analyst at NPD. “That’s why there’s a lot of discounting going on in the category, and tons of advertising, especially related to tea’s healthy halo.”
Iced tea is relatively inexpensive, which is one reason some operators can sell it for $1 or less per cup. At the same time, it’s rich in antioxidants—higher in green and white teas than black—with less caffeine than coffee or many carbonated drinks.
“Consumers believe it’s better for you,” Riggs says. As demand continues to increase, additional flavors will become available, “which will make its appeal even greater.”
Tea is the world’s second-most-common beverage, behind water. Most black, green, white, and oolong tea is produced by the same plant, although varieties differ depending on the growing region, the time of year tea leaves are picked, and the way they’re processed. Herbal teas are made from infusing herbs, spices, and other plant materials in hot water, while chai is a mix of tea, herbs, and spices. Some operators mix tea with beverages like limeade and coconut water, add milk to create lattes, or use chocolate as flavoring.
In addition to being refreshing, iced tea accompanies food well.
“The tea pH is almost the same as water: mild but with flavor,” says John Buckner, director of marketing for Concord, North Carolina–based S&D Coffee and Tea, the biggest supplier of tea at limited-service restaurants. “It compliments fried foods, like burgers and chicken, and spicy foods like Mexican. Around [North Carolina], sweet tea is the perfect compliment to pulled-pork barbecue. It’s so mild, it doesn’t compete with the food.”
Sweet tea used to be a Southern phenomenon, but one S&D’s client, McDonald’s, made it mainstream around the country. Now many quick-service and fast-casual restaurants offer both unsweetened and sweetened iced tea.
Tea also has grown in popularity because it’s a good base beverage for a variety of flavors, whether it’s made with fruit juices or a simple lemon slice. Raspberry and lemon are common flavors, and many eateries offer a mix of tea and lemonade sometimes known as an Arnold Palmer. The greatest flavor growth last year was pomegranate, Buckner says.
Simple, consistent brewing systems, often four gallons in size, have helped make tea more dependable. “Consistency is the key in [quick service],” he says.
In recent years, green tea has gained fans because of its taste and antioxidants, and quick serves are adding it to menus that already feature black iced teas. Last year, Sonic launched a line of freshly brewed green iced teas, including unsweetened and sweetened versions, along with peach, mango, raspberry, blackberry, and mint mix-ins. Sonic reports its green iced tea is growing in popularity. Dunkin’ Donuts, meanwhile, added Rainforest Alliance Certified iced green tea this spring.
Not all owners embrace iced tea, however. Statistics from market researcher Datassential found iced tea on the menu at 74 percent of limited-service restaurants in 2013 after being at about 78 percent the previous five years.
“I wouldn’t say this drop is a trend until we see it for a couple of years, but iced tea may have lost ground among some restaurants,” says Maeve Webster, Datassential senior director. “There are so many options out there, and we really haven’t seen a lot of innovations.”
Still, there are plenty of operators who see great potential for tea, including Howard Schultz, chairman, president, and chief executive officer of Starbucks. The company acquired Teavana in late 2012 and is putting its own spin on the tea retailer. The first Teavana Fine Teas + Tea Bars opened last year in Manhattan and Starbucks’ hometown, Seattle. Twenty more are projected to open this year, including units in Chicago and Los Angeles.
“We are more convinced than ever that we have the opportunities to transform the tea category to the way we have transformed coffee,” Schultz told analysts in December.
Starbucks units sell several varieties of lightly sweetened, often flavor-infused teas shaken with ice, plus iced tea lattes and Tazo bottled teas. But Teavana stores go further. Teavana’s regular iced teas include Citrus Lavender Sage, infused with sea buckthorn, lavender, and sage, plus pineapple and orange. Among specialty iced teas is the Sparkling Dragonfruit Devotion, which is slightly carbonated and infused with herbs and fruit. The tea bars also feature craft iced tea fusions and iced steamed milk tea lattes.
Teavana is likely to assist Starbucks stores, where the biggest barrier for tea “is the perception that Starbucks is solely about coffee,” says spokeswoman Holly Hart Shafer.
In April, Oprah Chai Tea, created by media star Oprah Winfrey and Teavana teaologist Naoko Tsunoda, became available at both Teavana and Starbucks. It is black tea blended with rooibos leaves and infused with cinnamon, ginger, cardamom, and cloves.
The idea of a tea bar is not new. Denver-based fast-casual Asian chain Tokyo Joe’s has featured a five-kettle tea bar in its restaurants for years.
“Tea is very important to what we do,” says Larry Leith, founder and chief innovation officer. “Tokyo Joe’s is an Asian grill, so you would expect us to have tea, but we sell a lot more iced tea than hot. It does well with sushi, rice bowls, and salads.”
