Leaders in Customer Loyalty, Powered by Loyalty360
Leaders in Customer Loyalty, Powered by Loyalty360
How HTeaO is Brewing Emotional Loyalty Through an Elevated Iced Tea Experience
In a beverage industry dominated by coffee culture, iced tea is making a bold statement, thanks to HTeaO. The rapidly growing franchise has transformed a traditionally home-brewed beverage into a sought-after, in-store experience that fosters both emotional and transactional loyalty.
We recently sat down with Heath Nielsen, President of HTeaO, to discuss the company’s journey, its approach to customer engagement, and the future of iced tea in the quick-service industry.
Everyone recognizes the passion for good coffee, specialized coffee, personalized coffee. It's something that many Americans are deeply focused on. However, when it comes to iced tea drinkers like myself, we don't always receive the same level of attention focus from brands or do they necessarily understand the emotional drivers of great iced teas. I experienced this firsthand as a parent of two Division I athletes. I spent a great deal of time traveling across the country, mostly in the Midwest, attending swim meets and soccer games within the Mid-American Conference.
Speaker 1:Unfortunately, that requires a significant amount of driving. I always make it to stop at a Love's Travel Shop when I have an opportunity. Love's has a good loyalty program but, most importantly, they have amazing iced tea. It's freshly brewed, strong and you can drink it black. Sadly, many other places where you could stop don't offer the same quality iced tea. The tea is often tasteless, stale, and for those who know the taste of stale iced tea, it's not good. It tastes like plastic and also has a pungent odor to it, and doesn't take long for that iced tea to go bad. But there's a company out there that's specifically focused on iced tea HTO. They offer a variety of iced tea options and they do things that make iced tea drinkers like myself feel valued.
Speaker 1:Again, I'm very much looking forward to hearing more about the story with Heath Nelson. He is the president of HTO. Welcome, heath. Thank you very much for taking the time to join us on the Leaders in Customer Loyalty Show. How are you? Great, great, really good. First off, for those who may not be familiar, can you give us a brief introduction to HTO and also about your role of the company?
Speaker 2:Yeah, no, I appreciate that. So HTO is a very cool concept. My name is Heath Nielsen. I've been with the company now about a year and a half as the president Come from a good background in coffee Black Rifle, Starbucks, Nestle Grew up in the retail world with Old Navy and Sony and some time in the resort industry, so kind of been around you know some really good high quality brands.
Speaker 2:I stumbled onto this HTO in Plano, Texas, driving down the road one day and had one of the most amazing kind of retail experiences. I walked in, didn't know what it was and all senses kind of hit at the exact same time that the door electric doors open. There was beautiful country music playing on the radio. The smell of tea just kind of rolled outside and kind of hit my body and permeated me. I walk in and then I see these 26 bubblers of all these different iced teas. Bubblers of all these different iced teas, and you know you can walk around and you can sample anything that you want and mix and match and it was a phenomenal experience.
Speaker 2:I'm a black iced tea drinker core and core, but I found myself doing the craziest thing was like mixing a little blueberry on top and a little bit of Georgia peach on top, and it was a wild experience. But this is what happened, though. That made me say I wanted to be part of this organization. People started to interact with me, People were talking to each other. They're like did you try the watermelon? Did you try the blueberry? If you mix the blueberry with the coconut, it's a cool flavor and, being in retail my whole entire life, that human kind of experience and connection you just don't get it out there anymore. It's very transactional and very quick and there's some great, great products out there. I love all of our kind of competitors and other places that still visit regularly, but the human connection component is what sold me.
Speaker 2:It's damn good tea, but it's in a really fun, energetic, healthy environment as well. So we have 140 stores today I believe 142. We opened one this weekend and we are expanding in primarily Texas and Oklahoma is the bulk of our market, but we're New Mexico and Northern Arkansas, Kansas, Missouri, moving our way over to Tennessee and Florida. So it's a good started in 2009 in Amarillo, Texas, Justin Howe and his family, mom and dad. They're serial entrepreneurs like they've had every business you can imagine, and this tea kind of started like all good natural brands do, it just started as a small little idea and it just grew and grew and grew. So it's been great. It's been a lot of fun. That's awesome.
