Coffee Bean & Tea Leaf Targets Franchise Growth After Brand Refresh

Editor-in-chief of Franchise Times

Quality coffee and tea offerings are the "dual dragons" of The Coffee Bean & Tea Leaf, says President Sanjiv Razdan. With about 200 locations in the U.S., the brand is turning its attention to franchise expansion.

When Sanjiv Razdan joined The Coffee Bean & Tea Leaf more than two years ago as president of the Americas and India, he said he wanted to make franchisee-led growth a priority. Since 2021, Razdan and his leadership team have been working to prepare the company to pursue exactly that, undertaking a brand refresh and refocusing the development strategy in tandem with new initiatives to drive sales.

Razdan, the former chief operating officer of Sweetgreen whose experience also includes executive roles with Pizza Hut, KFC and Applebee’s, said the last couple of years have brought “foundational changes” that are necessary to achieve ambitious growth goals. Those include doubling Coffee Bean & Tea Leaf’s footprint of cafes and increasing the grocery, foodservice and e-commerce business tenfold. The company also shifted away from corporate store development.

The Coffee Bean & Tea Leaf, owned by Philippines-based Jollibee Foods Corp., has about 1,100 global units, roughly 200 of them in the United States in just four states: California, Hawaii, Nevada and Arizona. Many of the U.S. stores are in non-traditional settings such as healthcare facilities, university campuses and airports. While the brand still sees significant opportunity in those environments, said Razdan, “we think the cafes will be 80 percent of our portfolio.”

Sanjiv Razdan is president of the Americas and India for The Coffee Bean & Tea Leaf.

Those cafes, as with all new locations, will showcase the concept’s new experiential café design developed by Livit. A complete brand refresh, meanwhile, positions the company as “a global house of coffee and tea where you can discover endless opportunities,” said Razdan.

Locations can be as small as 200 square feet and up to 1,800 square feet, with inline and drive-thru formats, versatility Razdan said makes The Coffee Bean & Tea Leaf attractive for different markets and sites types. “We’ve got the iconic brand, and it’s one that can show up in a multitude of asset types,” he said of the 60-year-old company.

Franchised drive-thru stores had average sales of $1.14 million in 2022; the AUV for traditional franchise units is $744,211. The cost to open a full-service store ranges from $359,500 to $785,500.

Investments in consumer-facing digital technology, including a revamped loyalty program and the rebuilding of its mobile app, are also key to The Coffee Bean & Tea Leaf’s growth strategy. About 40 percent of digital transactions happen on the app, and that number is increasing as customers order ahead for pickup, Razdan said.

The product front, meanwhile, is where The Coffee Bean & Tea Leaf truly stands out, he said, with the brand refresh serving to amplify its offerings of premium coffee and tea. The company is launching a new tea platform with matcha, chai, black and fruit teas, while also adding “interesting origin” coffees.

“We’re positioned as a premium lifestyle brand with really high-quality coffee and teas. No other chain has a meaningful presence in both,” Razdan said. “We call them our dual dragons of coffee and tea.”

It was the product quality that initially stood out to Jason Park, who today operates four Coffee Bean & Tea Leaf stores with three in the pipeline. “It’s different from Starbucks—that’s all we knew in Texas,” said Park, who had relocated to Los Angeles. His first unit, in that city’s Cedars-Sinai Medical Center, “was successful pretty much right away.”

Franchisee Jason Park operates four Coffee Bean & Tea Leaf stores in the Los Angeles area with plans for more.

“It was a hit right from the beginning,” he said, and he’s since continued to focus on development in healthcare, office and mall settings. While the COVID-19 pandemic brought a multitude of challenges, especially as offices emptied and mall visits plummeted, Park pushed through and his stores are again performing well. (The Coffee Bean & Tea Leaf’s domestic store count dropped by 84 between 2020 and 2022, with 65 company store closures.)

“We’re back to where we were before—this year is full go,” Park said. A franchisee since 2015, he added he’s encouraged by what he’s seen from the leadership team.

“Sanjiv, he listens to franchisees. He takes it to heart—and then he delivers,” Park continued. “We didn’t have that before. He’s someone I will follow.”

Katherine Lam and Daniel Nguyen have years of experience operating restaurants in airports, starting with their Bambuza Vietnam Kitchens in the Portland International and Seattle-Tacoma International airports. The couple, who created Bambuza Hospitality Group and have 13 restaurant and retail locations in the Pacific Northwest, opened their first Coffee Bean & Tea Leaf in California’s John Wayne Airport in 2021.

Katherine Lam and Daniel Nguyen are continuing to grow Coffee Bean & Tea Leaf in airports through their Bambuza Hospitality Group.

Originally set to open in 2020—“Then everything came to a screeching halt,” said Nguyen.—they moved quickly to refurbish a vacant space in the airport in April 2021 and added two more stores that summer.

“We saw immediately, people can do without sandwiches and burgers, but they can’t do without their coffee,” he said of travelers.

“We didn’t anticipate the strong sales at John Wayne in the beginning,” noted Lam. “We’re super happy with the return, so we decided to expand.”

They’ve since added a café in Lake Oswego, Oregon, near Portland, and are developing their first Coffee Bean & Tea Leaf at Salt Lake City International Airport. More café expansion is likely for Bambuza.

“Portland and where we live has such a coffee culture,” said Lam. “Coffee Bean & Tea Leaf is truly outstanding, especially compared to other national brands.”

The Coffee Bean & Tea Leaf is now franchising in 21 states, with Texas and Illinois the highest priority for development, Razdan said.

Editor-in-chief of Franchise Times