Retail profile: The Tea & Coffee Exchange

WTN141006_ART_TeaExchange_BigBear_DisplayCase_smGinny and Harvey Durand, the founders of The Tea & Coffee Exchange, have carved a successful niche catering to tea and coffee connoisseurs in resort communities.

They have two Southern California tea shops: one at Lake Arrowhead and another on Big Bear Lake.

These towns have a lot in common. They’re both huddled around lakes high in the San Bernardino Mountains. They both have plentiful hiking trails, boat rentals, and creeks for fishing. But most importantly for the Durands, they are weekend and seasonal getaways for hordes of Los Angelinos eager to escape the blistering Southern California sun.

The permanent-resident populations of both cities is only 10,000 to 20,000 but locals say these numbers swell more than 10 times during summer months.

Out-of-towners are the lifeblood of these shops, which sell mostly specialty coffee and tea but also pastries, sandwiches, soup, even crepes. Despite the communities’ similarities, the real key to their success is learning to cater to the markets’ differences, said Ginny Durand.

WTN141006_ART_TeaExchange_LakeArrowhead_OwnersGinnyandHarveyDurand_smBig Bear’s customers are health-conscious and physically active. They arrive in droves every winter for the ski resorts and athletic events — there’s even a snow shoe race. These customers order more coffee than tea. They order hardly any gelato. They order more sandwiches, but when Ginny introduced a soup menu it flopped, she said.

“You’d think it’s cold so they’d want soup,” she shrugged.

Though Arrowhead is a similar mountain getaway town, customers are as different as night and day. The store’s big rush comes in the summer from city families there to escape the heat and play in the lake. Here they buy more tea than coffee; they eat a lot of gelato, and the store sell lots of touristy knick-knacks — T-shirts, sweaters and mugs emblazoned with the town’s name.

They started conceptualizing the stores in 2004 when Ginny was working as a sales representative for a manufacturer and Harvey as a vice president for a Hawaiian-based company operating high-end gift shops at resorts.

When Harvey retired, they decided it was time to set up shop, Ginny said.

They opened their first shop in 2007 in The Village, a commercial center that serves as Lake Arrowhead’s downtown. At first, they served only tea, both wet and dry, and some pastries.

“The whole store was full of tea products,” Ginny said.

WTN141006_ART_TeaExchange_LakeArrowhead_FrontCounter_smTea retail was projected to become a big business in the coming years, and they hoped to establish themselves early to reap the benefits of brand recognition. But by the end of their first year in business, the importance of catering to the needs of their customers “here-and-now” sank in. People regularly asked whether the store served coffee, Ginny explained. “You have to figure at least one member of the family is going to want coffee,” she said.

After renegotiating a new agreement with the landlord, they brought in the beans.

“Financially it helped a lot. That was a lot of traffic we didn’t have to turn away,” Ginny said. “It’s really hard to say to someone no, we can’t serve you.”

By the following year, the Durands had made another realization: A lot of people — especially locals who worked nearby – wanted to know whether they had anything else to eat beside pastries. “We were close by and they considered us fast food,” she said.

So they expanded their food menu — brought in soups and sandwiches — but it wasn’t long before they outgrew that too. “People started asking, ‘Don’t you have anything else besides soup and sandwiches?” Ginny said.

That’s when they tried something unique for a tea and coffee house: crepes. They installed a big, round crepe grill and taught their crew to make them in their own nontraditional way; big, fat and thick with filling.

Ginny estimates food is about a quarter of their earnings with the other 75% split evenly between coffee and tea.

WTN141006_ART_TeaExchange_LakeArrowhead_PrepStation_smWhile they were finding the ideal selection in Arrowhead, they enlisted the help of their son, Craig Boelsen and in 2009 he opened a location in Manhattan Beach, an upscale beach city in Los Angeles County.

Due to a hiccup in the red tape they weren’t able to get a food service permit in a reasonable amount of time, so they close that store within 18 months.

They were disappointed, but the timing turned out to be great because Starbucks was in the process of closing its Big Bear Lake location. They snapped up the lease for the space and opened in February, 2011.

They plan to continue to keep experimenting in their shops, always improving the menu and other elements of their business, to better accommodate their customers.

The couple is considering a number of ideas, such as replacing the underused gelato cooler in Big Bear with a wine fridge and serving it the way they do at the Starbucks Evenings locations.

“You have to keep reinventing yourself as you learn about your customers, your market,” Ginny said.

— By Pete Surowski