How to Open a Tearoom
Is it any wonder that so many tea lovers dream of opening their very own tearoom? Whether the vision is traditional English, tranquil and trendy Asian, or some modern fusion, I’ve never met a tea lover who doesn’t get excited by the prospect of sitting down to enjoy a few tea-inspired dishes and a flight of premium loose teas with friends. If what Americans buy is mostly marketing, packaging, and experience, then what could be better than a perfectly executed oasis of tea? The flavors, history, and romance are simply unparalleled.
Understand Food Service. The first key is to understand what it means to work in food service, and understand that your tearoom will be a food-service establishment regardless of the specifics of your approach and menu. Consider the differences between a Chinese restaurant, a Japanese sushi bar, an American steakhouse, a Spanish tapas restaurant, and a Brazilian steakhouse. The customer experience, menu, and decorations are dramatically different. At the same time, the daily workload and challenges of the manager, chef, server, and hosts are identical. A tearoom is a restaurant with a tea theme. If you’re not prepared to go into the restaurant business, you’ll be sorely disappointed.
Understand Customer Expectations. According to a study by Mintel, 76% of American households have packaged tea products in the pantry (loose or bagged). 10% of American households buy loose-leaf tea. So while most consumers are familiar with tea, a small percentage can be considered tea connoisseurs who go out of their way for a premium tea experience. The advantage of adding food to a tea-based business is that it attracts a broader consumer base, rather than just the few percent who are tea connoisseurs. The flip side of that is that if you are attracting the average consumer instead of just tea connoisseurs, you are competing against all other food-service establishments. Your key differentiator – being the only tearoom in your area – is just a marketing angle to the average consumer. Your average guest in a tearoom is going to care a lot more about the quality of the food and the speed of the service than the quality and selection of tea.
You will, no doubt, be very proud of your ability to infuse tea into your menu. The average customer will enjoy the upgrade, but it only works best if your dish is as good or better than that offered by competing restaurants. The truth is that since your ingredient costs will likely be higher and your volume lower, your dishes will be more expensive and therefore must be better. The average consumer will pay a premium for something different once, but will only come back if the experience is better than what they can get elsewhere.
When it comes to tea, the average consumer and casual tea drinker will typically prefer inexpensive flavored tea to premium, single estate, gourmet specialties. You’ll go into business dreaming of flights of First Flush Darjeelings or Chinese Oolongs, but that’s not what you’ll serve. The reality is that most customers will prefer the pricing and taste of their fruity teas and tisanes over a perfectly prepared flight of premium classical teas. This is especially true in a setting where they’re also eating food and therefore less able to discern the nuances of the tea.
An appreciation for fine teas is taught and developed over time. Very few customers in a tearoom or bistro will have any patience for education and experience. Most are there with friends to grab a bite to eat and talk. A server that tries to educate or discuss the product is often seen as an intrusion. You’ll be tempted to go out of your way to make the tea connoisseurs happy, but don’t forget that your model is based on attracting casual tea drinkers!
Understand how Retail complements food service. Most prospective tearoom owners want to offer a retail section where customers can buy teas and teaware. This is a great idea. Just don’t think that you can take a $500,000 tearoom and a $500,000 tea retail shop and combine them for $1 million in sales. The likely result will be maybe $600,000. In a food-service environment, whether it’s closer to a restaurant or a café, retail displays are about impulse buys. People do not do their Christmas shopping in a restaurant or café.
People walking down the street will very rarely step into a tearoom to shop for retail. Section unless they also intend to sit and eat. This might not be how you plan it, but that’s how it works. If someone wants a bottle of wine, they go to a liquor store, not any of the local wine bars with retail sections. It is rare to see anyone shop at Cracker Barrel unless they’re also eating there. The customer assumes that the shopping is an extension of the dining experience. The diner is not in a shopping frame of mind, having already spent a lot of time in your establishment and a decent amount of money. The likelihood that a diner will spend more than a few dollars in your retail section is very low.
Samovar Tea Lounge operates three beautiful tearooms in San Francisco. While they’ve been extraordinarily successful and have generated a ton of national attention, they’ve never been able to drive retail sales beyond a few percent of their total in-store business.