There have been two signature iced tea blends since Tokyo Joe’s began, and the company experimented with many others before settling on its current lineup.
In addition to a China black iced tea, the chain features two green iced teas: a Japanese Sencha variety flavored with quince essence, and a pomegranate-flavored offering. There is also passion fruit black tea and raspberry and hibiscus herbal tea.
“With our food, five blended teas work very well,” Leith says. “We’re pretty crazy about the quality, so we make sure it’s fresh all the time. If you keep the tea too long, the flavor is not as vibrant.”
The best-selling teas vary from store to store throughout the 25-unit concept with restaurants in Colorado and Arizona. Planned Texas stores will have sweet tea, too.
Tea is so important at Peet’s Coffee & Tea that it’s in the company’s name. The chain serves a wide range of cold tea beverages, including iced tea, Coolers made with tea and juice, lattes, and creamy cold drinks called Freddos.
“The interest in tea continues to grow, the places offering tea are going up, and the general understanding of tea by people is rising,” says Eliot Jordan, Peet’s director of tea.
Peet’s brews two unsweetened, unflavored iced teas every day: Summer House, a blend of China and India black teas, and Jade Green, a blend of China green tea and jade oolong that is smooth and tastes a little nutty.
“You can make iced tea from any type of green tea, but you want to stay away from the grassy-tasting ones,” Jordan says. “You want the ones that are mellow and toasty.”
The company’s three Coolers are sweet and fruity. Hibiscus Breeze, for instance, consists of hibiscus flowers, chamomile, and cinnamon with some added lemonade.
Peet’s also offers matcha—a super-fine, high-quality green tea powder—as an iced tea, in regular and flavored lattes, and as a Freddo. “It has a really unique, rich taste,” Jordan says.
One tea company making a push into the limited-service category with its fresh-brewed iced tea is Honest Tea. The tea was rolled out in Smashburger stores last year and has been added at other fast-casual chains, such as Saladworks and Lime Fresh.
“Our tea is a nice entry for operators to get organic and fair trade–certified language in their stores,” says Seth Goldman, Honest Tea’s president.
A number of restaurants had offered bottled Honest Tea, but the on-premises brewed tea is new. “We did some trials with smaller restaurants before the Smashburger deal took it national,” he says.
Honest Tea’s core brewed offering is a black tea, but there are also raspberry, green, and lemon herbal versions sweetened with organic cane sugar.
Iced tea is a menu item that is better in restaurants than at home, Goldman says. “Consumers are not going to have tea leaves of this caliber, sweetened like this, and brewed in this way.” It’s also quite profitable, costing pennies per cup, he adds.
Green tea was the second flavor created at frozen-yogurt chain Pinkberry and continues to be available in most stores. There is also a green tea smoothie, plus green tea latte yogurt and smoothies.
“We used to have only two smoothies, and one was green tea,” says Laura Jakobsen, Pinkberry’s senior vice president of marketing and design. “When we relaunched our smoothies, it became one of the options that franchisees can rotate in.”
The green tea frozen-yogurt flavor is “very approachable,” she says, although not exactly mainstream. “It is an authentic green tea formula, and we use matcha powder.”
S&D Coffee and Tea’s Buckner says tea creations are just getting started.
“We will see more cold and hot tea lattes, tea smoothies, sparkling tea, tea freezes, among others,” he says. “Tea lattes are already taking off, and you are going to see more quick-service restaurants adopt them. I think it will explode over the next few years.”
San Diego–based Dlush, which founder and CEO Jefferey Adler dubs a “cross-category drink concept” aimed at youth, is one example of an upstart brand pushing tea to its limits.
“We marry tea with fruit or ice cream or food to make drink combinations that are pretty bold,” he says. “It’s not for the faint of heart.”
Cucumber Apple Fizz, for instance, has a black tea base, Sprite, and fresh-sliced cucumbers and green apples. It is topped with Pop Rocks.
“We’re really interested in pioneering eating and drinking in one vessel,” he says, noting similarities with boba or bubble tea, a Taiwanese drink with milk and tea with tapioca pearls.
Most Dlush locations serve bubble tea, but the nine-unit chain was prevented from selling it at one college due to competitive restrictions. As a result, the company came up with some new food-and-drink-in-a-cup options. One features a cup filled to the 20-ounce mark with tea, topped by a small plastic tray housing food such as cashew nuts or popcorn. Straws, sometimes adorned with candy-like jellied fruit rings, go through both the food and the tea.
Dlush also makes Thai iced tea, which is tea sweetened with sugar and half-and-half.
“It is unabashedly very sweet, but what makes our Thai tea different is that we can make it various ways,” Adler says. “Most have half-and-half cream, but we can go with almond milk or soy milk, and people have the permission to play by adding other items.”
After all, he says, “we’re just looking to have fun.”