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Ones to Watch | By Lynne Miller

Argo Tea
Tea drinks from Argo Tea.

As co-founders of Argo Tea, Arsen Avakian and Simon Simonian are putting premium tea on the table, much like Starbucks did with high-end coffee. In five years, the Chicago-based tea café has evolved into a chain of 10 company-owned stores, all in the Windy City. In the coming months, the company plans to branch out to the East Coast with the opening of five new corporate stores.

Avakian, who grew up drinking coffee and tea in his native Armenia, never envisioned a future in foodservice. After immigrating to Chicago and earning a Master of Business Administration, he worked in information technology and private equity. His boyhood friend, Simonian, followed a similar path to America, ending up as a computer scientist. Looking for a new business opportunity, the 30-somethings saw potential in developing a tea café with a modern American sensibility and broad appeal.

“People don’t realize this is the second most-consumed beverage in the world after water,” Avakian says. “There’s a reason everyone wants the beverage. We decided to start our business by refreshing in consumers minds what that product is.”

To introduce people to Argo’s one-of-a-kind drinks, employees routinely provide samples to passersby outside Argo cafés. The cafés serve up “teappuccinos,” green tea ginger twists, yerba mate lattes, and other proprietary blends. The menu features more than 30 hot and chilled beverages. While uniquely flavored tea drinks distinguish the company, purists can also order a cup of unsweetened loose-leaf tea in traditional flavors. The average check ranges from $4 to $5.

“It’s an affordable luxury,” Avakian says.

In addition to year-round favorites, Argo Tea offers a rotating selection of seasonal beverages. For instance, the White Tea Açaí Squeeze is popular in the summer. The limited-time offer beverage is a blend of açaí berries from Brazil, white tea from China, and freshly squeezed lemonade.

Retail sales are seasonal, too. Customers shopping for gifts buy more packaged tea blends and teapots in December, bumping up the average check to $10–$15, Avakian says. But brewed beverages generate the majority of sales.

The company imports tea from growers around the world and brews its teas at a central brewery in downtown Chicago. That process allows baristas at the cafés to quickly finish the drinks by adding milk or water to the tea concentrates.

The cafés do not look like the stereotypical tea houses of past centuries. Located in Chicago’s hippest neighborhoods, the sleekly designed shops have a modern and inviting look. They’re decorated in shades of green and dark wood. The shops offer customers free wireless Internet service. Cafés range in size from 1,000 to 2,000 square feet, with dining areas that can seat 40 to 100 people. Most shops also have outdoor seating. Argo operates two kiosks, which take up 150 to 200 square feet. The company will introduce the concept to travelers at Chicago’s O’Hare International Airport with a kiosk expected to open later this year, Avakian says.

Argo Tea also offers freshly brewed organic fair trade coffee, as well as croissants, quiches, macaroons, brownies, and lunch items. Customers can also choose from among 40 varieties of packaged loose-leaf tea blends.

The cafés appeal to customers who are concerned about their health and diet. On the Argo Tea Web site, consumers can get a summary of calories, cholesterol, carbs, and other nutritional information for beverages. The cafés also offer vegan and sugar-free foods and beverages, including caffeine-free teas.

When he talks about his business, Avakian emphasizes the healthy nature of Argo’s products and their modern appeal.

Argo Tea
President: Arsen Avakian
hq: Chicago
Year Started: 2003
Annual sales: Undisclosed
Total Units: 10
franchised units: 0

“We never were and never will be a traditional teahouse,” he says. Argo’s focus on one-of-a-kind beverages, combining healthy attributes with appealing flavors, sets the company apart from other beverage chains, he says.

In a nod to the green movement, the company follows environmentally friendly practices. For example, Argo encourages customers to use ceramic mugs, plates, and silverware when they dine in the stores. The cafés sell reusable branded tea tumblers and provide discounted pricing for customers who bring their tumblers in for another drink.

Since it opened, Argo mostly has attracted health-conscious females to its cafés, but that’s changing. While women still outnumber men, the cafés are beginning to attract more males, as well as teenagers. Teens favor drinks like bubble tea, a milky iced tea flavored with “nata de coco,” chewy gels made from coconut.