Capital Teas, the six-store chainlet of specialty tea shops based in Annapolis, has received a $5 million investment from Pear Tree Partners in Massachusetts to help grow its business.
Capital Teas co-founder and chief executive Peter Martino said he will use the money to expand the number of locations, grow online sales and increase wholesale business to local hotels and to restaurants, such as the Bombay Club in downtown Washington and Le Diplomate on 14th Street NW, both of which it serves.
“This gives us the flexibility to concentrate on operations and a consistent and positive customer experience, while expanding the number of locations,” Martino said. “We are no longer bootstrapping.”
Martino, 50, a former nuclear submariner and an attorney, said he had been looking for an investment partner. He was introduced to Pear Tree in December by a mutual business acquaintance.
He expects the chain to be profitable this year.
The company is based in a 4,000-square-foot office and distribution center in Annapolis.
Founded in 2007 by Martino and his wife, Manelle, Capital Teas has been trying to grab a piece of the $9 billion tea market in the United States. Teavana, the 330-store Atlanta-based retail company built on a similar tea vibe, was bought by Starbucks in 2012 for about $620 million.
Until now, Capital Teas stores have been mostly a tea lover’s shopping experience, with upscale locations filled with teapots, books, tea sets on polished wooden tables and “sniffing walls” with dozens of loose teas available for purchase.
Martino wants to expand his concept into a “tea bar” boutique, where customers can drink hot tea and nibble snacks while they noodle with their iPads or read newspapers.
The company opened its first tea bar in the Mosaic shopping center in Merrifield. It plans to convert its National Harbor store to the same format this spring. The company is also planning the same concept at its Capitol Hill store on Barracks Row, which should open in the next few weeks.
Martino said he and his wife, who is chairman, will retain control of the company even with the investment. Manelle Martino, 35, has become the public face of the company as it seeks to expand. She is featured in the current issue of Marie Claire magazine.
“We are hoping to double our size this year, from six stores to 12,” Martino said. “The expansion is not a function of money, it is a function of identifying the right locations. And we are looking hard.”
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