STiR coffee and tea magazine

36 STiR coffee and tea / Issue 5, 2020 (October / November) "Teavana came the closest on the re- tail [bulk tea] side," he said. But Teavana's winning formula was more about gifting than about tea. Like so many other novel gifting concepts [think olive oil, popcorn, coffee, nuts], there's a consistent enthu- siasm curve. "DAVIDsTEA, like most tea retail- ers, never really completed more than two-thirds of a sustainable business model," said Cain. The novelty factor of premium, loose leaf tea and accessories allowed these incomplete businesses to succeed… for a while. Now the novelty is worn off. There will always be excellent, fash- ionable, independent cafes and small chains, but the replicable business model in coffee service is heavily supplement- ed by food, tea, dessert drinks, and any- thing else they can throw in to become more like a quick service restaurant than a shrine to the bean. "Where is the tea bar or café with a credible, competitive assortment of cof- fee drinks, and food for different dayp- arts?" he asks. "I've seen only a few inde- pendents pull that off, and they appeared to be doing very well." Customer acquisition concerns It takes "each one, to teach one," accord- ing to author Norwood Pratt, whose Tea Lover's Treasury introduced modern spe- cialty tea to the North American market. The African proverb refers to literacy education, tutored one-to-one, but sug- gests the importance of educating tea drinkers by example. Guided tastings live-streamed to customers are the latest adaptation by tea retailers. Miriam Novalle is the epitome of tea promotion. In April, "with the pandemic at my door," herT Salon in New York City hosted "Tea, Taste, and Zoom," a $25 per person online tasting session that included a tea kit mailed to participants. The event drew a crowd. Novalle said that she mailed 47 kits for her second "Tea with the Masters" Zoom event in September. In 1992 Novalle founded the T Salon tea-bar and retail shop with seating for 40 indoors and 20 on the patio at Chelsea Market. She opened a second 30-seat lo- cation on Melrose Ave. in Los Angeles in 2009. In 2010 Novalle reported 40% of the company's sales were from bever- ages, 30% from dry tea and the rest in food and accessories. Four years ago, she "Let me be quite candid and say you can never get to 100% replacement of that of- fline touch and feel and context. That's unique. When you see the person, you interact with the person in the offline setting, the way you are able to relate is very different, and we realize that from our store at the airports. However, there is no reason why you can't get to 95% of that experience, and thankfully, in today's day and age, with technology, you're able to do that," explains Dugarr. The decline of brick and mortar It is now apparent that several retail formats are no longer viable due to Covid-19 restrictions. DAVIDsTEA, the largest chain tea retailer in North America, declared bankruptcy this spring, closing all but 18 of its 231 locations. According to the Mon- treal-based company is reorganizing, pivoting to online sales, and grocer after e-com- merce sales increased by 127% compared to last year. Wholesale sales in grocery are up 86% compared to fiscal 2019. Weber, at THAC, observes that DAVIDsTEA "built a strong brand over the years that can stand on its feet firmly through online and grocery store sales. Their customers will continue to purchase their products - because they know them and trust them." Small chains and franchise operations like The Spice & Tea Exchange are stable and even expanding in some locations, including St. Petersburg, Fla., a state hard-hit by coronavirus. "Ninety-seven percent of our stores have been impacted by the coronavirus pan- demic, whether that's having to close doors completely, or reduce hours," writes c.e.o. Amy Freeman. She said the company's executive staff called every franchise operator "to hear straight from our leadership that The Spice & Tea Exchange is a nimble com- pany, working tirelessly to pivot, so they profit." "The company has always given 20% of its online sales back to franchisees, it has increased to 30%. On top of the higher percentage going back in the pockets of fran- chisees," she said. "The company has been working around the clock to get custom- ers to the website to drive online orders. The franchise is offering free shipping and specials through e-newsletters and Instagram/Facebook posts," according to c.o.o. Penny Rehling. Intimate, independent Victorian and Southern-style tea rooms that resemble small cafes with limited financial resources appear vulnerable. YELP, which tracks business activity in 219 cities in 32 countries, reported in August that 61% of its foodservice listings were permanently closed. An August survey of owners by the New Work State Restaurant Association found 63.6% of New York restaurants are likely to close by the end of the year without government assistance. "The tea industry never found a reliable, replicable business model," observes Charles Cain, a management consultant at Building Oz and former Starbucks executive responsible for retail operations. Starbucks acquired Teavana in 2012 and expanded to 379 stores before closing the venture in 2017. Teavana closed its online store at the time, citing the upsell advantages of serving customers face-to-face.

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