Fort Worth INC. Magazine - John Henryor a few brief seconds, Justin Howe looks past me scanning his memory while trying to answer a question I just posed.
It is representative of the sincerity with which he’s pondering.
Why didn’t anybody before you think to do with tea what Starbucks did with coffee?
“That’s a good question,” he says before giving it one more scan. “I don’t know. We just took tea out of a restaurant and put it in a store. And we do it really well, obviously.”
Tea has been as popular here as long as there has been a here. Well, as long as there has been an America.
The last time I checked, more than half of U.S. voters couldn’t name a single U.S. Supreme Court justice. Vice president? Probably. I think.
But you can bet your bottom dollar they can tell you about the hopping mad American colonists, the Sons of Liberty, they called themselves, who dumped chests of imported tea from the British East India Company in the Boston Harbor as a protest of the king’s imposed taxes on a favorite beverage.
It was taxation without representation, they charged.
It kicked off a whole big to-do that was widely chronicled and disseminated in history books. Or most history books anyway.
Don’t tread on our tea.
Tea is the most widely consumed beverage in the world not named water, the champagne of the earth.
It’s a simple preparation of pouring hot water over cured leaves of the Camellia sinensis plant. The first recording of tea described it as a medicinal beverage in China in the third century.
Merchants helped quickly to spread its popularity across continents.
And, yes, in the early 19th century, Great Britain made fashionable the afternoon tea, a break from one’s routine in which tea is served alongside sandwiches and baked goods, such as scones. That tradition was imported by colonists.
The flavor of tea varies by where the tea leaves are harvested and how they are grown and processed. Black tea is the most popular worldwide, followed by green, oolong, and white tea.
Someone started pouring it over ice. Talk about groundbreaking.
In the Deep South, drinkers began shoveling sugar into their tea and calling it sweet tea. East Carolina University conducted a study that demonstrated correlation between sweet tea and the region’s “diabesity” epidemic.
The “Sweet Tea Belt,” according to the study, includes parts of Alabama, Arkansas, Georgia, Indiana, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, and Virginia.
The same area, researchers noted, is also called the “stroke belt.”
Notice, however, there was no mention of Texas.
That’s not to say we don’t drink our share of tea sweet. Some do. But on the whole, we want simply tea.
And, so, from that day in the third century until now, no one has done what Howe has managed to do.
Make a Starbucks-esque slash with tea.
Howe, a son of Amarillo in the Texas Panhandle who has done a little hunting in his day, and his team are doing it quite prolifically.
Howe is the co-founder and CEO of Fort Worth-based HTeaO, a franchise-based company that is the dominant, first-to-market store that sells tea. Only tea.
It’s exactly what Starbucks did.
“Man, it’s so crazy,” says Howe. “‘You sell only iced tea?’ I get that question twice a week. How did Starbucks take coffee out of a pancake restaurant and put it on the corner of the street? It’s so obvious. How did no one think of this kind of concept for tea?”
In January, HTeaO opened its 100th franchise in College Station.
The celebration was fit for the milestone. This ribbon-cutting ceremony included the accoutrements of kid-friendly events, food trucks, and, of course, lots of tea.
The store is franchisee Bryan Benson’s fifth location, including three in San Angelo. His College Station store is one of the largest storefronts in the chain, almost 3,000 square feet. He is hoping to add two more, his general manager Paul Torres told the The Eagle.
Other franchisees include former NFL receiver Roy Williams, who had a stint with the Dallas Cowboys. Williams has a store in his hometown of Odessa.
The corporate office employs 90 full-time and between 170-200 part-timers.
In addition to Williams, HTeaO also has an affiliation with PGA Tour golfer Ryan Palmer, a friend of Howe’s from Amarillo. Of those 26 flavors, one is the “Ryan Palmer,” a takeoff of the widely popular “Arnold Palmer.”
More recently, HTeaO formed a partnership with “Yellowstone” actor Cole Hauser. Soon, all 100 and counting stores will feature the option of coffee with handcrafted coffee and espresso-based drinks featuring Free Rein Coffee’s signature blends.
HTeaO launched officially in 2018 after years of planning. Business is booming with over-the-top demand for the company’s 26 current flavors, all made naturally — no powders or syrups — some of them sweet, and you can mix and match them. They’re all brewed with water from a mini-treatment plant on-site at each location. To have good tea, after all, requires good water that tastes the same, regardless of the city.
