Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

  • Anytime Fitness
  • CruiseOne
  • Firehouse Subs
  • Jimmy John's
  • Massage Envy
  • Menchie's
  • Orange Leaf Frozen Yogurt
  • Planet Fitness
  • The UPS Store
  • Yogurt Land
  • And Hundreds More...

No, thanks. I'm not interested in uncovering the actual earnings of hundreds of franchises at this time.

Franchise Chatter Guide: How the Jamba Juice Franchise Became a Leading Health Brand that Has No Problem Attracting Millennials

by Brian Bixler on June 30, 2014

in Franchise Chatter Guides, Smoothie Franchise



Franchise Chatter Membership Information

Don't Invest in a Franchise Until You Check Out This List Find the Ideal Business for You

Jamba Juice Bar

This Franchise Chatter Guide on Jamba Juice and other top smoothie and juice franchises was written by Brian Bixler.

Not that many generations ago, during the days of Anita Bryant and the Florida Sunshine Tree, “juice” meant just one thing to the American buying public: orange. Now there is a whole rainbow of flavors and ingredients that make up modern juice menus, like the one for a Jamba Juice franchise, where pomegranate, mixed berry, orange-carrot-banana, peach, carrot, açai and banana-berry are flavor options. And if something else would please the palate, customers can order a smoothie made with nonfat yogurt.

Jamba Juice has been the franchise to watch both because of its leading market share and its innovation. For example, it has cleverly billed itself as a “healthy, active lifestyle brand,” which leaves the future open for product development. Market researcher Technomic Inc. places it in a specialty category among limited-service restaurants, along with other smoothie purveyors as well as snack and cafe businesses such as Pretzelmaker and NrGize Lifestyle Cafe.

Despite continuing net losses for Jamba Juice in the fourth quarter of 2013 and first quarter of 2014, analysts are still very optimistic about the Jamba Juice franchise program and juice and smoothie bars overall. Technomic puts Jamba Juice sales for 2013 at $531 million, a 3.4 percent increase from the year before. Sales are coming from products with higher profit margins.



Price Points Changing

“What you’re seeing is that juice has moved up to the very high end, up to 12 bucks (for a serving),” said Darren Tristano executive vice president of Technomic Inc. “And then you’ve got smoothies that have been shifted down to the McDonald’s price point. McDonald’s blew (the low-priced smoothie market) open.”

The good news for Jamba Juice, Tristano continued, is “a big consumption trend moving upward” and “the big loser in all this is the carbonated beverage.”

Jamba Juice Company started right out of the gate in 2014, announcing an expansion of its international plans by reaching an agreement with Foodmark, a division of Dubai-based Landmark Group, to open 80 Jamba Juice stores across the Middle East over the next 10 years. The company also “has a pipeline commitment for 480 locations in South Korea, Canada, the Philippines, Mexico and across the Middle East,” according to Patrick Morris, food contributor for the Motley Fool investment website. “Of the 80 stores that it plans to open through its agreement with Landmark Group, the first is expected to be opened in Dubai sometime this year.”

At the same time it announced the agreement in the Middle East, Jamba Juice reinforced its brand by launching a line of “Whole Food Nutrition” smoothies and juices made with “straight-from-the-earth, whole-food ingredients.” The options include smoothies made from veggies such as kale, carrots and chia seeds, and Greek Yogurt offered in three new flavors. In addition, Jamba Juice offered further fresh juice options that are made-to-order fresh for consumers.

Roll-Out Plans Accelerated

JambaGo

JambaGO

Jamba Juice was also happy to trumpet the news that it had accelerated a roll-out plan for the expanded fresh-squeezed juice menu, beating its original target date by six months, and having it available in more than 500 Jamba Juice stores nationally as of June 2, instead of the end of the year as originally planned. The company claimed the hastened schedule was because of overwhelming consumer response in the pilot launch. That demand was said to be responsible for a 3 to 4 percent lift in year-over-year comparable store sales for those that launched juice through the first quarter of this year, according to the company.

Jamba Juice’s marketing strategies have been especially successful in attracting the all-important Millennial crowd with products the demographic seems to crave, especially healthier alternatives for food and beverage. One of the company’s biggest initiatives has been the introduction of JambaGO as another source of revenue for Jamba Juice franchisees. The self-serve smoothie machine under the Jamba brand was introduced into Target stores in 2013 starting with about 1,000 units. Moreover, cafes, schools, stores, etc. are all potential locations for JambaGO.

