Increase Profits by Serving Loose Tea

Offering loose-leaf tea in coffee shops and cafes is often avoided because it is thought to be more difficult to brew than teabags and is perceived to require more time and space. However, Michael Stout, from The Golden Moon Tea Company, recently wrote an article featured in the June, 2010, issue of CoffeeTalk, entitled How Coffee Houses Can Earn an Additional $20,160 Per Year Using Loose Tea. In the article, Stout gives advice on how to easily make the switch to loose tea from teabags to make a larger profit.

You might first be curious about the method Stout used to arrive at this figure (I know I was). Here's his explanation:

  • Offering teabag service for $1.50, at a cost of materials (teabag and cup) of $0.10, yields a profit of $1.40.
  • Keeping in mind an 8oz. serving of loose tea only requires 2 grams of leaf (think the weight of a dime), let's say your cost of materials is $0.26. Customers are willing to pay more for a higher-quality product, so you can charge an additional $1.00 premium. Following this logic, a cup of quality loose tea would sell for $2.50, yielding a profit of $2.24 - $0.84 more profit than the $1.40 you would make from a teabag.
  • An extra $0.84 may seem insignificant if you don't sell much tea. Stout goes on to explain: If a coffee shop makes $400,000 a year in sales and 9% of that is from tea, that is roughly 24,000 cups of tea. An additional $0.84 per serving of tea would increase profits by $20,160 per year.

Obviously, your increase in profits may not match the number Stout came up with. It depends on your specific cost of materials, the difference between what you might charge for loose tea versus a teabag, your annual profits, and what percentage of those profits are derived from tea sales.

Brewing Loose Tea

Filling a paper infuserStout continues with a discussion about why it is assumed that brewing loose tea is difficult. This often may be because unnecessary tools are used, such as using a teapot to brew a cup of tea. A great way to serve a to-go cup of tea is with a disposable paper infuser, generally known by the brand name T-Sac. T-Sacs are inexpensive, all-natural, oversize paper teabags used to brew loose tea (think a tiny paper pillowcase). Since these infusers are larger than typical teabags, they allow your premium tea leaves room to open and release their wonderful flavors. Using a paper infuser is not difficult: Simply scoop a serving of tea into the infuser, place it in a cup, and add hot water.  After steeping 3 - 4 minutes (have your staff instruct to-go customers to do so), remove, and enjoy the finely brewed tea!  Excluding steep time, the above steps can be done more quickly than prepping an espresso-based drink and will most likely bring in a larger profit (add up the cost of coffee, milk, and syrup and see what you think).

Displaying the Tea

In addition to paper infusers, the only other items you need to start serving loose tea are containers to store the tea, scoops for serving, and the tea itself, so the initial starting costs are not very high. Good containers for loose tea are made of tin or glass and, ideally, are square (to save shelf space). Even more space is saved if the containers are stackable. When first carrying loose tea, a good number to start with is six different teas. This number allows a nice mixture of black teas and herbal tisanes (both top sellers), as well as green teas, oolongs, etc., and will also not eat up a lot of room. Once you have all the necessary materials, its a good idea to create an eye-catching display, something for which glass containers are ideal, as customers (who often eat first with their eyes) are able to see your tea before they order it.

Benefits

Since most cafs serve teabags, simply offering loose tea will interest many customers, as most people have not seen loose tea up close. In the article, Stout attests that people are willing to pay more for loose tea because it looks nicer, smells nicer, and definitely tastes better than bagged tea. Loose tea is composed of whole tea leaves while teabags contain lower grades of ground up leaves called "dust" or "fannings", which lose their flavor much quicker than whole tea leaves. With loose tea, customers will appreciate the extra step of service and that you willing to go further for quality. Overall, serving loose-leaf tea over bagged tea is a win-win. Your business will end up making more money and your customers will be happy youre serving a better quality product.