To date, 400 other franchises are at some level of the pipeline leading to development. In total, they’re spread around 14 states, Arizona to the Carolinas and Florida as bookends.
The stores do actually sell more than tea, but not much. It’s licensed to sell Yeti products. And you can also pick up a healthy snack.
One can also buy the water.
HTeaO is among the fastest-growing companies in the Southwest, ranking No. 59 in Inc. magazine’s list of private companies based in Texas, Arizona, New Mexico, and Oklahoma. The listing recognizes up-and-coming fast-growth companies in key regions across the country. HTeaO, one of 166 companies in the Southwest recognized for its growth from 2019-21, experienced a two-year revenue growth of 240%.
HTeaO is headquartered in an office on Markum Ranch Road in west Fort Worth and with 100,000 square feet of warehouse near Meacham International Airport on the North Side.
“It felt culturally [that] this is where we belong,” he says while we chat in the store in Lake Worth. “I had to move the supply chain component of HTeaO to the metroplex.”
There was no supply chain for the tea concept, so, he created. TeaBevCo is a subsidiary of HTeaO. There are four entities that make HTeaO go. In addition to TeaBevCo, there is a real estate development company, an operations company, and the franchise operation.
“We had to create it,” he says. “I mean, we control every SKU. And a convenience store solution is unreliable at best. And then the idea of you controlling what you sell is ridiculous. So, we had to.”
Out of the ruins of the Great Depression came a number of business concepts that flourished in the aftermath.
One was King Kullen, a grocery store chain based in Long Island. According to the company, Michael Cullen invented the supermarket format when he turned a Queens warehouse into a grocery store. The downscale setting allowed him to keep prices low for families with unemployed breadwinners.
We’ve all heard of Ocean Spray Cranberries.
During the downturn, rather than compete, three cranberry companies pooled their resources.
Likewise, HTeaO’s founding is in the ashes of the ruinous Great Recession of 2008-09.
Entrepreneurs possess a range of characteristics that enable them to succeed. They are visionary, creative, and innovative leaders, for one. Two, they are tolerant to risk. They are adaptive to unforeseen circumstances. And finally, they are resourceful and resilient problem-solvers.
They are also, all of them will tell you, often damn lucky. Had a miraculous fog not appeared all of the sudden, George Washington would have been toast in 1776.
Good fortune is part of the formula.
Howe’s mother and stepfather owned a hamburger restaurant in Amarillo. With disposable income hindered by the recession, Kim and Gary Hutchens’ restaurant was suffering.
Concerned about business traffic during the downturn, his stepfather had an idea: set up six flavors of tea to lure the thirsty.
* * * * *
I change the subject momentarily on Howe as we stand chatting in the store on Paul Meador Road. I’m sipping on a blueberry tea.
So, has anyone in your immediate family ever worked for someone else?
Howe begins to shake his head from side to side before returning his full attention to me.
“Not that I can recall,” he says before giving it one more think. “Not that I can recall, no.”
It is an ethos passed down, the seeming invisible thread weaving through the tapestry of family life that guides behaviors, decisions, and interactions.
Entrepreneurship and self-reliance — family values, without a doubt — are the cornerstones Howe’s personality and attitude toward living — they are his identity.
“I grew up watching everyone around me start businesses,” says Howe, 46.
His mother was a hair stylist who owned a big salon and owned the property it sat on in Amarillo. She cut hair 12 hours a day, six days a week, Howe says. She leased spaces to other stylists.
His father made cabinets for a living. From that he subsequently became a general contractor and started building high-end custom homes.
“They did all the nonlicensed trades in-house, concrete, dirt work,” Howe says. “We framed them, we did all the roofing, we did all the masonry, we did everything, mechanical, electrical, and plumbing.”
His mother married his stepfather when Howe was 11. His stepfather’s family owned restaurants. Howe got a taste of that, too.
“I wasn't great in school, so I ended up doing a lot of onion peeling in the back of the restaurant. I grew up in the back of the restaurant. So, through that, I knew I didn't want to be in the restaurant business or in the construction business.”
Those formative moments.
He laughs.
