How Do You Build a $500 Million Coffee Chain? By Selling Matcha to Teens.
At 3:30 p.m. on the Upper East Side of New York City, Emma and Maddie, both 12 years old, are sipping matcha lattes at their usual after-school hangout: Blank Street Coffee.
As the name suggests, Blank Street made its name in coffee—launching in 2020 with a Brooklyn cart, and then, with the backing of millions in venture capital, rapidly expanding with stores across the city and beyond. Coffee snobs balked at the brand: The chain's automated espresso machines and aggressive expansion plan struck them as inauthentic to cafe culture. But now the company has caught a fresh stride by leaning into sugary, colorful, caffeinated, TikTok-friendly green tea.
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There are a variety of flavors—among them, strawberry-shortcake matcha, blueberry matcha, white-chocolate matcha. New this month are a rocky-road latte and cookies-and-cream matcha.
'At first I didn't like it, but now I do,' Emma said of her $7 iced green drink, smiling through her braces. The sixth-grader said she charged the drinks to her parents' credit card once or twice a week. 'The matcha part isn't sweet, but the part with the syrup and stuff at the bottom is good.'
'I used to walk by here and not know what it was, but I heard about it from TikTok so I stopped in,' added Maddie. 'It's become a trend. A lot of the high-schoolers order it at school.'
Blank Street joins many brands, including Sephora and Stanley, that have been propelled to a broader cultural relevance because of teen customers. The craze now has teens and Gen Z customers proudly sipping matcha and posting about brightly colored drinks that measure high in sugar and even higher in clout.
The company now boasts a $500 million valuation, a large number for a coffee chain that isn't Starbucks.
'I see people all the time in class with a Blank Street cup,' said Cooper, a 15-year-old ninth-grade private-school student. He said the coffee chain had invaded his New York City classrooms this past fall. He estimates he patronizes Blank Street four times a week.
Blank Street co-founders Vinay Menda, 32, and Issam Freiha, 29, say they didn't set out to capture the wallets of Sephora teens. They are college friends who started the coffee chain after working together in venture capital. Freiha is originally from Lebanon and Menda from Dubai. The duo researched trendy Asian coffee chains and decided to try a similar approach in the states. (A third co-founder, Ignacio Llado, joined in 2022 to expand Blank Street to the U.K.).
They realized they could hit it big with flavored matcha two years ago after a mixologist on their London team created a blueberry drink that went viral. Since then, Blank Street has been doubling down on new matcha beverages, rolling out a few every season. Matcha now accounts for approximately 50% of the business, Menda said.
'Matcha is amazing for mixology,' said Freiha from the company's Brooklyn offices one recent morning. 'It's something we can build way crazier, amazing flavors. We've barely scratched the surface.'
Blank Street raised $25 million in a Series B round of funding at the end of May, bringing its total funding amount to $135 million, a spokeswoman for the company said. The company says it is profitable. It earns an estimated revenue of $149 million annually, a person familiar with the business said. It has plans to eventually expand its 90 global stores to locations such as Miami and Los Angeles.
'The influencers are all drinking it, like it's just a part of their lives, so you feel like you got to try it,' said Madison Ginsberg, a 19-year-old sophomore at the University of Florida.
To help its marketing team think about customers it serves, global creative director Mohammad Rabaa says his team creates fake personas with character-building mood boards around each new matcha drink, to 'market it in a hyper-specific way.'
Blank Street's strawberry-shortcake matcha persona is, for example, 'an East London Girl who listens to Katseye,' Rabaa, 29, said.
'The Aries latte is someone who hangs out in McCarren Park, is from Brooklyn and feels, to me, more Charli [XCX].'
A new cookies-and-cream matcha drink is 'a Lower East Side Dimes Square boy.' The team hasn't decided what kind of music the character listens to yet.
The company has had huge success with some flavors, like banana-bread matcha. Others haven't done as well, like a grapefruit cold-brew spritz Freiha described as 'the most rogue one we've ever done.' (The character for that one was 'a Dua Lipa listener who does summer in the Amalfi coast. Very bougie,' Rabaa said.)
In other words, Blank Street is trying to sell a lifestyle.
'You're not just getting matcha, you're getting a vibe,' said Alexis Taliento, a 23-year-old Brooklyner. Taliento said she preferred Blank Street to Starbucks, whose menu she finds overwhelming. 'Blank Street is clean, new, fresh. It's super aesthetic.'
Adri Thomas, a 22-year-old public-relations professional originally from Chicago, said she associated Blank Street as a hot New York spot because she had heard about it from YouTube vloggers. When she moved to New York last year, 'Blank Street was literally one of the first places I went, before I even had any of my furniture.'
A Blank Street matcha drink can have 25 grams of sugar—just at the daily suggested limit for women by the American Heart Association.
Maddi Klancher, 23, works in financial technology and said she bought matcha from Blank Street four to five times a week, mainly out of convenience. She has had better matcha from other places, she said, but at $7 a drink, Blank Street has lower prices.
Blank Street has an invite-only membership, where baristas give customers access to pay $22 a month for up to 14 drinks a week. The program has a long wait list and has fueled online frenzy. Maddie Kane, a clean-energy researcher in New York, said she had jumped the line by gifting herself a membership through the website, a loophole that's since closed. 'I hacked my way into it,' Kane, 25, joked.
Alessandro, 16, said she'd always thought matcha was 'disgusting,' but enough peer pressure from friends had convinced her to try Blank Street's.
'Strawberry shortcake tastes like a cake,' she said. 'I had a headache after.'
Write to Chavie Lieber at Chavie.Lieber@WSJ.com
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