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Business Observer Thursday, Mar. 12, 2009 12 years ago

Tea Time

Kim Pham has turned a retail loose-leaf tea business into a retail and wholesale success that is expanding out of state.

Kim Pham has turned a retail loose-leaf tea business into a retail and wholesale success that is expanding out of state.

Entrepreneurs, cousins and business partners Kim Pham and Lan Ha started Kaleisia Tea Lounge in north Tampa in 2005 as a small shop selling loose-leaf teas.

It has grown into a lounge with live music that now sells vegetarian food and has a growing wholesale operation as well.

Kaleisia — a combination of kaleidoscope and Asia — now sells more than 100 varieties of tea to consumers and businesses, including some hard-to-find varieties from China, where Pham travels annually to get rare teas.

And the latest news is that Pham is scouting out a location for a new store in Charlotte, N.C.

If you think all of this came easy, or was matter of timing with the Baby Boomers' interest in healthy eating, think again, Pham says.

The biggest lesson she's learned as a retail and wholesale business owner is how demanding the operation is. She says it would probably be impossible to run if she was married and had children, like some of her friends.

“The main thing we've learned is that it is really hard work,” Pham, 29, says. “I love what I do. But it is really, really difficult to start the business. It demands a lot of you.”

Those demands include 80- to 90-hour work weeks and keeping staff small to hold down overhead. The first two years, their income equaled about half the minimum wage.

But over time, the store's popularity rose, especially with students and staff at the University of South Florida nearby.

As more customers came, the store started selling vegetarian food, such as spring rolls, pumpkin coconut soup, salads and avocado wraps. That pushed the average customer ticket from about $2.75 to about $8.

Kaleisia also marketed more through events, such as tea tastings, which often prove more popular than wine tastings.

And it was all done with a name that Ha came up with, but which most people can't spell or pronounce, Pham admits. But it is working.

“Our lifestyle has improved quite a lot,” Pham says.

Vietnam natives
Pham and Ha were born in Vietnam. Their mothers were sisters and remained close.

Pham and Ha traveled overseas and during college, they wanted to open a tea shop, similar to successful ones they had visited. But their parents stopped them.

Once they graduated, they traveled more overseas and in 2004, began planning a tea lounge. They came to Tampa because Ha had attended USF. Pham came from Los Angeles, where she graduated from Occidental College.

They looked for store locations, equipment, products and vendors. It took more than 18 months.

“We are very meticulous,” Pham says. “You only get one chance at getting a customer. If the first chance fails, she won't be back.”

They signed a lease on Fletcher Avenue in north Tampa six months before opening the shop. Build-out of the store was important so they could showcase their dozens of brands of tea.

On April 28, 2005, Pham and Ha opened Kaleisia. Although the crowds were more modest than today, the lounge got a good deal of attention because it was so different.

“I came from L.A. where tea lounges were everywhere,” Pham says. “They are missing in Florida. We got really lucky in that the community was very excited.”

Picking the spot
When Ha and Pham decided to open the tea lounge in Tampa, people pushed them to open it in tony and trendy South Tampa or hip and bohemian Ybor City.

But the partners studied the city and its communities and settled on north Tampa, near USF, in a transient, not always safe neighborhood known as Suitcase City.

Two of the reasons for that were that Kaleisia uses university students as staff and Pham and Ha wanted to help revitalize that neighborhood.

“We picked on one of the worst neighborhoods in town,” Pham says. “We didn't want to be anywhere established.”

With more customers coming to the store, the neighborhood would improve, she reasons.

“Just because it's low income, doesn't mean they don't have money to spend,” Pham says. “We want it grow and change. The community there welcomed us with open arms.”

Kaleisia's marketing includes tea tastings at events, educating customers on tea and donations to nonprofits.

It has not seen sales fall despite the softer economy.

“We've had growth last year and this year,” Pham says. “We have not lost one employee.”

Wholesale, retail work
Kaleisia's wholesale business grew out of its retail success. It now supplies tea to four Tampa Bay area businesses, including a supermarket and a coffee shop in Plant City, plus shops in Los Angeles and North Carolina.

Inside the store, Pham, Ha and the staff spend a lot of time talking to customers about the varieties of tea, their tastes and health benefits. For example, some kinds of tea, because of their makeup, are naturally decaffeinated.

“We really educate our customers,” Pham says. “Our staff is very well trained.”

The education includes free workshops for customers on more than 100 different types of teas. It adds three new teas every month.

Kaleisia also sells tea through its Web site. Customers come from across the world, including the Czech Republic and Germany. “It's been amazing,” Pham says. “Online sales have grown as well.”

Yet Pham and Ha remain grateful to the north Tampa community. “We're amazed they are in the store day to day,” Pham says.

“People come here to get away from problems and stress,” she says. “Tea takes time. You don't rush tea. You relax, breathe and feel healthier.”

Business: Kaleisia Tea Lounge
Industry: Retail and wholesale loose-leaf tea
Key: Offering varieties of loose-leaf tea, putting them on the Web site, educating customers and expanding the wholesale accounts.

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