Howe’s first authentic experience of entrepreneurship — aside from mowing grass — was the snow cone stand his stepfather owned. It was in front of the hamburger restaurant the family owned, Buns Over Texas. The stand was called Snowballs Over Texas. The restaurant’s business had picked up significantly.
“He said, ‘If you'll just run this thing, you can have it,’” Howe says. “I said, ‘I’m in.’ I took it over; started running it. He owned all the assets. I operated it with my own sort of entity. I went and got my health department permit, self-tax permit, filed the 941 account from the IRS to pay employees. I did all that. And I vividly remember going through all of that frantically trying to get all these regulatory things that I needed. And then we ran it for two summers. It was great.”
He next headed to school, leaning in on something else that resonated with him in those early days.
There’s a good story out there about how Amon Carter became infatuated with airplanes. Cal Rodgers, the guy who in 1911 made the before-unthought-of flight from the Atlantic to the Pacific, flew into Texas around that same time. The daredevil was said to be racing an eagle. He set his plane in a pasture on the North Side. More than 10,000 people were reportedly there to greet him.
The first in line to shake his hand, so the story goes, was Amon Carter. And from that day forward, he worshipped airplanes.
Howe fell in love with them at an early age, too.
Howe grew up hearing about his grandfather’s life as a radio operator on the B-29. His father loved the airspace, and his uncle was an air traffic controller.
While his school buddies were dreaming about being a pro athlete or firefighter or no telling what, Howe was dreaming about the skies.
“I wrote a deal when I was a kid; I wanted to be a pilot,” he says. “It was just one of those dreams as a kid.”
After graduating from Amarillo High School, he went off to do it, attending the Spartan School of Aeronautics and Technology in Tulsa. His design was to go to Frank Phillips in Borger to finish a four-year program. But the school went bankrupt.
But by October 2001, he had an instructor’s license and an associate in aviation science. He has been a professional pilot ever since.
In 2001, he began instructing and piloting for a charter company. He also fought forest fires for the Forest Service for four summers.
“I did all kinds of different stuff just trying to build flight time.”
His first real significant dip into entrepreneurship was a business managing planes for individuals, families, and businesses. Through that, he started buying and selling jets.
One of those planes he managed and flew belonged to Hastings Entertainment, an Amarillo-headquartered retail chain that sells books, movies, music, and video games. It also functioned as a video rental shop. At its height, Hastings had 126 superstores, located mostly in the Heartland and Rocky Mountain states and in college towns.
Howe learned something from Hastings that would serve him well in the years to come.
Howe’s jet service business today only serves the HTeaO fleet, which is based out of Meacham. Yet, it serves him well. Howe and Andrew Hawes, HTeaO’s director of development, can easily set off for locales to check potential pad sites and markets. The two were headed to Amarillo the day after we spoke and to Arkansas the day after that.
They had been in Tennessee recently before doing the same thing.
An hour and a half to Nashville. Two hours to Houston and another 30 minutes home.
“Piece of cake,” he says. “It makes it nice to be able to put boots on the ground and make decisions and meet people.”
In addition to the jets, Howe ultimately did get into the construction business and residential real estate. He had what he describes as a “big portfolio” of residential rent houses. He still owns a granite countertop business in Amarillo.
Howe’s company was building 1,500- to 2,200-square-foot houses, taking homes on trade and then owner-financing them.
The model all changed in 2008.
Large banks which traded in credit default swaps were forced to declare bankruptcy when a large number of the underlying credit instruments defaulted at once. That all had a trickle-down effect. The federales put regulations on hard money lenders.
“A residential guy could only do eight deals a year,” Howe says. “And, so, that kind of took me out of business.”
Whereas he had been on an upward trajectory in real estate and construction, his life changed overnight. He had dozens of homes in inventory when the market fell apart.
“I almost went bankrupt in 2008,” he says. “It was a very painful season.”
His mother and stepfather were feeling the wallop, too, at Buns Over Texas, their build-your-own burger restaurant concept.
They needed to create another reason for people to come into the store.
His stepfather took a flyer on tea.
Howe will never forget 2008, of course. It was a defining moment.
“Everyone was always on red alert,” he says, “trying to figure out how to save our businesses. The whole world is crashing around us. What do we do?”
The concept of Buns Over Texas is in the spirit of the tongue-twisting Fuddruckers, though Howe believes Doodles, Buns Over Texas’ predecessor, beat Fuddruckers to the concept of building your own burger.