Speaker 1:What are the biggest challenges you face in your current role? What keeps you up?
Speaker 2:at night. Yeah, that's always the struggle there. I mean, I think it's balancing unit economics at the franchise level while still trying to maintain growth for us we want to get out. Our pipeline is very rich when it comes to franchisee investment, or interest, I should say, coming in, but at the same time, individual unit franchise growth and their profitability is what we have to be laser focused on. So you know, growth and maintaining of the business that's what everybody does. But I think when both are firing very strong at the same time and you're still trying to build some foundational business elements, I think that's that's where you know all of our energy is going.
Speaker 1:That's awesome, I think. As we prep for this, I discussed that I'm a huge iced tea guy myself. I don't drink coffee ever. I drink the black coffee, maybe a little bit of sugar in it, but I can drink that. You know, Gallaudet, it's obviously the antioxidants and everything that's in it. Just great to have black tea. And I travel a lot for my kids who are Division I athletes, and I will never miss a Love's Travel Shop. I'm not pumping loves, but they have really great iced tea, one of the things we talked about. Sometimes iced tea is good and sometimes it's horrible, right. So to get that good iced tea, I'll go out of my way. And loves has actually a good key it's fresh, it's stronger. Um, do, do, uh, you know coffee getting all the rage. Do iced tea drinkers sometimes get a shat in that regard? I think they do.
Speaker 2:But here's what's funny. I appreciate your comment about coffee. My whole life I grew up I drink hot black coffee I think there's three of us left in the whole world at this point, but I drink hot black coffee until about 9 o'clock and then somewhere around 11, 12, I graduate to iced tea. Somewhere around 11, 12, I graduate to iced tea, and that's been what I've done ever since I was, since literally, you know, a younger age growing up. That's just what I drink.
Speaker 2:Tea consumption and coffee consumption in the United States hasn't really grown over 25, 30, 40 years. What's changed is where people drink coffee. So the coffee consumption before Starbucks, before Dutch, before Pete's coffee consumption is basically the exact same. People are just now drinking it more on the go. It used to be an at home, and so tea is kind of the same thing for us.
Speaker 2:The way we look at it is that iced tea is traditionally a lunch that's added on with a meal, or you kind of brew it at home and you're right, the quality can vary outstandingly, just like coffee, though at the end of it the root is water. We have the world's best RO system, I think. The world's best RO system, I think and our water quality and purity is what makes our tea stand up so good. We are, you know, gluten-free, kosher, non-gmo, all the great things about it. We use pure cane sugar, natural flavorings, and so you can kind of play with, you know where you like to go, but water at the end of the day is is what's going to make or break that? That, that tea? In my opinion, that makes sense.
Speaker 1:Emotional loyalty big topic in those for those in the customer loyalty industry. Do people have an emotional loyalty connection to iced tea or am I the outlier?
Speaker 2:It's not the majority like you would, I think, with coffee. But I think as people as we talk to, we like to say we didn't invent tea, we're just actually, we're just kind of representing it differently and we're kind of bringing it to the market slightly different. What I find amazing is that when you start to have connections with these people in the store, I can smell my grandma and grandpa's house. It just smelled like coffee all the time and that's that earliest memory. But right next to that memory for me was that Lipton sun tea jar sitting on the deck outside Every single day my grandma and mom and dad would make that that iced tea. So I think the connection is as strong.
Speaker 2:People just don't draw to it because we haven't, like literally introduced this concept of more tea on the go outside of a ready to drink. It's not a handcrafted, we're handcrafted and I think that that's the. I think that's the unique difference. But when you think about weddings and baseball games and and family gatherings, iced tea is 99 percent of the time sitting there right on that table. That's awesome.
Speaker 1:Would you be considered QSR or fast casual restaurant? What do you consider yourself? What are you?
