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JUICE AND SMOOTHIES - A HOT NEW MARKET
By Harold L. Ritchie
Ritchie International
An Atlanta Based Hospitality Firm
404-888-9951
The foodservice industry is really getting the squeeze. As in fresh-squeezed
juices and fruity smoothies, that is.
The juice-and-smoothie megatrend couldn't come at a better time. Consumers
are looking for light, nutritious alternatives to standard breakfast, lunch, and snack fare.
And operators are looking for vibrant new brands and exciting ways to build sales.
Juices and smoothies fill the bill perfectly.
Standalone concepts like Surf City Squeeze and Jamba Juice may have started
the craze, but now other companies are rushing into the newly created niche. This is an
opportunity that promises to go platinum. According to industry consultant Fessel
International, segment sales are expected to grow by as much as 30 percent in 1997,
far outstripping most other menu categories. Meanwhile, U.S. consumption of juice and
juice drinks has been rising precipitously, according to A.C. Nielsen, to 7.8 billion
gallons in 1995, fueled largely by the success of the juice-bar segment.
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30324 •
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"There's so much demand for this kind of product right now," says Kirk Perron,
founder of San Francisco-based Jamba Juice, which is widely credited with creating the
demand for the so-called "juice experience"--and spurred numerous imitators. "So many
people are leading healthier lifestyles today, and they're looking for alternatives."
Jamba Juice's first College/University, Stanford University, is averaging $4,700 a day
out of 550 square feet.
Alternatives are what it's all about. For one thing, even juice-bar operators have
been surprised at the extent to which smoothies and high-quality juices have moved
beyond snack and beverage status to become a full-fledged meal option. In addition,
juice-and-smoothie concepts offer lots of operational and financial benefits. They are
relatively compact and easy to manage--Freshens' Smoothie Authority, for instance, can
be fitted into just six feet of counter space--and start-up costs, including franchise fees,
for most concepts settle in at under $200,000. Sales that can run twice that cost of entry
or more ensure that industry is taking notice.
Moreover, juice-and-smoothie concepts are easy to merge into full-service
restaurants or food courts--making a standalone location unnecessary in many
instances. The success of integrated concepts like Rainforest Cafe's Magic Mushroom
Bar or the juice machines behind the zinc bar at Mezze in New York City attest to that
fact
only
too
2
clearly.
1999 Ritchie International. All Rights Reserved.
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30324 •
404-888-9951
• Fax: 404-888-0925
According to Matthew Kenney, chef-owner of the Mediterranean tapas bar, juices
and smoothies are a natural for Mezze, since the products are on hand anyway.
Although the exact selection might change daily, offerings run the gamut from
squeezed-to-order Red Carrot-Apple Juice to a custom-blended Banana Mango
Smoothie. "At $1.75-$3.25 for the juices and $4 for the smoothies, this is a real profit
center for us," notes Kenney.
With these kinds of numbers, juices and smoothies become a no-brainer. And so
does the scenario of rising competition and eventual shake-out, particularly since--like
yogurt concepts--juice and smoothie bars appear so easy to knock off. But there's every
indication that for operators who get the formula right, the upside potential is excellent.
With about 50 units open, Jamba Juice is the prototypical New Age juice bar,
spotlighting an array of squeezed-to-order juices and blended-to-order, juice- and dairybased smoothies, which are supplemented with such nutrition-boosting "Enertias" as
VitaBlend and FiberBlend. Along with a limited array of complementary food products,
it's all served up in bright, socially correct locations that stress a balanced lifestyle
combining nutrition, fitness, and fun.
"We've inspired a lot of competition but most of them don't understand the true
complexity of Jamba Juice," says Perron. "Our underlying purpose is to enrich the
quality of people's lives in both a nutritional and holistic sense--to promote the concept
of
overall
wellness."
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1999 Ritchie International. All Rights Reserved.
