Chai spices up beverage segment: coffeehouses and bakery-cafes brew up new ideas for hot or iced tea drinks

Nation's Restaurant News, August 4, 2003 by Jack Hayes

Chai, a spiced tea drink that has been brewed for centuries in tiny stalls along the byways of Northern India, is claiming more and more space on beverage menus in coffeehouses, bakery-cafes and a growing number of other dining venues across America.

Chai is made from various blends of tea, milk and aromatic spices--including cardamom, cinnamon, cloves, ginger, nutmeg and pepper--and served hot like a latte or cold in the fashion of an iced latte or frozen herbal tea. The beverage is now an accepted alternative to both coffee and traditional tea, according to foodservice operators and beverage experts.

The versatile drink also is showing up in such concoctions as seasonal eggnogs, fast-food milk shakes and exotic alcohol-based cocktails, and it even is finding its way into dessert recipes.

"Chai is a high-profile replacement for those who don't drink coffee," says Don Reynolds, founder of Wilmington, N.O.-based Port City Java. The chain serves chai drinks at 31 units in Maryland, New Jersey, North Carolina, South Carolina and Virginia as well as at three franchised locations in Iceland.

"But I'm a coffee lover, and I drink chai when I'm not in the mood for coffee," Reynolds adds. "Actually, it's a great afternoon substitute for devoted coffee drinkers. Iced chai is wonderful, and chai is also terrific in a shake."

Meanwhile, such major chains as Dunkin' Donuts, Starbucks Coffee, Panera Bread and Atlanta Bread have rolled out chai drinks systemwide.

According to Starbucks' spokesman Nick Davis, the chain brought chai onboard four years ago and currently is offering chai tea lattes and iced chai lattes as well as chai creme frappuccinos.

"We have a healthy business of chai tea lattes served over ice," Davis says. "In addition, we have crafted a blended recipe for a chai creme frappuccino, which is also a popular customer offering. The frappuccino was launched last summer."

Among the earliest of coffeehouse operators to sample the product, Port City's Reynolds brought chai into his stores nearly a decade ago and has watched it gain momentum each year. Chai now accounts for 12 percent to 15 percent of Port City's beverage revenue.

"We've made chai muffins using the [liquid] concentrate [rather than dry powder chai mix] that were really good," Reynolds says. "We also did a pound cake, replacing part of the recipe's liquid with chai concentrate. It gave the cake a neat color and a spicy flavor."

Vancouver, Wash.-based Burgerville, a "nontraditional" 40-plus-unit, quick-service chain operating across the Northwest, went one step further when its research and development chef, George Brown, created the Oregon Chai milk shake.

"Chai has the perfect seasonings for our pumpkin milk shake," Brown says. "I love those flavors myself; they have a Zen quality. And of course it fits with the different way we approach our menu,"

"Chai is a sweet yet very complex drink with a tiny bit of heat to it," Reynolds explains. "At the very end the pepper hits you at the back of your throat and sort of polishes the experience."

Many operators report that chai has strong acceptance in college and university towns, and Port City's Reynolds explains that is because younger consumers are always more open to new products.

"But I don't think chai is being marketed specifically to young adults," Reynolds says. "It's just a newer drink with an element of hand-preparedness that puts it on the level of an espresso or a latte. In other words chai is a gourmet beverage with pizzazz."

Other regional coffee chains, such as Irvine, Calif.-based Gloria Jeans, part of the Diedrich Coffee Inc. group, are giving chai credit for as much as 10 percent of their beverage gross.

"I'd say about one of 10 customers in our stores is ordering chai," estimates Gloria Jean's marketing vice president, Diane Hays-Hoag. "We were a bit ahead of the curve with chai drinks, and some of our stores are expanding their menu beyond the hot chai latte and the iced chai," she says.

Hays-Hoag notes that Gloria Jean's operations manual has "a plethora of approved chai drinks" that operators have the option of featuring on a temporary or permanent basis.

"What we like about the chai product we use is the shelf life of the nonopened concentrate, which comes in quart packages," Hays-Hoag adds. "Restaurants like shelf-stable items." Nevertheless, she says her group is preparing to bring in single-serve retail packets that can be mixed with water in the stores like gourmet and herbal teas.

In downtown Chicago, near Oprah Winfrey Studios, LePeep operator Chris Martin also likes the long shelf life of the liquid chai concentrate product he serves in his dining room and at his to-go espresso bar near the restaurant's front door.

"Until we crack the package open, it can sit for a long time without losing flavor, freshness or potency," Martin says. "We go through a case of chai a month, which is equal to eight or 10 chai drinks a day, so at most we're refrigerating one 32-ounce package at a time."

Compared with roughly one pound of chai that he uses in an average week, Martin goes through 20 pounds of espresso beans and about 50 pounds of regular coffee beans. He is looking into blended cold drinks with chai as an alternative to cold espresso this summer, mainly because chai sold well for him last winter.