Speaker 2:I love that question. You know we're self-serve and so right there out of the gate we're kind of a trailblazer into our own. But if I had to pick between the two of them, I'm going to say quick serve, simply because of speed is very important to us. We people are coming in through the drive through. Our wait times are barely over a minute. We're not cooking any food, we're not preparing any meals like that, so it's a very, very quick. When, the, when, the, when the customer comes into the store, we see them taking some time and kind of perfecting their own beverage, grabbing a snack and going to the counter. But the transaction is quite quick. We don't have seating inside of our stores. It's it's grab and go, because you're you're buying 30, 40, sometimes 50 ounces of a beverage and so that's not something you kind of sit around and drink. You take it with you in your car back to work, back to school, where you're going. Excellent.
Speaker 1:So, when you look at the quick service restaurant industry, what are some of the challenges and opportunities that exist within the industry? You know what is the current landscape. You know how is it changing.
Speaker 2:So last summer was tough for a lot of people. July, august, I think, people kind of saw some tightening on discretional spend. Promotions just came in heavier than I've ever seen anywhere. You know, I am up there in age and experience and I don't think I've ever seen promotions run as deep as they did over the summertime, going into holiday, and so I think right now the biggest metrics that we're still watching, though, outside of promotions, are going to be just real estate costs and construction costs, and I know that sounds a little bit like the same tone for the last two, three years, but it's true.
Speaker 2:But with interest rates where they are, the costs are very hard, and so we're kind of in this juxtapose where we're trying to open as much as we can but at the same time we need to make sure that we don't get into a situation where we're paying too high on rent and our franchisees are coming in with too high of cost before they even get their doors open. So it's a slow methodical, more than the lease rates are great, the ground rates are great, the construction numbers are strong. Let's go for it.
Speaker 1:That's awesome. So you talked about some of the microeconomic trends that you're seeing. How do you think the customers are changing within the industry holistically?
Speaker 2:I'm going to go back to promotion. I feel like promotion is driving everything. I've never seen Starbucks run more promotions in their entire life. Every time I open up with our new app and I'm a heavy, heavy app user, so I've got all the usual suspects on there I'm getting pinged nonstop for different loyalty, new products, new concoctions, new pricing. It's very, very, very heavy, and so I think it's very interesting how it's kind of almost training the customer to sometimes chase some of those and where maybe in the past you were a loyalist of fill in the blank any brand, but now you might be interested in kind of dabbling a little bit and trying a few other things, and so that competitive pricing promotion lever, I think, is what's what's going to be interesting to see how much longer that goes.
Speaker 1:I think, is what's going to be interesting to see how much longer that goes. Okay, anytime you create a new app or redesign a website, there's a significant investment with each right, not only in money and time spent, but also in commitment from your team, and not only sustaining commitment, but getting that initial commitment, deciding to do both at the same time and while revamping your loyalty program. A big challenge, a big opportunity. And why do you feel it is important for HTO to take on both at the same time.
Speaker 2:Yeah well, actually, let me, let me throw another one at you. We actually launched a brand new website in that same window too, which was which was very, very aggressive. Yes, I agree. So a couple a of things for us. First of all, we did not take it lightly. We knew that we had rockstar partners to work with Patronix, detroit Labs, olo, growth Factor. We had some really, really strong level of experience external.
Speaker 2:Internally, we felt we had a really good team as well, but we just went through a new branding exercise and what I didn't want to do was launch a new platform.
Speaker 2:And then there's another new iteration and then there's another connection piece to it, and when we really looked at it with Patronix and Detroit Labs, we needed to launch them together. So we just had to come in with our previous app, which was a very kind of standard out of the box app, great app. But it was very standard, didn't have a whole lot of functionality, it was almost exclusively used for loyalty. Mobile order and pay wasn't really a thing on it, delivery wasn't a thing, curbside wasn't really a thing, very single, small digit percentage usage. So it didn't make sense to me to not tether them together, and so it was kind of one of those moments where you know it's not, it wasn't going to be easy, we knew there were going to be some challenges, but you know we decided ultimately it was the right thing to do, to get it out. And you know now we're what? 45 days behind us.