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30324 •
404-888-9951
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But for all its earthy-crunchy sensibilities, Jamba Juice is no lightweight. Backed
by private investors from the ranks of Starbucks, Perron has brought in a team of
growth-minded professionals--including president Glenn Bacheller (formerly of Noah's
New York Bagels and Baskin-Robbins); CFO Mark Archer (Del Taco); and vice
president of operations Rene Boer (Arby's)--bent on turning Jamba Juice into a $100million company by the end of
the decade. Part of this stellar expansion will be in the area of nontraditional units-colleges, airports, retail environments, and so on.
"We're looking at all kinds of opportunities, expanding wherever people want us
to be," explains Perron. "Within five years, we expect to have a presence in every major
market." The first noncommercial unit opened in late April at Stanford University, and
according to Perron, the company has been "blown away" by the enthusiastic response
from this nearly-ideal target market. To boost its presence in the noncommercial and
other nontraditional sectors, the company introduced its first-ever kiosk, at this year's
Branding America, and is evaluating numerous potential sites.
Enthusiasm for juices and smoothies is huge right now, that much is certain. "We
can't believe the interest out there--it's really incredible," says Carlo Besio, a founder of
four-unit Happy Juice, based in San Jose, Calif. In business less than a year, the fruitsmoothie concept has been literally inundated by franchise requests, and has identified
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1999 Ritchie International. All Rights Reserved.
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30324 •
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wide applications to a variety of different locations, such as health clubs, airports, and
noncommercial settings. Happy Juice offers 20 different smoothies, made with both
yogurt and nondairy sherbet, with the option for Happy Add-Ons such as protein
powder, wheatgrass, and spirulina. There are also fresh-squeezed juices and juice
blends.
"Unlike yogurt, we believe the smoothie isn't a fad," asserts Besio. "People really
want these things, as a meal alternative, as a snack, after a workout, or as a walkaround item. They taste good, they're nutritious and refreshing, and there are enough
possible flavors to really build repeat business."
The big player in the smoothies market, however, is Smoothie King, which pegs
itself as "the McDonald's of smoothies." With 112 locations in 11 states, the Kenner,
Louisiana-based company has one very particularly clear point of difference from its
competitors: Smoothie King is not just a smoothie shop, it's a full-line nutrition center
dispensing a variety of vitamins, nutritional foods, and snack products.
"Basically, we bring them in with smoothies, then get them to buy other things,"
explains Richard R. Leveille, Jr., executive vice president, franchise sales, noting that a
true health-food store is too limited a market. "The smoothies appeal to just about
everyone's sense of what tastes good; the other products change their life."
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1999 Ritchie International. All Rights Reserved.
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30324 •
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• Fax: 404-888-0925
And with 36 different flavors plus custom blends that could include nutrition
enhancements--plus a proprietary line of healthy muffins and new Savory Sticks (similar
to bread sticks)--Leveille believes Smoothie King has what it takes to keep repeat
business strong. And, while the company is concentrating on strip-center locations now
(an additional 100-plus franchises have been sold), executives believe that even at
1,000 sq. ft., the concept has enough legs to travel into nontraditional venues.
Where Smoothie King is big, The Smoothie Authority is small, but executives at
Freshens yogurt are banking on it just as aggressively. Part of the Atlanta-based yogurt
specialist's StreetSmart Retail System, The Smoothie Authority can be retrofitted into a
Freshens with as little as six feet of counter space, plus some menu systems, blenders,
and fresh-fruit displays.
"The key to our success is that the product is fresh and all-natural, and made in
full view of customers," notes Steve Kibler, senior director, new business development.
The concept is currently in about 20 mall Freshens, with plans for about 50 by
the end of the year. But, with a total of more than 550 Freshens retail locations
nationwide, the company obviously has big plans for The Smoothie Authority. At the
University of Arizona, for instance, the smoothie bar is generating $1,500 a day in sales,
most of it incremental, according to Kibler; the company has Freshens locations in
about 175 colleges, and its expansion efforts in that market for smoothies will be
significant. In some college locations, in fact, smoothie sales outstrip those of yogurt.
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1999 Ritchie International. All Rights Reserved.
