Continue to Site

    Reading the Tea Leaves

  • Restaurants increasingly see profits brewing in both cold and hot teas.

    The biggest growth in iced tea is in the sweet tea category, thanks in no small part to the decision by McDonald’s to begin serving it nationwide in 2008.

    Of course, sweet tea is a staple at restaurants in the South, including many quick-service companies like Charlotte, North Carolina–based Bojangles’ Famous Chicken ’n Biscuits. In fact, the beverage is “in our DNA,” says company executive vice president Eric Newman.

    “It’s the same recipe as when we began” in 1977, he says, even though the chain has grown to more than 500 restaurants in 10 states.

    Sweet tea is made “the old-fashioned way,” sweetened with pure cane sugar, Newman says. “We not only brew it, but steep it, prime it, and limit its holding time.” As a result, fresh batches of the tea are made several times a day.

    The strong performance of sweet tea at Bojangles’ and other quick serves in the South led McDonald’s franchisees in the Raleigh, North Carolina, region to develop a company-approved sweet tea offering.

    McDonald’s officials saw a national beverage opportunity.

    “We’ve been working hard to be a beverage destination,” and sweet tea seemed perfect, says company spokeswoman Ashlee Yingling. The regional favorite went through tests in other parts of the country before it was eventually rolled out nationwide.

    The result: “It is a hit,” Yingling says. It also sells for $1 for a 32-ounce serving in many markets, helping to make sweet tea the least expensive restaurant beverage other than water, with an industry average of $1.83 per serving, according to Mintel.

    Sweet and unsweetened teas make up about 90 percent of iced tea sales, Tomblin says. The rest are largely fruit-flavored teas, which are popular outside the South. Raspberry and peach are the most popular flavors.

    Wendy’s used flavored iced tea to expand its overall summer seasonal menu. The Wild Berry Tea, made with blackberries, strawberries, and raspberries, complemented the Berry Almond Chicken Salad and Wild Berry Frosty Shake.

    Numerous snack chains from Jamba Juice to Red Mango regularly feature tea in cold drinks, often extolling its health benefits to market the items. Overall, Chai and green tea tie for the top specialty flavor, each at about 10 percent, Technomic reports.

    Iced tea has been the main product made by China Mist, a Scottsdale, Arizona–based manufacturer that worked with numerous restaurants, including Panda Express and Noodles & Co., to develop tea offerings.

    The company is known for its whole-leaf iced teas and for using large tea leaves.

    “All of it is hand-picked, so we get the larger leaves,” says China Mist president Joe Jacober. “That helps in the final product, because the big leaves are a great carrier for flavor and you get all the health benefits from these bigger leaves.”

    The company also makes a concentrate from the same leaves.

    In the past few years, China Mist has added a hot tea line, including steeped whole leaf tea, regular tea bags, and a teapot program called Sachet, which employs a larger tea bag that can brew 20 ounces. About 85 percent of the hot tea items are organic.

    “Tea has become one of those things that restaurants can use to differentiate themselves, to be special,” Jacober says. “Everybody has basically the same carbonated drinks, but tea allows operators to create that unique experience.”

    Another special tea product, Chai—made by boiling tea leaves with milk, sugar, and often spices—has been a hot and cold tea offering for several years at Caribou Coffee. It is also the foundation of the company’s effort to redefine and re-energize its tea menu.

    “In the past year, one of the key things we’re doing is bringing to the tea platform what we do in coffee,” says Alfredo Martel, senior vice president of marketing and product management for the Minneapolis–based chain, which has nearly 500 units.

    Caribou has versions of black, green, oolong, and herbal tea, although the last is not made with tea leaves but with dried fruit, flowers, or herbs. The company has several versions of rooibos tea, which also is not tea but a South African plant.

    Several tea lattes, made with extra strong tea and hot steamed milk, are on Caribou’s menu as well. They include a Pomegranate Vanilla Oolong Tea Latte.

    “These mirror the coffee offerings in the flavor experience,” Martel says. “Tea lends itself to a lot of creativity” in terms of flavors the company wants to explore, such as fruit juices, herbs, and spices. He says fusing tea and carbonated drinks is in tests now.

    Caribou uses tea bags and loose-leaf tea to make various varieties of hot tea.

    Hot tea specialties at Tim Hortons are delivered mostly via tea bags, although the Canada-based company also offers one type of steeped tea in most of its markets.

    “We’ve got about 10 varieties of specialty tea, like Earl Grey, green, and Orange Pekoe, and then we rotate certain teas seasonally, like Blueberry White Tea or Pumpkin Spice,” says Dave McKay, director of brand marketing.

    Tea bags are important to hot tea drinkers because “they are very particular about the way they want their tea steeped.”

    At the same time, drive-thru customers who order hot tea want it ready to drink, with sweetening and milk added by request, just like in coffee.

    The company is also testing tea-based lattes in its Buffalo, New York, market. Similar tests that began earlier in some Canadian markets “have had positive results,” McKay says, and it reflects the fact that “tea drinkers are thriving and actually expanding.”