Speaker 1:It's awesome. And what role did customer guest feedback play in the redesign of the program?
Speaker 2:Yeah. So our loyalty program, we took it obviously incredibly serious. We have huge participation on the loyalty. As you can imagine, we do offer a happy hour every single day too, which is half off at every single store between two and four, or buy one, get one between two and four. And so the component of loyalty is where we were really focused. We knew we didn't. You know, we had to deliver the exact experience from an ease perspective and a rewards perspective. So we only made a few minor tweaks. As it related to that, I'd like to say the rest of it was more kind of look and feel, the wow factor with new colors, new imagery, but then the ease of ability of being able to place a mobile order and pay, not just a loyalty component. So they played a big factor in the sense of being very vocal about how much loyalty meant to them.
Speaker 1:Okay.
Speaker 2:What are some of?
Speaker 1:the key features or benefits of the new program that guests are going to notice immediately.
Speaker 2:Yeah, right, where I said it's order ahead, like you can quickly go in and select a store and then from there you can select when you'd like to pick it up as soon as possible or schedule it four or five days in advance. Our connectivity with DoorDash has been exceptional. We've seen 55, 60 percent growth on DoorDash just by turning on the new app with them, and that's been really, really good. People love our gap. We sell gallons of tea. They're all handcrafted inside of the store as well, and so people love those on delivery. But it's also just the bright visuals you get to come in and you actually get to see and read the descriptions of the product and to kind of get a little bit more of a visual reference where before our app, like I said, it kind of made transaction sense but it didn't really have a whole lot of wow factor.
Speaker 1:Okay, when you look back at the new program, what are two or three things you're most proud of?
Speaker 2:We ended up being 100% on time, which doesn't happen. A whole lot ended up being 100% on time, which doesn't happen a whole lot. I'd say we were actually in budget to minus about half halfway through. We decided to do an upgrade on a couple areas. So we, we incrementally went there, but actually I'd go back to our partners. It was we had, you know, detroit Labs, olo and Patronix consistently on calls together and it was fun. It was the teamwork and the camaraderie. I think people like yourself are like we like iced tea. Now, we like this. This is a cool concept, this is fun. We want to work with you guys and they kind of saw and felt our passion and they drank the Kool-Aid, if you will. And they kind of saw and felt our passion and they, they drank the Kool-Aid, if you will, and we, we love that. So I'd actually say like what I'm most proud of is like everybody was like really rooting for us and putting in that extra effort.
Speaker 1:That's awesome. And personalization you've talked about it a little bit. Being able to personalize the tea is something. It's a. It's a topic that's very relevant right now to our audience. We meet each week and talk about different topics, and personalization, invariably, is at the heart of most of all the topics you know, how does HTO plan to further enhance the personalization experience for your guests?
Speaker 2:Well, yeah, and as I, as I said before, we were self-serve, so you get to come in and craft your own journey for sure, like exactly the way you want it. We actually, unlike a lot of other restaurants or food service brands, we encourage people to come in, like a lot of times it's a little bit more convenient and more efficient to go through the drive through. We love that if you know exactly what you want. But we encourage people to come in because that personalization at that point is at the very, very highest level. We also have a not so secret secret menu that we promote. That secret menu is a direct reflection of what the customers are telling us, that they're concocting and what they make. So every month or so we're adding a new one in there and it's a cool mixes of things. I mean it's a cool mixes of things. I mean it's crazy.
Speaker 2:A couple of weeks ago I had a dill pickle iced tea, which was a combo of like three of our different beverages, and I could not believe. I had a root beer float in a store last week. That would blew me away.
Speaker 2:You would have thought you were drinking an old school A&W root beer float and it was just with some root, our root beer tea, and a cream and a couple other things added into it. It was delicious. So that and then sharing that back out, is our personalization right there at the core.
Speaker 1:That's awesome when you look at the new suite, the new website, the new app, the new customer loyalty program how does that set H2O apart from the competitors? And then the fast suite the new website, the new app, the new customer loyalty program how does that set H2O apart from the competitors? And then the fast-growing you know, the team beverage market at least how they're consuming it.
