A preacher I love to listen to often recites this little poem: “Great it is to dream the dream when you stand in youth by the starry stream. But a greater thing is to fight life through, and to say at the end ‘The dream was true.'” He also often says: “How big is your ‘want to’?
So here we go again. This is the third tea retail concept I’ve poured my heart into in the last 11 years. As I sit with rough sketches of the interior and saved photos of finishes and ideas in email files, it seems like yesterday since a partner and I had planned to happily work together on building a modern tea cafe. It was 11 years ago. Let’s be honest: we had big dreams and hoped to grow it into a chain. That resulted in a total of three at its peak, which have diminished to two, both of which are more pannini/gelato cafes than tea-centric. I lost control early on, a few months after opening the doors of the first store, when my partner’s husband decided they wanted to fly solo and I was negotiated out with less than half of my original equity position and not enough resources left to fight someone very financially well-heeled. That was my first retail experience and my first partnership experience and it wasn’t bittersweet..it really tore my heart out.
But my passion for business and tea is, probably like yours, fervent, and so the second retail tea business was opened shortly thereafter by my husband and I on a shoestring, as more or less a laboratory for learning not only about retailing in general, but techniques of brewing tea, and about retailing specialty tea in particular. After 4.5 years, we closed it due to a steep rent increase and the necessity of committing to a long-term lease in a location we knew from the start was not ideal for the concept but affordable. Yes, we broke the location (x3) rule. Yelp reviews during the full 4.5 years were 5 star which was very gratifying in itself, but we knew the time had come to move on and make adjustments. We were also continuing to work on a disruptive brewing technology and took a breather to assess where the specialty tea market and other retailers were going.
Two years after shutting the doors, it’s exciting to see that the specialty tea retail opportunity is even more exciting now than it was a decade ago. And, although loose tea itself has gained incredible momentum, there are very few retail competitors who are of any size, and there are no concepts we’ve seen that we would be cloning. Part of the challenge and fun for us is to be original and fresh. However, when thinking about a retail concept, if you indeed hope to make a living from the business, there are many things to consider.
By running a store hands-on daily, we gained information on what margins should be on each product, where the most labor and waste were, what percentage of total sales each segment of the product mix was, and what customers were looking for and responding to within the store. Space utilization is key in retail, with each square foot costing you money, and therefore needing to contribute in some way to the bottom line.
Your name plays a large part in determining how customers perceive your business, as will the front facade and interior design as well as product offerings. Are you a cafe, a store, or a combination of both? Will you serve tea alone, or tea and coffee? Because tea cafes seem to be the direction many retailers are taking, you will be perceived as a ‘third space’, with one cup for “extended-stay-lap-toppers” a part of your daily routine. Will this help or harm your business? We found that loose tea buyers are not the ones who think of the tea store as their office. When Starbucks introduced the ‘third space’ concept, there was no internet, no laptops. They saw it as a convivial place. They now focus on drive-throughs, handing early a.m. caffeine fixes out a window to half-asleep commuters and, whether they like it or not, McDonald’s, Dunkin’ Donuts and Tim Horton’s are their true competition.
If your concept is more of a store than a cafe, are you in a location that supports that concept? Teavana, much more a store than a cafe, is located in malls with high foot traffic. If you aren’t in a high traffic location, how will customers find you? What will that cost you? Do you have a website that will support your retail concept and vice versa? And what will make you different than the competition? If you say better product…..wrong answer. It takes more than just better product.
Will your theme be Asian, zen, modern, or maybe an English style tea room? The colors, flow, arrangement, product mix, music/sound, lighting, signage all work together to support the theme. Some colors are used more often in eating establishments because they stimulate appetite, such as red. There is even the science of which way customers turn or look when they enter a space and what should be there for maximum advantage. It’s a great idea to read as much as you can about the science of retail design, especially if you don’t plan to use a commercial designer. Looking at photos of interiors of successful retailers’ spaces is also eye-opening. There is always a reason they are set up as they are..and it’s ultimately to stimulate sales and increase business.
The Health Department is a big deal if you plan to serve food and not just sell sealed packages and general merchandise. Even serving or sampling out a cup of tea will necessitate dry storage, the proper commercial equipment, sinks, etc. Have you considered a water filtration system? Some more expensive ones can cost somewhere in the $6000 range, and then there will be refrigeration, water heating appliances, and any number of other supporting appliances, depending on your menu. Build-outs? The one my husband and I took over had cost the original owner $250,000. Ouch. That’s a lot of tea.
Diane Walden has been in the tea business since 2007, when she became part-owner in three tea stores, two of which continued until 2016 and were sold. She and her husband also ran their own tea shop in her hometown in Southern California for almost five years before moving the business online. Always interested in the brewing importance of the tea experience, the couple licensed a commercial brewer to a coffee and tea equipment manufacturer recently and are hoping it will be on the market in the future.