Up Against the Big Brands

But there are other big names in this race. Brands like Starbucks, Tropical Smoothie Cafe and the aforementioned McDonald’s, have opened the door for Dunkin’ Donuts to pair smoothies with donuts; and frozen yogurt stores such as Let’s YO! and Red Mango have already added smoothies to their menus as a nonseasonal offering. Red Mango also announced earlier this year it is expanding its healthy offerings by introducing fresh-squeezed juices in Red Mango stores and Red Mango/Smoothie Factory Juice Bar co-branded stores across America. Still, it’s Jamba Juice that seems to be scrutinized most often by potential franchisees.

“Some investors look at Jamba and only see minimal growth due to stagnate revenues. However, Jamba is showing signs of targeting newer markets through innovation, and a better balanced business that knows how to turn a profit,” research analyst Nicholas Durante wrote last month for SeekingAlpha.com.

Jamba Juice’s dominance in the industry is obvious when you compare its $500 million-plus sales to $39 million for Robeks Fruit Smoothies & Healthy Eats or $16 million for Smoothie Factory, according to Technomic.



“Jamba is dedicated to the growth and expansion of their corporate and franchised locations through newer channels and markets,” Durante said, noting that the company goal to open about 70 new stores in 2014 is within reach and 25 to 30 percent will be international. Recently Jamba Juice also opened its first drive-through location in Las Vegas.

Industry Overview

Smoothie Industry at a Glance

In its own report on Juice & Smoothie Bars released in May, IBISWorld projected moderate growth in the sector, but, contrary to some other analysts, it emphasized that cold-pressed juice would drive sales. (Others have shrugged about the actual effect the cold-pressed process would have on the industry.)

Starbucks is credited with stirring the competition when it purchased Evolution Fresh, a cold-press juice producer, in 2011. There is a general thought in the industry that consumer preferences, especially those of Millennials, will drive sales as consumers look for beverages with lower sugar content, or options in which the sugar comes from natural ingredients like whole fruits.

Customers are expected to turn increasingly toward cold press juice, IBISWorld concludes. It’s made by hydraulically chopping and crushing whole fruits and vegetables such as spinach, kale and ginger without using heat. The process is said to yield juice that is highly nutritious.

Starbucks Smoothies

Now Starbucks will start testing Evolution Fresh smoothies made with Dannon Greek yogurt “for added protein.” Starbucks and Danone entered into a partnership last year. Three smoothie flavors will be tested in nearly 200 Starbucks in San Jose and St. Louis this summer and a full line is expected to launch in all markets next year.

IBISWorld estimates the current revenue from juice and smoothie bars to be about $2.2 billion. It’s projected to rise at an annualized rate of 2 percent annually on average to $2.4 billion over the five years to 2019. In the current market, product segmentation favors juices which comprise 52 percent of total revenue, compared to smoothies at 43 percent and other food making up the other 5 percent.

Product Segmentation Smoothies and Juices

The research firm calls Jamba Juice the leader of the juice and smoothie franchises with more than 800 units, capturing the largest share of the market at 26.2 percent.

Other Major Players

Smoothie King

Smoothie King Interior Photo

Smoothie King started as one, stand-alone store in Louisiana in 1973 and began franchising in 1989; so the company has deep roots, particularly in the South. IBISWorld estimates that it is the second largest chain of its kind (behind Jamba Juice) with more than 500 stores in the United States and additional international locations, particularly in South Korea, where it began franchising in 2003. Wan Kim, the owner of the company’s South Korean master franchise, purchased Smoothie King from its founder Steve Kuhnau in 2012.

With only a handful of units being company-owned, franchise expansion has been the main strategy of the company for the past five years. But Smoothie King would like to increase its number of company-owned stores where new products can be developed and introduced before a system-wide roll-out.

The brand differentiates itself by concentrating primarily on smoothies in a blended and often customized presentation, instead of juices. The beverages often contain a variety of protein powders, nutritional supplements, herbs and other natural ingredients.

Smoothie King is a private company, and therefore not required to make all of its financial data public. IBISWorld expects the company’s system-wide sales will reach $164.8 million in 2014, representing an annualized growth rate of 8.3 percent per year on average over the past five years. IBISWorld credits Smoothie King with having 7.7 percent market share; the company also ranked highest of its kind on the 2014 Franchise 500 list by Entrepreneur magazine, landing in the top 100 at No. 86.