Understand the Hours and the Implications. Traditional tea time is between 1 and 5. This is the slowest period of the restaurant day. In short, tea service may be a great way to drive traffic during the slowest hours, but your tearoom cannot survive on tea service. You will need to capitalize on both the lunch and dinner rush. The only food-service concepts that can survive on one rush per day are huge volume breakfast concepts, lunch concepts that cater to high-density business areas, or high-priced fine dining concepts. It is difficult to make a tea room survive without finding a way to stay busy from lunch through dinner. A successful dinner menu will likely require alcohol and a kitchen. You can cater lunch and tea service items, but dinner is a bit harder.
If your model is more of a café (modeled after the ubiquitous coffee shops), then of course dinner won’t be your focus, but then your hours need to be early morning through late evening to drive the sales necessary for success.
Understand the Staffing Implications. Employees who are adept at learning about and getting customers excited about tea may not want to serve tables or mop bathrooms. The employees who can handle serving 5 or 6 parties at a time are not going to learn the nuances of your finest teas. The best servers are going to leave you and go to a restaurant with more expensive dishes and alcohol. A server can make twice as much at a chain like Olive Garden than in a tearoom because the traffic and average tickets will be higher, and they get to make their money in tips.
As importantly, an employee engaged in a consultative sale should be able to spend 10 minutes or more with a customer discussing the finer points of tea. The typical café or tearoom customer waiting for service will grow impatient very quickly watching your staff “chit chat” with another customer. This is a challenge that’s difficult to overcome unless your retail and foodservice sections are entirely separated. Even if they are, your employees will gravitate towards the immediate service needs of the foodservice guests over the slow, focused process of the consultative sale. It’s tough to slow yourself down and engage a customer when you have tables waiting for their check or food waiting to be served. Can you afford to hire both dedicated retail and food-service staff?
Understand the Costs. You can open a great retail tea shop in under 1,000 square feet. However, to have enough seating to support a kitchen, you really need at least 2,500 square feet. Labor costs are higher, equipment costs are significantly higher, and the build-out is often very expensive. A Panera sandwich shop is neither huge nor beautiful, but it costs more than $1 million in cash upfront to open one.
Does that mean you need a million dollars to open a tearoom? Certainly not, but if you don't understand why a Panera would cost $1 to $1.5 million and can't explain where and how you're going to do it for less, you have a lot of homework to do.
If you’re looking for someone to learn from on the tea and food-service side, pay a visit to the Samovar Tea Lounge in San Francisco and the Queen Mary Tea Room in Seattle. Each is an impressive and profitable business that has an excellent reputation in the tea industry. Each also takes a different angle on the company.
Understand Food Service. The first key is to understand what it means to work in food service, and understand that your tearoom will be a food-service establishment regardless of the specifics of your approach and menu. Consider the differences between a Chinese restaurant, a Japanese sushi bar, an American steakhouse, a Spanish tapas restaurant, and a Brazilian steakhouse. The customer experience, menu, and decorations are dramatically different. At the same time, the daily workload and challenges of the manager, chef, server, and hosts are identical. A tearoom is a restaurant with a tea theme. If you’re not prepared to go into the restaurant business, you’ll be sorely disappointed.
Understand Customer Expectations. According to a study by Mintel, 76% of American households have packaged tea products in the pantry (loose or bagged). 10% of American households buy loose-leaf tea. So while most consumers are familiar with tea, a small percentage can be considered tea connoisseurs who go out of their way for a premium tea experience. The advantage of adding food to a tea-based business is that it attracts a broader consumer base, rather than just the few percent who are tea connoisseurs. The flip side of that is that if you are attracting the average consumer instead of just tea connoisseurs, you are competing against all other food-service establishments. Your key differentiator – being the only tearoom in your area – is just a marketing angle to the average consumer. Your average guest in a tearoom is going to care a lot more about the quality of the food and the speed of the service than the quality and selection of tea.
You will, no doubt, be very proud of your ability to infuse tea into your menu. The average customer will enjoy the upgrade, but it only works best if your dish is as good or better than that offered by competing restaurants. The truth is that since your ingredient costs will likely be higher and your volume lower, your dishes will be more expensive and therefore must be better. The average consumer will pay a premium for something different once, but will only come back if the experience is better than what they can get elsewhere.
When it comes to tea, the average consumer and casual tea drinker will typically prefer inexpensive flavored tea to premium, single estate, gourmet specialties. You’ll go into business dreaming of flights of First Flush Darjeelings or Chinese Oolongs, but that’s not what you’ll serve. The reality is that most customers will prefer the pricing and taste of their fruity teas and tisanes over a perfectly prepared flight of premium classical teas. This is especially true in a setting where they’re also eating food and therefore less able to discern the nuances of the tea.
