August 2, 2011

My body is completely intolerant to caffeine. Yes, it’s weird, but if I take even a sip, I’ll literally be up for 18 hours. So instead of ordering decaf, I stick with herbal teas—which has been largely disappointing because most cafes only serve the bland-tasting bagged variety. I prefer loose leaf, so you can imagine how excited I was when I moved to Chicago and walked into my first Argo Tea.

The café was just off Michigan Avenue, and upon walking up to the counter I was overwhelmed by the wide variety of loose leaf tea from all over the world. Flavors were mixed with tea as the base: mint and tea; Acai berry, lemonade and tea; raspberry, white chocolate and tea. I ordered the herbal chamomile, sat down, and was immediately impressed with its richness of flavor.

That was a few years ago; I now see Argo Tea cafes all over the city. Turns out, the company was founded here eight years ago by resident Arsen Avakian.

Originally from Armenia, Avakian immigrated to the U.S. for school and ended up working in the technology industry before making the switch to entrepreneurship. In the early 2000s as he was spending a lot of time in coffee shops, it dawned on him how little tea was being consumed.

“Where I grew up, tea and coffee were equally consumed; it really is the cultural drink of choice in the rest of the world, except the U.S.,” he says.

Avakian wanted to create a new American beverage category, but needed to do some research first. “I wanted to understand what was preventing North Americans from consuming tea, and after looking into it, I found some obvious obstacles,” he says.

Problem #1: lack of quality ingredients. Problem #2: negative perception of tea. According to Avakian, North Americans only drink tea when they are sick, and feel that tea tastes good when only ingredients such as honey and lemon are added.

“That was my starting point, so I went around the world and sourced some of the finest ingredients to help make a quality product,” he says. In order to attract a customer base, he needed to offer something different—not just straight tea—so he developed a new approach: mixing tea with other flavors.

“It was like using the intelligence of a mixologist or bartender; no one had done that with tea,” he says.

Starting out

Avakian made a business plan, recruited talented friends and opened his first Argo Tea café in mid-2003 in Chicago’s Lincoln Park neighborhood. The business was an immediate hit.

“Within the first few hours, we knew we were onto something special,” he says.

Operations were a different story. While running a café seems simple, says Avakian, “it is a deceiving business. I made the decision that there was only one way to learn, so for the first 18 months my initial team and I got behind the counter and worked as baristas.”

The company evolved as they learned. Two years later, Avakian opened his second café in Chicago, and today the company has 23 cafes—also in Boston, New York City and St. Louis. Two years ago, the company entered the retail space with ready-to-drink bottles of tea, available at grocery stores.

Lessons

What has Avakian learned over the years?

“That things change and you have to be flexible enough not only to survive, but to evolve and adapt; you have to have persistence and think outside the box—you’ll find the one plus one doesn’t always equal two; it might equal 11 at times,” he quips.

Avakian resists the comparison to Starbucks. To him, Argo Tea is a beverage company, not a chain of coffee shops. Future plans include opening cafes on the West Coast—hopefully next year.

What’s the best part of his job?

“Selling something that you know will make people feel better; tea is truly healthy and it appeals to a variety of groups and lifestyles; I feel like our product is helping to unite communities and that is really exciting,” he says.

Check out this related story: Why A Former Starbucks Exec Opened His Own Coffee Shop.

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