Speaker 2:Yeah, I think you know, in all transparency, I think this gets us very competitive. To be completely honest, we did not have a strong app. We had a very strong loyalty program, but we did not have a super, super strong app. So I think that this just makes us more attractive to the customer because of ease of use. We also are working really hard. We have 140 stores, as I mentioned, across nine different states. We're really working to consolidate our market and growth so that we can be your more, your daily go to. Right now, we can be seen as oh, if I'm in that area or if on that street, I'll stop into HTO, where we really we do have a great coffee offering. I'll stop into HTO where we really we do have a great coffee offering. We have a partnership with Free Rain Coffee, which is a great new concept, and so we do want to be seen as your daily, your weekly go-to. So I think this app, the loyalty, the website, more stores that's just what puts us into the competitive nature against everybody else.
Speaker 1:You talked earlier about some of the KPIs and metrics that are important to you to gauge the success of a new effort. What are the metrics that you're looking at KPIs to gauge success?
Speaker 2:Yeah. So we've got a pretty robust dashboard with our partners that we've built. We've got a pretty robust dashboard with our partners that we've built. The two that I would say I'd put at the top of the list would be, logically, number of downloads, which I'm happy to announce. Since December 10th on launch, we're close to 40,000 downloads. New downloads we carried over our existing downloads that we had or users that we had already. But number two is frequency. We had a hard time kind of calculating our customers' frequency. So what we're trying to do now is move the you know, once a month-ers to once a week, or the once a week to twice a week, and being able to do that through notifications, whether it be SMS or email or push notifications on the app, different LTOs, different promotions by customer that's really where you start to get into the great fine tuning. So I'd have to say downloads and frequency are the two that I'm tracking the most Excellent.
Speaker 1:When you look at other customer loyalty programs, are there programs that you are loyal to, to that you find yourself very committed to? If so, what are those?
Speaker 2:Yeah, I mean, you know I grew up I think there's Chick-fil-A, I think does a phenomenal job. My old employer, starbucks, I still think is very, very strong. I just saw that they just launched a great secret menu program on their loyalty as well. Those are really, really strong. You look at even smaller regionals like us. I think somebody like a Swig has done a great job with their apps that are out there too Jersey Mike's, jimmy John's both of them do a great, you know, a great great job. Detroit Labs did work with Jimmy John's early on, which is one of the reasons we love that app. It's a very quick, fast-moving, easy to understand app, and so that was one of the selling points for us when we picked Detroit Labs to help partner.
Speaker 1:Okay, excellent when you look at customer loyalty, customer experience. If you could ask a competitor anything about their customer experience or customer loyalty strategy, what would you ask them?
Speaker 2:Yeah, that's a really good question. I think I'm going to go back to one of my comments around where's the balance here between promotion? Think I'm going to go back to one of my comments around where's the balance here between promotion, customer acquisition costs and growing the business? There's a fine line, tipping point there. I think that I'm very curious to see how it plays out. We're very fortunate, as you can imagine the iced tea business, the coffee business in general, some very, very healthy margins. But I think that balance, um of promotion, um and uh, um and price is, it is very interesting one right now okay, well, thank you very much for uh taking the time to do the interview.
Speaker 1:We have the wonderful quick fire round of questions right now, so looking forward, okay, great love it first. One word or short phrase do you use to inspire others?
Speaker 2:So people will laugh because I use this one very regularly, but man, it's so meaningful, I think anyway. So it's like if you go to the Bill and Melinda Gates Foundation, it's sitting right there front and center. It says if you want to go fast, go alone. If, if you want to go far, go with others. That's awesome. What's your least favorite word? So I have to preface this. I know this is rapid fire, I apologize, but culture, I think people will be well, that's not really culturally acceptable or that's not a cultural fit or something like that, and I feel like it's become a little bit of a catch-all. Nothing is more important than your company culture. Nothing is more important than your company culture. But when, sometimes, when I hear it, I feel like it's it's, it's being used as a catch-all for, for, for, maybe something that's quite different than culture okay, what's your favorite?