An appreciation for fine teas is taught and developed over time. Very few customers in a tearoom or bistro will have any patience for education and experience. Most are there with friends to grab a bite to eat and talk. A server that tries to educate or discuss the product is often seen as an intrusion. You’ll be tempted to go out of your way to make the tea connoisseurs happy, but don’t forget that your model is based on attracting casual tea drinkers!
Understand how Retail complements food service. Most prospective tearoom owners want to offer a retail section where customers can buy teas and teaware. This is a great idea. Just don’t think that you can take a $500,000 tearoom and a $500,000 tea retail shop and combine them for $1 million in sales. The likely result will be maybe $600,000. In a food-service environment, whether it’s closer to a restaurant or a café, retail displays are about impulse buys. People do not do their Christmas shopping in a restaurant or café.
People walking down the street will very rarely step into a tearoom to shop for retail. Section unless they also intend to sit and eat. This might not be how you plan it, but that’s how it works. If someone wants a bottle of wine, they go to a liquor store, not any of the local wine bars with retail sections. It is rare to see anyone shop at Cracker Barrel unless they’re also eating there. The customer assumes that the shopping is an extension of the dining experience. The diner is not in a shopping frame of mind, having already spent a lot of time in your establishment and a decent amount of money. The likelihood that a diner will spend more than a few dollars in your retail section is very low.
Samovar Tea Lounge operates three beautiful tearooms in San Francisco. While they’ve been extraordinarily successful and have generated a ton of national attention, they’ve never been able to drive retail sales beyond a few percent of their total in-store business.
Understand the Hours and the Implications. Traditional tea time is between 1 and 5. This is the slowest period of the restaurant day. In short, tea service may be a great way to drive traffic during the slowest hours, but your tearoom cannot survive on tea service. You will need to capitalize on both the lunch and dinner rush. The only food-service concepts that can survive on one rush per day are huge volume breakfast concepts, lunch concepts that cater to high-density business areas, or high-priced fine dining concepts. It is difficult to make a tea room survive without finding a way to stay busy from lunch through dinner. A successful dinner menu will likely require alcohol and a kitchen. You can cater lunch and tea service items, but dinner is a bit harder.
If your model is more of a café (modeled after the ubiquitous coffee shops), then of course dinner won’t be your focus, but then your hours need to be early morning through late evening to drive the sales necessary for success.
Understand the Staffing Implications. Employees who are adept at learning about and getting customers excited about tea may not want to serve tables or mop bathrooms. The employees who can handle serving 5 or 6 parties at a time are not going to learn the nuances of your finest teas. The best servers are going to leave you and go to a restaurant with more expensive dishes and alcohol. A server can make twice as much at a chain like Olive Garden than in a tearoom because the traffic and average tickets will be higher, and they get to make their money in tips.
As importantly, an employee engaged in a consultative sale should be able to spend 10 minutes or more with a customer discussing the finer points of tea. The typical café or tearoom customer waiting for service will grow impatient very quickly watching your staff “chit chat” with another customer. This is a challenge that’s difficult to overcome unless your retail and foodservice sections are entirely separated. Even if they are, your employees will gravitate towards the immediate service needs of the foodservice guests over the slow, focused process of the consultative sale. It’s tough to slow yourself down and engage a customer when you have tables waiting for their check or food waiting to be served. Can you afford to hire both dedicated retail and food-service staff?
Understand the Costs. You can open a great retail tea shop in under 1,000 square feet. However, to have enough seating to support a kitchen, you really need at least 2,500 square feet. Labor costs are higher, equipment costs are significantly higher, and the build-out is often very expensive. A Panera sandwich shop is neither huge nor beautiful, but it costs more than $1 million in cash upfront to open one.
Does that mean you need a million dollars to open a tearoom? Certainly not, but if you don't understand why a Panera would cost $1 to $1.5 million and can't explain where and how you're going to do it for less, you have a lot of homework to do.
If you’re looking for someone to learn from on the tea and food-service side, pay a visit to the Samovar Tea Lounge in San Francisco and the Queen Mary Tea Room in Seattle. Each is an impressive and profitable business that has an excellent reputation in the tea industry. Each also takes a different angle on the company.