Tropical Smoothie Cafe

Tropical Smoothie Cafe Photo by RetailByRyan95

This brand has been around since 1997 when it was established by husband-and-wife team Eric and Delora Jenrich in Destin, Fla. The company moved quickly into franchising, opening its first franchised unit that same year in the state capital of Tallahassee. As it hints in its name, the brand is also interested in emphasizing its food menu, calling its offerings the “better-for-you-food,” along with its smoothies that stress a tropical twist.

Just this year, the franchise introduced new flatbreads to complement herb-infused smoothies and other beverages. Tropical Smoothie Cafe has tried to appeal to different dayparts by marketing light fare such as salads, wraps, sandwiches, tacos and even noodle bowls, with the aim of serving the breakfast, lunch and dinner crowds.

There are more than 370 units in the Tropical Smoothie Cafe chain nationwide. The company underwent a major change in late 2012 when Tropical Smoothie Cafe sold a controlling interest to BIP Opportunities Fund LP for $10 million.

Earlier this year, the company produced its first system-wide commercial ad campaign and continues to grow with new franchise agreements, particularly in the Southeast. IBISWorld did not provide a market share estimate for Tropical Smoothie Cafe, but Technomic noted in its profile that sales increased 6.3 percent to $169 million and units increased 9.4 percent to 360 in 2013.

Maui Wowi Hawaiian Coffees & Smoothies

Maui Wowi Photo by JChungg

Inspired by the Pacific islands, Maui Wowi was also founded by a couple, Jill and Jeff Summerhays, in 1983, but they did not begin franchising until 1997. It’s the perfect example of how coffee houses are also trying to please a variety of customers with an array of beverages, especially when coffee sales slow down after breakfast. The Maui Wowi brand is built on its Hawaiian Fresh Fruit Smoothies and it also includes all-natural frozen yogurt on its menu.

Based in Greenwood, Colo., Maui Wowi now has a franchise chain of about 200 locations in the United States, serving coffee, smoothies and other snacks and beverages. The brand differentiates itself by bringing Hawaiian coffees to the mainland. It has developed an exclusive line of Kona espresso, cappuccino drinks, and blended gourmet coffees from Maui, Kona, Kauai and Molokai.

Having developed a distinct brand connected with the Hawaiian islands, the coffee franchise now has more than 200 domestic franchise operations. However, according to data from Entrepreneur.com, the number of units has been falling at times during the last five years and the company has lost significant market share. IBISWorld estimates Maui Wowi’s market share at 3.8 percent.

Robeks

Robeks Tropic-KALE Smoothie

Los Angeles-based Robeks has been offering smoothies, shakes, blends and juices to the Southern California region since 1996. Since then, the company has expanded its franchising operations to total about 105 locations; however, this number declined over the past five years.

In 2014, the private company’s system-wide sales will reach an estimated $42 million, according to IBISWorld, which estimates Robeks’ market share at 2 percent.

While it shares the same objective as many of its competitors—catering to health-conscious customers who want a delicious-tasting beverage made from premium ingredients and the freshest fruits and vegetables—Robeks “has also defined itself, in part, by what it is not,” the company stated on its website as recently as last year. “We’re a smoothie shop. Smoothies account for more than 80 percent of our revenue. We are not trying to sell customers a breakfast burrito or an 800-calorie sandwich when they walk through the door.”

But the franchisor might be changing its tune as it works harder to promote its juices as well. RestaurantNews.com reported just recently that Robeks has vastly expanded its juice menu to meet demand for more green vegetable juices. The results have been dramatic. Juice sales have doubled at the franchise overall and tripled in some locations, the website reported.

The site also reported that same-store sales have risen for 28 consecutive months, with an overall average revenue increase of 12.5 percent during that time.

More to Come

Though the industry is in a mature phase of growth, there will likely be many more brands to come along as smoothies and whole-food juices become more popular, according to Technomic’s Tristano.

Certain brands have become identified with specific geographical regions: Jamba Juice franchises, with more than 50 percent of them located in California, are associated with the West; Smoothie King, with its beginnings in Louisiana, is well-known in the South; while Tropical Smoothie Cafe, with most of its units in Florida and Virginia, has staked out the East and Southeast. But that’s about to change, Tristano said.

“Franchising tends to go where it has the most opportunity. There’s so much growth in franchising that it’s blurring these lines, and these competitors are going into places where they will succeed in the market. I think we’re going to see more brands opening, and it’s going to be a slower growth rate. There will be 3 to 4 percent growth rate in limited-service (restaurant) growth over the next five years, but smoothie and juice won’t grow as fast as the fast-casual segment and Mexican and coffee chains.”



Franchise Matching Quiz



{ 0 comments… add one now }

Leave a Comment

Previous post:

Next post: