This annual list of the best tea franchises was revised and updated on September 7, 2023.
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When it comes to hot drinks, America has long been associated with coffee. But tea shops are on the rise, in large part thanks to the trend for bubble tea. Combining well-being, novelty, and a tasty dessert-like treat, tea outlets are becoming increasingly common across the US, offering a new opportunity for franchisees.
On an average day, 159 million Americans drink tea – that’s nearly half the population. Tea production was worth $1.2 billion in the US in 2023, proving that there is a substantial market for the beverage. In fact, America is the world’s second largest tea importer.
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Arriving in the US from Taiwan in the 1990s, bubble tea offers an interesting alternative to traditional tea, with bubbles of tapioca, or pearls as they’re sometimes known, floating in the drink. Over the past decade, the profile and popularity of bubble tea has risen as young people have jumped on this trend. As of 2021, bubble tea shops were worth around $1 billion per year, employing over 22,000 staff in nearly 3,400 businesses.
Tea has been associated with a wide range of potential health benefits, such as boosting the immune system, strengthening bones and teeth, and helping to control blood cholesterol levels. As with many claims for the health qualities of foods and drinks, the evidence for much of this is unclear, but the association with health has a strong hold on the public imagination. Tea is widely perceived as a healthier alternative to coffee and soft drinks, and 41% of tea consumers consider healthiness to be one of its key benefits. The use of natural sweeteners means that tea brands can often present themselves as healthy even while offering a sweet treat, while offering dairy-free options can help in attracting the growing bases of vegan and lactose intolerant customers.
An increase in disposable income among consumers has encouraged manufacturers and outlets to provide a wide variety of tea products, including premium and exclusive blends. Black, green, and herbal teas mean that franchises can offer a wide variety of products to consumers, to suit different tastes. Milk teas, different types of bubbles, various toppings and flavorings all add to the variety that tea shops can offer. Most also offer other drinks such as coffees and smoothies, to reach the largest possible consumer base, but tea is the unique selling point and the novelty that draws customers in.
With disposable incomes rising post-Covid, and some other beverage outlets having shut down because of the pandemic, there may be an opportunity for tea shops to expand, though growth looks less impressive than originally foreseen. The North American tea market was expected to grow by an average of 5.9% per year from 2019 to 2025, but revenues from tea production have declined by 2.7% per year over the past five years. While this decline may be slowing, with only a 0.7% loss in 2023, it’s still worrying for anyone in the tea business. Their novelty may allow specialty stores such as bubble tea outlets to see the significant growth that was predicted for them, but some caution is needed, especially in the uncertain economic climate.
As with many areas of the economy, part of the problem for tea shops may lie with supply chains. Tea shops are very reliant on materials from Asia, and as the Covid pandemic demonstrated, long supply chains are prone to disruption by unexpected events. The development of lean thinking over the past 20 years has made supply chains more efficient, but also more fragile, and this increases the risk of delays and extra costs when something goes wrong. As global markets shift, tea shops may sometimes see prices rise or ingredients become harder to source, and these short-term disruptions can hinder a business’s long-term growth.
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The biggest tea drinking regions in America are currently the south and the northeast. However, the bubble tea market appeals to a different group of consumers from traditional tea drinkers, so identifying a good location for a tea outlet may be more about local circumstances than regional trends. A lot of the competition comes from coffee outlets, so it’s important to consider their presence, not just those of other tea shops, when identifying premises.
With a pleasing combination of novelty and perceived health benefits, tea shops have fitted neatly into America’s existing beverage market. As a rising trend, these present an opportunity for beverage-oriented franchisees to try something new, if local circumstances can support a brand built on this novelty.
Franchise Chatter’s Top Tea Franchises of 2023
1. Gong Cha
Gong Cha is a tea drink franchise specializing in premium-quality freshly prepared bubble tea (Taiwanese chilled tea with sweetened milk and tapioca balls). The name Gong Cha is a Chinese term for the act of offering only the best tea to the Emperor, indicating the tea used is of the highest quality and fit for royalty.
On the menu are eight different tea drinks in the Milk Foam Series, seven options in the Milk Tea Series, eight different smoothies in the Slush Series, nine unique options in the Creative Series, five Tea Latte selections, and three coffee lattes in the Coffee Series. Nine different toppings are available to add to many of the beverages.
Founded by two friends (Huang and Wu) in Kaohsiung City, Taiwan in 2006 and franchising since 2009, the number of locations has been rising rapidly in recent years from 1,070 in 2019 to the current total of 1,755 (up from the previously reported total of 1,526), of which 587 are company-owned and 1,032 are located outside the US (there are currently 136 locations in the US).
Bambū is a Vietnamese-inspired chain of beverage shops specializing in Chè dessert drinks, boba milk teas, signature Vietnamese coffees, real fruit smoothies, and exotic juices. Chè is a Vietnamese word used to refer to traditional homemade dessert drinks, beverages, and puddings. At Bambū, all their Chè dessert drinks are made to order beginning with fresh young Thai coconuts they cut, drain and use the coconut water, the coconut meat, and make coconut milk, all done in-house.
The menu features 16 unique signature Chè dessert drinks (or customers can customize their own), more than 25 fresh-brewed fruit teas, milk teas, and tea blends with a choice of add-ins and toppings, a wide range of hot, cold, or blended Vietnamese coffee beverages, real fruit smoothies, and unique fresh juices.
Founded by four sisters (Anh, Kelly, Jenny, and Julie) in San Jose, California in 2009 and franchising since 2014, there are currently 67 locations (up from the previously reported total of 61), of which only one is company-owned and four are located outside the US.
HTeaO has 26 different flavors of iced tea brewed fresh every hour, of which 16 are sweetened and 10 are unsweetened. Growth for this chain has been a rapid rise, in part because of the simplicity of the concept – iced tea, which is a high-demand item, especially in the South – as opposed to any food to cook and so on. But iced tea isn’t the only thing available in their stores. They sell iced tea in gallon jugs, along with water and ice. The water used for brewing tea and making ice or selling plain is ultra-purified reverse osmosis water.
Founded by Justin Howe along with Gary and Kim Hutchins in Amarillo, Texas in 2006 but franchising only since 2018, there are currently 60 locations (up from the previously reported total of 35), of which four are company-owned and all are located in the US. The company website lists another 30 locations as “coming soon.”
4. Glow Tea
Glow Tea styles itself as a farm-to-cup boba (bubble) teashop offering high-quality boba tea. Boba tea originated in Taiwan in the early 1980s, consisting of chilled tea mixed with sweetened milk and other flavorings and typically including balls or “pearls” of tapioca (a starch extracted from the storage roots of the cassava plant). Glow tea uses organic tea sourced from Yunnan, China.
The menu features eight different Boba Milk Tea beverages and four Real Fruit Tea drinks. Also on the menu are five Boba Smoothies and several different snacks, including Boba Waffles, Mini Cream Puffs, French Macarons, and Mochi Ice Cream.
Founded by Weidi Shen and Yubing Weng in Seattle, Washington in 2018 and franchising since 2021, the company website currently lists three locations, all located in and around Tacoma, Washington.
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The franchises on this list were ranked according to the number of units in the franchise system. If you are a prospective franchisee searching for franchise opportunities that meet or exceed certain performance benchmarks for sales, profits, and return on investment, please check out this list of America’s Most Lucrative Franchises.