Red Diamond

Why Iced Tea Works on Menus Year-Round

This popular beverage can help restaurants capture sales in any season.

Though many consider iced tea a warm-weather beverage, it’s actually evolving into a year-round favorite of consumers, who are wooed by factors like the drink’s health benefits—especially compared to carbonated soft drinks—and flavor, says Bill Bowron, chairman, president, and CEO of Red Diamond.

Tea contains flavonoids, which are naturally occurring compounds that are believed to have antioxidant properties, according to the Tea Association of the U.S.A. Inc. These benefits and others have helped make tea what the Tea Association reported as the most widely consumed beverage in the world next to water and a beverage that can be found in almost 80 percent of all U.S. households. Additionally, approximately 80 percent of tea consumed in America is iced.

“Iced tea is easy, crisp, and clean, and restaurants make a large margin on it,” Bowron says, noting that outside of alcohol, eating establishments generate a higher percentage of sales off their tea and coffee programs than anything on their menus. “A restaurant invests three or three and a half cents in a glass of tea, and they’re selling it for $3.”

Consumers are also enticed by iced tea’s ready-to-drink (rtd) format that makes it more convenient for take out, reports the Tea Association. The canned and bottled RTD tea segment comprised just under 50 percent of the market share and is expected to continue growing by an estimated 30–35 percent over the next five years.

Even more significantly, millennials are plucking down plenty on cold drinks, Bowron says. Millennials are the most likely consumer group to drink tea, with 87 percent of them drinking the beverage. Millennial Marketing reports that chilled beverages are also highly popular gourmet products among millennials and younger children.

Separately, iced tea drinkers—especially young consumers—continue to order the drink, even when it’s colder outside, Bowron says. While sales might pull back slightly, he continued, “it’s still a go-to drink, particularly with younger people. They’re grabbing it in a bottle and going on their way.”

With consumers’ increasingly refined palates, however, they expect more from iced tea than simply something to drink, a major factor when menu planning, he noted. “Rather than simply having a glass, people want to know if it’s full bodied,” Bowron says. “Is it an Earl Grey? An Irish Breakfast? People want it to be personal. They want something they can enjoy as an experience. Restaurant menus need to cater to that.”

In that spirit, restaurants, as well as a number of chains and convenience stores, are creating buzz through limited-time offerings with various flavored iced tea options during the year, Bowron says. “That helps them create value and a reason for people to come to them instead of going elsewhere. So, when an operator’s putting together a menu, their menu doesn’t look like it looked last time.”