HTeaO sells Texas-sized cups of freshly brewed iced tea in 24 different flavors.
Texas chai, peach ginger, mango fresco and sweet mint are just a handful of the flavors offered by iced tea franchise HTeaO, which is betting its brewed drinks will stand out in the growing specialty beverage category.
“We’re the first to market, we’re ahead of a trend, we’re the only ones doing it,” said CEO Justin Howe. “The customers are freaking out, and they have been for over a decade.”
Howe is the son of co-founders Gary and Kim Hutchens, who flipped what started with six flavors of iced tea they called Texas Tea and served at their burger restaurant, Buns Over Texas, into an entirely new business.
The drinks were such a hit Buns Over Texas began drawing customers purely with its tea offerings. In 2009, the Hutchenses took the Texas Tea name and opened a separate store, and in 2012 they partnered with Howe to take the brand nationwide. In 2018, what became HTeaO opened with its first store in Midland, Texas.
“The product quality is through the roof,” said Howe. HTeaO sells freshly brewed, large cups of iced tea, which can be customized with 24 different flavors and levels of sweetness—and come in Texas-sized amounts. The brand’s small size is 24 ounces and the largest size is 44 ounces. Gallon and half-gallon jugs are also available.
Bryan Benson owns three stores in Texas.
“It’s not a syrup-based drink like everything else that you get at every other location, anywhere you go,” Howe said. The company instead uses cane sugar and natural flavorings. Howe’s favorite is a classic: unsweetened tea with lemon.
Howe brings a long and varied history to the company, starting when he was a teen working in restaurants and in construction, two businesses with family ties. At 17, he’d already founded a lawn mowing business and a snow cone stand, which he operated outside his family’s restaurant and employed nine people. He later went to school to become a pilot, then founded a granite countertop fabrication company as well as an aircraft management company in 2001. He went on to build and managed properties before getting back into a family business.
HTeaO had 63 locations open as of November 2022 in Texas, Kansas, New Mexico, Oklahoma and Florida, and 83 more in construction in the southern United States.
Franchisee Bryan Benson owns three HTeaO units in San Angelo, Texas. He was the brand’s first franchisee in 2019, and he was interested in owning his own location about 18 months before HTeaO was franchising. “We just thought, ‘Hey, man, this is cool. This is a cool vibe, it’s a cool environment,’” Benson said.
Benson and his partner now have three more units in the works. “They’ve all been doing very good,” he said about his existing three stores.
Justin Howe
HTeaO will sign multi-unit deals, but most of the 400 franchises it’s sold are to single-unit operators, Howe said. “We do multi-unit deals with a very intentional rollout, where we’ll let them do a limited amount of stores in the beginning,” he said.
To accommodate the expected expansion, Howe has a “robust” infrastructure in place with HTeaO’s 40-plus full-time employees. HTeaO has its own warehouses, trucks and drivers, which minimizes the supply chain issues many brands are struggling to address.
“We don’t just drop the pallet off,” Howe said. “We have drivers that actually care about selling product in the store.”
As for goal-setting, Howe doesn’t like to look long term. “I don’t have a five-year vision,” he said. “Our goals are based on the unit-level economic support, meaning that if we have a store that opens in an area that hasn’t overcome obscurity with the brand, then our goals are to support those units.”
The investment required to open an HTeaO store ranges from $235,200 to $1.6 million. A food truck location costs $511,800 to $1.9 million and a non-traditional venue is $77,500 to $124,000. The royalty fee is 6 percent of gross sales. Typically, stores require about 2,000 square feet with a drive-thru and a T-shaped bar.