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FDD Talk 2015: The Smoothie King Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on September 30, 2015

in FDD Talk 2017: Food Franchises, Franchise Earnings, Smoothie Franchise

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Smoothie King Interior Photo

In this FDD Talk 2015 post, you’ll learn the following:

  • Section I – Background information on the Smoothie King franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Smoothie King franchise, based on Item 7 of the company’s 2015 FDD
  • Section III – Presentation and analysis of Smoothie King’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
  • 2014, 2013, 2012, and 2011 average gross sales for franchised traditional Smoothie King locations that were in operation for at least 12 months as of the end of the calendar year
  • 2014, 2013, 2012, 2011, and 2010 average annual gross sales percentage increase for franchised traditional Smoothie King locations that were in operation for the entire 24-month period ended December 31 of the respective calendar year
  • number, percentage, and average gross sales for franchised traditional Smoothie King locations that achieved gross sales of $500,000 or more in the last five calendar years (2010-2014). Smoothie King refers to the group of units with $500,000 or more of gross sales in a calendar year as the King’s Club.
  • number, percentage, and average gross sales for franchised traditional Smoothie King locations that achieved gross sales of less than $500,000 in the last five calendar years (2010-2014)

Section I – Background Information

Wan Kim, owner of Smoothie King since purchasing it from the chain’s founder in 2012, has been steadily growing the franchise, with more than 100 new locations opened in his first two years of ownership and an 8.47% hike in same-store sales in 2014 over the previous year.

Kim’s goal for 2015 was to average two locations a week and to increase the average gross sales. He wants to see 1,100 domestic locations by the end of 2017.

Smoothie King, based in Metairie, Louisiana, offers fresh-blended smoothies and sells retail products such as healthful snacks, energy bars, vitamin supplements, sports beverages and others.

Smoothie pioneer Steve Kuhnau founded the chain in Kenner, Louisiana, in 1973 as a standalone vitamin shop, inspired by his chronic food allergies to create fresh-fruit smoothies that were packed with nutrients, vitamins and minerals. Smoothie King became the first franchised smoothie bar/health food store in the U.S. in 1989.

Kim Discovered Chain as College Student

Kim, of Seoul, South Korea, discovered the company in 2001 as a student at the University of California at Irvine. Impressed with the products and approach to health and wellness, Kim opened the first Smoothie King location outside the U.S. when he returned to Seoul in 2003. His work on growth of the brand led to 130 locations in Korea.

In 2012, SK USA Inc., a company Wan created, bought Smoothie King Franchises Inc. from Kuhnau, and Wan relocated to New Orleans, where he is the company’s CEO.

The smoothie chain has more than 730 stores around the world and is expanding aggressively in the U.S., Korea and Singapore.

Chain to Move into Middle East

Smoothie King will enter the Middle East with the signing of an agreement in July 2015 with Al Ghurair Retail LLC of Dubai for 45 Smoothie King locations. The first locations are expected to open in the fall in the United Arab Emirates.

After expanding to South Korea, Singapore and the Cayman Islands, Smoothie King has been quiet on the international front for the past several years. The Middle East agreement will bring Smoothie King locations into the Gulf Cooperation Council states (Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates) over the next five years.

Prototypes Open

Smoothie King announced in July 2015 that it had opened two variations of a prototype standalone unit, a 1,050-square-foot store in its New Orleans headquarters and a unit covering 1,500 square feet in Arlington, Texas, which is within the Dallas-Fort Worth market. The units have drive-thrus and limited seating. A similar store was planned in Metairie, Louisiana.

Chain No. 79 on Franchise 500

Smoothie King has been the No. 1 franchise in its category on Entrepreneur’s Franchise 500 list for more than 20 years. The chain was No. 79 on the list in 2015, up from No. 86 in 2014.

Smoothie King was also No. 66 on Entrepreneur’s list of 2015 Top Global Franchises and No. 102 on Entrepreneur’s 2015 Fastest-Growing Franchises list.

New Orleans Arena Becomes Smoothie King Center

The New Orleans Arena, the home of the NBA’s New Orleans Pelicans (formerly the Hornets), was renamed the Smoothie King Center in February 2014 in a 10-year agreement.

Pumpkin Smoothie Returns, Signals Onset of Fall

The Pumpkin Spice Smoothie returned to Smoothie King Aug. 31, 2015, and will take fans through the fall. The smoothie is made with pumpkin-pie filling, nonfat milk, Greek or frozen yogurt and a vanilla protein blend. If made with protein-rich Greek yogurt, the smoothie has a solid 15 grams of protein in 300 calories, with 4 grams of fiber. This smoothie is made to order for those who like to sneak tastes of the pumpkin pie batter at Thanksgiving.

Vegan Smoothies Added to Menu

Smoothie King introduced two new Vegan Smoothies Powered by Sunwarrior in September 2014. Sunwarrior raw plant-based protein was combined with ingredients such as kale, acai and mango for these smoothies, which were made available in Mango Kale and Dark Chocolate Banana Flavors. The smoothies provide up to 11 grams of plant-based protein, are free of lactose and gluten and are rich in Vitamins A and C. Each has less than 350 calories per 20-ounce serving.

Holiday Smoothie Features Ghirardelli Chocolate

Smoothie King added a limited-time holiday smoothie in November 2014. The Dark Chocolate Smoothie featured Ghirardelli 100 percent cocoa and provided up to 15 grams of lean protein with ample amounts of iron, calcium, Vitamins A and C. The smoothies were available in Dark Chocolate Strawberry, Dark Chocolate Orange and Dark Chocolate Mint flavors.

Greek Yogurt Stars in Smoothies

Smoothie King in June 2014 introduced three new Greek Yogurt Smoothies, bringing to the menu the protein, calcium and probiotic advantages of Greek yogurt. Flavors included Blueberry Strawberry, Pineapple Mango and Carrot Orange. The smoothies, whose yogurt comes from Chobani, each have less than 350 calories and provide up to 12 grams of protein and 4 grams of fiber.

Parent-Pleasing Carrot, Kale Hit Menu

Carrot and kale, which parents had praised in test markets, joined the Smoothie King menu in March 2014 with Berry Carrot Dream, Apple Kiwi Kale and Carrot Kale Dream smoothies. The introduction of the two vegetable ingredients meant that customers could add them to their favorite smoothies in addition to purchasing the new smoothies.

Section II – Estimated Costs

  • Please click here for detailed estimates of Smoothie King franchise costs, based on Item 7 of the company’s 2015 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2015 FDD) and Analysis

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