Speaker 1:uh, let's try this again. What is your favorite flavor of iced tea?
Speaker 2:black, unsweet. Boring I know, but here's what I'm doing. A little splash of blueberry on top, which just kills me to say it, but man, it's good. Okay, that's good.
Speaker 1:What excites you at work?
Speaker 2:Franchisees. I love being in the franchise business. All boats rise with the tide. If they come in engaged, they've got a great idea. We all win. So yeah an engaged franchisee gets me going. Lto's also I love, uh, I love. I love collaborations and lto's. We're doing one with poppy here next month that I'm super excited about. More to come, but, uh, I love, uh, I love lto's okay uh, what do you find tiresome at home or at work?
Speaker 2:you know, everybody needs, everybody needs to vent. But my glass, you know and maybe I'm just buried in the sand I just can't stand negativity, I just can't. If you wanna come in and you got a problem, I love it. I'll sit, let's figure it out. But you know, I love the business that we're in. We're not solving world hunger, unfortunately. We're not cur world hunger, unfortunately. We're not curing cancer, unfortunately, but we do deliver a phenomenal product. Negativity in general is tough for me. Okay.
Speaker 1:And is there a book that you read, or have read, that you find appropriate and like to recommend to colleagues?
Speaker 2:You know this is somewhat embarrassing. I'm not a huge reader. I love podcasts. I went on an hour and a half drive each way, every single day. The NPR one I think I've listened to for as long as it's been in existence how I built. This is phenomenal. On Bloomberg, masters in Business, it's so cool. They just talk to these giant companies but they find the founder CEO and they just for an hour, hour and a half. They just walk through their journey in life, personally and professionally, and it's really cool. There's a lot of correlation that you find with some of these companies, so I'd have to say those two.
Speaker 1:Okay, when you look at other professions, is there another profession that you may potentially like to give a shot?
Speaker 2:I dipped my toe in this. I was in the resort industry with Vail Resorts and North Star and Tahoe for 12 years total between the two of them. I love that hospitality, but I've always been intrigued by the hotel business. Running a very large luxury hotel has always been something that I thought would be amazing. It's the ultimate expression of customer service.
Speaker 1:Okay, and what do you enjoy doing that you may not have as much time to do as you would like.
Speaker 2:I've got four daughters and a very energetic wife, so we do a lot. It feels like, but in the summertime we're on the boat every weekend and then in the wintertime, dirt toys we're in the dirt on four wheelers and quads and razors and all that type of stuff. So that's where we get our excitement. Okay, who inspired you to be the person that?
Speaker 1:you are today, all that type of stuff. So that's, that's where we get our our excitement. Okay, Uh, who? Who inspired you to be the person that you are today?
Speaker 2:Great question. Um, uh, um, uh, a general named Colonel. He was a Colonel at the time but he's general now Colonel Eaton. Um, I was in the army and uh, um, for some reason, um, um, he took a, uh, took a, took, took a, took a. Liking to me and he really, I don't know. Just getting exposure to work with somebody as brilliant as he was and how motivating he was, I think really set me up for a career trajectory, no doubt about it.
Speaker 1:That's awesome, and how do you want to be remembered by your friends and family? Father?
Speaker 2:Yeah, I love my career more than anything. It's awesome. And how do you want to be remembered by your friends and family? Father yeah, I love my career more than anything. It's great. Obviously pays the bills affords for lifestyle, but there's no job more important than being a father.
Speaker 1:Absolutely Perfect. I agree with that wholeheartedly. Well, heath, thank you very much for taking the time to speak with us today. It was a pleasure getting to know more about you and also getting a nice introduction to HTO, so thank you very much for taking the time.
Speaker 2:I appreciate it, Mark. Thank you so much.
Speaker 1:Absolutely, and thank you everyone for taking the time to listen. Make sure you join us back every Thursday for additional episodes in our Leaders in Customer Mobility series and until then, have a wonderful day.