How to Boost Profits by Serving Tea

With more Americans drinking tea than ever before, restaurants can cash in on easy winnings.
Chuck-Bauman-Heather-Agosta
According to Chuck Bauman and Heather Agosta, the co-owners of Jasmine Pearl in Oregon, tea can have a higher profit margin than alcohol. (Photo: Chuck Bauman and Heather Agosta)

Coffee may still dominate when it comes to American hot beverage preferences, but tea is on the rise. And for restaurants, the trend is an easy way to brew up quick profits.

According to the Tea Association of the U.S.A., about four in five Americans drink tea. Millennials are the most ardent sippers — 87 percent of them of drink tea. As of last year, tea purchases represented 6 percent ($11 billion) of total dollars spent on food and beverages in the United States. Between 2010 and 2015, tea offerings on U.S. restaurant menus grew by 16 percent.

“Tea products have a great perceived value to customers and the cost of goods is generally better than soda,” said Scott Ballard, owner of PJ’s Coffee and Tea, a cafe headquartered in New Orleans with 80-plus stores. “Adding flavor profiles and beverage options decrease the likelihood of customers ordering water — helping increase ticket averages too.”

Jasmine-Pearl

(Photo: Jasmine Pearl)

Profits are in the bag (or infuser)

Tea can be very lucrative for a restaurant’s bottom line according to Chuck Bauman and Heather Agosta, co-owners of The Jasmine Pearl, a Portland, Oregon-based tea company and wholesaler that supplies to restaurants around the country.

One pound of loose-leaf tea, which costs between $15 and $25 from The Jasmine Pearl, yields 180 to 226 8-ounce servings. If such servings are sold for between $2 and $4, a restaurant stands to make between $335 and $879 per pound of tea.

“Tea can have a higher profit margin than alcohol and is quicker to make than an espresso drink,” Bauman said.

The decision to serve pre-bagged tea versus loose-leaf can affect profits, according to Bauman. Loose-leaf is more labor intensive because servers must scoop the tea (in advance or when tea is ordered) into infusers or bags. But it has a higher perceived value and therefore you can change more. Loose-leaf tea purchases are growing, though bagged tea still dominates (69 percent of hot tea in the U.S. is purchased bagged).

Which to choose depends on the type of restaurant and customers, according to Tim Smith, owner of the Tea Smith, an Omaha-based retailer with two store locations and a wholesale operation that supplies to restaurants such as Blue Sushi and Sake Grill.

“If the restaurant is fast food and self-service where price is the big factor, bagged is often a better choice,” he said. “For fast casual and high end settings, every aspect of the menu should add to the overall quality and guest experience. If the restaurant has a dessert menu, featuring coffee and teas should be given a similar consideration to other items on the menu.”

Suiting your customers to a T

Though no one selection of tea offerings fits all restaurants, distributors and tea experts recommend serving a variety of teas that include one or two black teas (such as English Breakfast or Earl Grey), one or two herbal tisanes (blends of fruit and flowers that don’t contain caffeine) and one or two green teas.

Kelly-Zajac

“A small amount of staff training will go a long way in revving up tea sales.” – Kelly Zajac owner of Tudor House Coffee & Tea

Bauman advises his restaurant clients to choose teas that fit the restaurant’s menu offerings. High-end restaurants might serve single-origin teas (“self-drinkers” in industry speak), whereas bakeries and coffee shops may want a mix of single-origin, blended and flavored teas.

Since about 85 percent of tea in the United States is consumed iced year round, ask your supplier for recommendations on varieties that are best brewed this way.

Consider working with your supplier to create a custom blend as well, said Kelly Zajac, owner of Tudor House Tea & Spice, a tea shop in Kalamazoo, Michigan that supplies tea to retail customers and wholesale to restaurants and cafes.

“Customers appreciate uniqueness and exclusivity,” she said. “And if you don’t want to experiment with creating your own blend, this is a great opportunity to partner with your local tea shop.”

If you’re not familiar with tea, don’t select blind. Most wholesale tea suppliers will work with food service clients to choose options that are easy to make and fit the restaurant’s brand, said Smith.

Serving and storing

PJ's-Coffee

(Photo: PJ’s Coffee)

For restaurant owners not familiar with tea, the crucial thing to know is that it should be kept away from light, heat and air, according to Zajac. “Easy to open opaque tins kept in a cooler part of the kitchen are perfect,” she said.

Other than tea, the only other ingredient is, of course, water. Filtered is best. Ballard suggests water urns, which keep water at near boiling temperatures.

Though different types of teas can require different water temperatures, Zajac said 195 degrees should be fine for most teas. Check with your supplier on water temperatures for the tea you select.

For serving, pre-bagged teas require no additional equipment other than boiled water, but loose-leaf needs scoops (ask your supplier about sizes) and steeping vessels, which can range from metal infusers to disposable paper bags.

Training servers on tea

Tea may be new territory for servers, especially if you’re opting to include loose-leaf teas. Zajac said it is imperative that they get an overview of the offerings and preparation methods. Local suppliers are usually happy to host short training sessions. Include some time tasting the offerings, talking about flavor profiles and going over tea-to-water ratios.

“A small amount of staff training will go a long way in revving up tea sales,” Zajac said. “Just like you would let them know details about the day’s specials and have them taste it, you want them to have some knowledge about the teas and what they taste like.”

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