Gary Hutchens believed he might be able to get hamburger sales up through tea.
When his stepfather proposed the idea of six kinds of tea, Howe immediately thought of women in his construction company office who would run across town to a fast-food chicken restaurant simply to buy tea.
They raved about the tea. And their runs over there were daily.
“They were infatuated with this tea,” Howe recalls.
The tea tactic worked, so much so that sales at Buns Over Texas were up 15% coming out of the 2008 turmoil, Howe says. The Hutchens’ restaurant business was not only saved, it was healthy, so healthy, in fact, that they bought another pad site and built another restaurant, a new home for Buns Over Texas.
“We were in a big shopping center that was owned by an institutional investor,” Howe says. “You can't just buy pad sites from guys that don't answer the phone. My stepdad was tenacious enough to get a decision-maker on the phone, and he bought a 35,000-square-foot pad site.
Watching all this, Howe remembers, was “par for the course.”
“Every day of my life there was always a new idea.”
Gary’s iced tea shop at the hamburger restaurant was called “Texas Tea.”
If you go into an HTeaO shop, you’ll see lots of Yeti merchandise available for purchase. That started in Gary’s Texas Tea.
Gary had gone to Academy and bought coolers, which he was able to immediately sell in a matter of days. Howe, through his granite countertop business, was an associate of the Selders family, Yeti’s founders. He facilitated a formal agreement to be a Yeti provider.
Anyway, over the course of three years, Texas Tea was catching on.
Howe and Hutchens partnered to do something bigger — like, nationally.
“They said, ‘We think this is a real concept,’ and I had been paying attention and thought it was gaining some momentum,” Howe says.
The process to launch HTeaO took six years, starting with building a prototype store in Amarillo. A testing ground for going all tea, all the time, on good real estate, Howe says.
“I thought it was crazy, too,” Howe says, “but we built the store. We had major problems with the model at first, but we solved those. When we started to gain momentum and real volume, we had significant interest in franchising.
“I didn’t know anything about franchising.”
To wrap his head around it, he became a franchisee, buying into three stores of a brand “I wish to leave unnamed.”
“I was interested emotionally in the experience of what it was like to have royalty fees sucked out of my checking account like a magic trick on Friday,” he jokes.
Howe came on board in 2012. They started to imagine and design a back-end infrastructure to be a national brand. In 2014, they launched a second proof-of concept in Midland.
HTeaO launched in 2018.
“All those years, there was lots of work done, lots of work done, all to build a foundation of a national brand,” Howe says. “Supply chain, real estate, construction, operations, franchising. There were all kinds of different back-end infrastructure that had to be built.
“We went slow to go fast in a sense.”
As it concerned the supply chain, he returned to his life as a pilot and his work with Hastings. All experience is valuable.
Hastings created its own supply chain through another company it formed, Anderson Merchandisers, which is still in business. Anderson Merchandisers supplied Hastings.
“That fascinated me very early,” Howe says. “I knew the family and knew the operations and just was fascinated by that they solved their own internal problem with their own supply chain. And then you look at some of these other QSR [Quick Service Restaurant] brands that control their own supply chain. There's just so many advantages.”
The mini-treatment plant on-site at each location was Gary’s idea. He had been doing it since introducing tea at Buns Over Texas.
The water is one of the secrets to success, Howe says, coyly. There are others that he won’t tell me, despite my queries.
The secret, though, is out about HTeaO.
Last year, two Dallas private-equity firms Crux Capital and Trive Capital acquired a minority stake in the company. The investment, Howe says, enables employees to participate in equity in the company. The investment, he says, also enables a focus on unit-level economics and support of the franchisees and allows his retirement-age parents to do more of that.
The new partners also bring operational expertise to the table.
Howe is the company’s largest shareholder, but the equity guys are “real partners.”
“They’re super close friends of mine. We work on a daily and hourly basis. I don’t have … my knowledge is what’s obvious to me, and as we grow to 500 or 1,000 stores, I think it’s wise for me to gain some partners who have been down that road before,” Howe says. “This was all a super carefully orchestrated alignment of interests between every single party.”
All in a partnership designed to moving forward on this enterprise that the Brits never dreamed of talking about at their fancy afternoon teas.
