Jamba Juice started back in 1990 when Kirk Perron, a self-described health fanatic, opened his first store in San Luis Obispo, California. Both his parents were blue collar workers who just couldn’t seem to get ahead, and who never owned their own home. Perron wanted to do well while doing good. Based on his own practice of often buying a healthy smoothie at his health club after working out, he began dreaming of opening his own smoothie store.
At the tender age of 26 and unable to secure funding from banks, he managed to scrape together $115,000 to open Juice Club, which quickly developed a devoted following. By the end of his second year, the store was turning a profit and he was ready to expand. His loan application to the Small Business Administration was rejected, which led Perron to grow through franchising.
In 1995 the name was changed to Jamba Juice (the word jamba means to celebrate in Swahili). Headquartered in Emeryville, CA, the chain now includes more than 800 locations in 26 US states (287 company-owned and 517 franchised) and 45 more locations scattered around the world in the Bahamas, Canada, Mexico, South Korea, and the Philippines.
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Here are 7 must-read news stories about the Jamba Juice franchise:
Bringing Better-for-You Smoothies to the World
Although Jamba Juice started out slowly in terms of attempting to enter international markets, the company believes the potential is there for at least 1,500 units. Its latest effort to sign on a new market is its master franchise development agreement with Quan Hung Gourmet Company to establish 35 Jamba Juice outlets in Taiwan over the next decade. The first Jamba Juice store in Taiwan is slated for 2015 in Taipei. This brings its total international commitments in the pipeline to 515 stores, including South Korea, Canada, the Philippines, Mexico, UAE, Saudi Arabia, Bahrain, Oman, Kuwait, Qatar and Taiwan (MarketWatch.com).
The Competitive Juice and Smoothie Landscape
For now it looks like Jamba Juice is at the top of the smoothie heap, but there are competitors trying to close the gap. New Orleans-based Smoothie King pioneered the healthy-smoothie idea back in 1973, and currently has around 600 locations throughout the world with system-wide revenue of $160 million (Wikipedia), which means it has a ways to go to catch up to Jamba Juice’s $228.8 million (Wikipedia).
Smoothie King is aiming to add 900 location over the next four years, focused largely on Tampa, Chicago, Baltimore, Washington, and Columbus, Ohio (St. Louis Post-Dispatch). Still, Smoothie King is trying to beat Jamba Juice to the mobile punch as it is in the process of rolling out an iPad point-of-sale system that will also serve to pilot mobile payments and order-ahead features (Adweek.com).
An even bigger threat may be convenience-store chain 7-11 (with 53,000 locations and $84.8 billion in revenue), which is beginning to jump onto the health-food trend. The company’s partnership with fitness guru Tony Horton is producing various healthy-menu options, including four different cold-pressed juices, currently being test-offered in Southern California locations (Los Angeles Register).
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Investing in the Juice Craze
Jamba Juice is beginning to catch the attention of investors. Zacks upgraded shares of Jamba from a “neutral” rating to an “outperform” rating back in August (InterCooler) and more recently labeled it the “bull of the day” on September 25 as it significantly outperformed the Russell 2000 over the past six months, giving it the Zacks Rank #1 or Strong Buy (Zacks) rating.
Interestingly, Jamba Juice CEO James D. White recently sold off 3,332 shares of the stock at a value of $45,748.36. He still has 88,360 shares (InterCooler).
Keeping Product Development Fresh
Jamba Juice’s better-for-you food and beverage offerings have expanded over the years from fruit smoothies and fresh squeezed juices to include Iced Fruit Tea Infusions, Hot Blends organic tea lattes, hot teas, oatmeal made with organic steel cut oats, wraps, salads, sandwiches, California Flatbreads, and a variety of baked goods and snacks.
Continuous innovation in product offerings is essential, and Jamba Juice makes it look easy. The chain’s latest offering features 12-ounce bottles of cold-pressed juices made from fruits and veggies. The line-up includes Orange Reviver (orange, apple, beet and banana), Tropical Greens (apple, pineapple, super greens and lemon), Citrus Kick (orange, pineapple, apple and ginger), and Veggie Harvest (apple, carrot, ginger and super greens).
Offered in Southern California locations as of September 16, statewide in California in October and system-wide in 2015 (FastCasual), the high-pressure processing method of cold-pressed juices retains more of the nutrients in the produce than heated pasteurizing (Nation’s Restaurant News).
Another recent product development being rolled out is a revamp of its Energy Bowl line (thick smoothies in a bowl topped with fresh ingredients) with six new flavors, including Acai Berry, Acai Primo, Berry, Chunky Strawberry, Mango Peach, and Tropical Acai (Epoch Times).
How Natural is All-Natural?
Two consumers are leading a lawsuit against Jamba Juice, claiming that when they bought the company’s home smoothie kits (Mango-a-go-go, Strawberries Wild, Caribbean Passion, Orange Dream Machine and Razzmatazz), they believed the claim of “All Natural” prominently featured on the front of the packaging. However, they have since discovered the kits contain ascorbic acid, xanthan gum, steviol glycosides, modified corn starch and gelatin, none of which they consider to be “all natural.” A federal judge has certified the class action suit, but only for liability and not for the purpose of seeking damages (Courthouse News Service).
Leveraging the Health-Food Trend
Franchise restaurants with less healthier menu options beware! The growing success of chains like Jamba Juice shows that decades of public health messaging about eating better may finally be getting through to increasing numbers of people. When a chain the size of Jamba Juice can prominently celebrate National Kale Day (Jamba Juice Facebook Timeline), it’s a safe assumption that healthier eating is here to stay.
Part of this trend is picking up on parents who want their kids to eat healthier snacks, so the company is making the most of marketing to the school-age crowd, including partnering with KidsGardening to help schools get money to create or revamp school gardens in the “It’s All About the Fruit and Veggies” grant program (KidsGardening).
Parents aren’t necessarily convinced by the larger fast-food chains that are all scrambling to offer healthier children’s menu options. In a recent survey of 6,500 patrons with children that asked them to rate quick-serve chains on “availability of healthy options,” Jamba Juice came out as #1 (BloombergBusinessweek).
Advice from Activist Investors
Engaged Capital, an activist investor that holds a 7% stake in Jamba Juice, has publicly called for changes in the company’s strategies. Specifically, they think that Jamba Juice’s $38 million in general and administrative costs from last year could easily be reduced by $14 million with a few simple moves: Exit the New York market, where bad weather tends to have a huge negative impact on its stores, and franchising many more of its company-owned locations. Cutting costs would be one way to enhance the company’s stock price (The Wall Street Journal).
The health food trend is here to stay, and although no chain is exempt from catering to the trend, few chains are better positioned to make the most of it than Jamba Juice. The company’s focus from day one has been offering the healthiest, most nutritious menu possible, and it continues to offer innovative new product offerings to meet the increasingly health-conscious needs of consumers around the country and the world.
Its momentum both domestically and internationally is beginning to catch the attention of investors, even though some of them are critical about how the company operates. Largely free of controversy, the chain appears to be well-positioned for strong growth in the years to come. The 7 must-read news stories presented above keep you on the leading edge of all the latest developments about the Jamba Juice franchise.