Why HTeaO is One of the Top 10 New & Emerging Franchises for 2023 Chief development officer Andrew Hawes explains how a drive-thru iced tea concept is attracting experienced multi-unit franchise operators
By Tracy Stapp Herold •
This story appears in the September 2023 issue of Start Up.
How does a drive-thru iced tea franchise sell more than 400 franchises in five years? We spoke with HTeaO's chief development officer Andrew Hawes to learn why franchisees see the brand as a sweet opportunity — and how it's grown to be one of the country's strongest young franchises.
How did the HTeaO brand get started?
Our founder, Gary Hutchens, has owned a hamburger restaurant in Amarillo, Texas, called Buns Over Texas, since the '80s. He started selling iced tea there in the mid-2000s. And around the time of the last recession in 2008, he started noticing people were coming in and, instead of spending 10 bucks on a hamburger, they were just spending two or three bucks on an iced tea. So in 2009 he added on 1,200 square feet to his hamburger restaurant and launched Texas Tea, offering six flavors of iced tea from a drive-thru.
His son Justin, who is now our CEO, joined him and his mom from the start, but took an official team role in 2012. That's when they launched the first prototype of a freestanding Texas Tea. And once we opened that, we realized we might have something special that we might be able to franchise. So we spent five or six years building the franchise model and the support system and the infrastructure, and then launched the franchise opportunity in 2018, at the same time that 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. We've even had some interest, crazily enough, from places like North Dakota and Idaho. But right now our focus is the southeastern United States, what I would call "tea-drinking country." The barrier to entry is much lower there, because you don't have to explain what iced tea is to someone in, say, Georgia.
Once we have that exposure in the southern U.S. and have a thousand locations open, we can get into some of the more northern states that aren't as familiar with iced tea yet. And one of the reasons we brought on what we call our brewhouse offerings, which is our hot tea and coffee offerings, along with increasing our morning traffic, was to eventually go into those markets where iced tea is less well-known.
What are your goals for the brand for 2023 and beyond?
We have 72 locations open and operational today, and 75 under construction, so that should bring our total to nearly 150 stores open in the next 12 months. Beyond that, we've already awarded more than 450 franchises in total, and we're looking at awarding 175 more this year.
To what do you attribute that growth?
It's a model built around the most profitable part of a restaurant. Any restaurant owner will tell you beverages are where the money is made. We eliminated all of the frustration and equipment that goes with food preparation. And it doesn't take a rocket scientist to realize that water, tea, and ice are not too terribly expensive, so the margins can be very lucrative. I think people can visualize, Hey, this is something I can do. I don't need culinary experience or a background in restaurant management.
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What types of franchisees has HTeaO attracted?
In the beginning, it was a lot of second-career type people — people who said, "I'd love to build a business for myself, but I need that support mechanism of a franchise." So for the first few years, our growth was heavily weighted toward single-unit operators, and they've been fantastic.
Now that we've built some brand awareness, we're starting to attract multi-unit, multi-brand franchise partners, which is extremely humbling.
I still view us as a young, unknown brand, so to have someone with 20 or 30 years of experience in the franchise space take a leap of faith means a lot to our team. We're still going to welcome single-unit franchisees, but bringing on multi-unit partners who can do five to 20 stores over a shorter period because they have the infrastructure already in place is really going to be key to our growth going forward.