472 Armour Circle • Atlanta, GA
30324 •
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• Fax: 404-888-0925
The Smoothie Authority offers a rotating selection of about 20 different fruit- and
yogurt-based smoothies, juices and juice drinks, plus protein boosters and other
enhancements. Because of the Freshens connection, the concept is also very flexible,
according to Kibler, with the ability to have anything from the full smoothie set-up to
satellites such as carts, where space is limited. The real benefit, however, is Freshens
commitment to the noncommercial market in terms of keeping start-up costs low. "It
costs less than $6,000, turnkey delivered, to put a Smoothie Authority into an existing
Freshens," says Kibler.
Freshens isn't the only major company to note the success of smoothies. BaskinRobbins, the world's retailer of frozen treats, has introduced the BR Smoothie product, a
blend of fruit, "fruit splash," ice, and a scoop of fat-free yogurt, into its more than 2,600
stores. Available in six tropical flavor combinations, the smoothie has zero grams if fat
and 400 calories or less, which aims it squarely at the healthy-treat market, according to
Tony Gioia, president of Baskin-Robbins USA, Co., Glendale, Calif.
Orange Julius, for its part, has developed a small clutch of Just Juice stores,
which serve a variety of beverages, including the original Orange Julius drinks, and the
new Paradise Smoothies line, as well as Julius Juicers (a fresh-squeezed vegetable
and fruit drink) and the Julius Swirl (a Julius drink blended with yogurt).
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1999 Ritchie International. All Rights Reserved.
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30324 •
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Part of International Dairy Queen, Orange Julius developed the Just Juice
concept for several different reasons, according to Ed Watson, chief operating officer.
"Orange Julius has been around since the 1920s, and we've always been perceived as
a healthy alternative, but we needed a way to keep current," explains Watson. The other
issue has to do with the dynamics of the shopping-center market. "They want us to
move into the food court, and there's a real question of whether or not we can afford to
be a player in that environment," says Watson. "Our menu is still primarily fruit-based
drinks and hot dogs, and that might not be enough to support higher rents and commonarea maintenance. With the Just Juice menu and improved trade dress, we think we
can stay out of the food court."
That, coupled with the rapidly emerging smoothie/juice drink market, gave
Orange Julius an opportunity to position its decades-old brand around new products.
And, while the jury's still out on the long-term potential for Just Juice--especially outside
of the segment's core markets on the East and West Coasts--initial results have been
encouraging. "As we see the success of the Just Juice concept, we'll start offering it to
our franchisees," notes Watson.
TCBY Enterprises, based in Little Rock, Ark., has also stepped into the game
with its September 1996 acquisition of Juice Works, a two-unit, Phoenix-based juice and
smoothie bar operation that has since grown to more than a dozen locations with many
more on the way. With its bright, upscale trade dres and a menu emphasizing fresh8
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30324 •
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• Fax: 404-888-0925
squeezed juices and yogurt- and sherbet-based smoothies, as well as dietary
supplements and wholesome snacks, Juice Works adheres to a proven plan. But
according to Jim Sahene, president of TCBY Systems and of Juice Works Development
Inc. (the respective franchising arms), the new concept distinguishes itself from the fray
in three important ways: through the backing of a worldwide, 2,800-unit yogurt
company, including marketing, operational, and real estate resources, as well as a
centralized production facility; through the inherent quality and merchandising of the
product; and through a unique Information Center that allows customers to access
nutritional and other information via an interactive, touch-screen computer system.
"We made very few changes to the original concept, principally because we did so
much homework before we selected Juice Works," notes Sahene. "The only thing we've
had to do is bring the concept up to franchising standards."
Although Juice Works is also being developed in a standalone format, most
development will be through co-location with both TCBY and other brands. The concept
has strong breakfast and lunch daypart presence, making it the perfect complement to
concepts such as TCBY, which counts fully 60 percent of its sales after 6 p.m., says
Sahene. Investment is low--about $25,000-$45,000 for an existing retail location to get
into the juice-bar business, and while it's too early to tell what sales will be achieved in
co-branded locations, standalone Juice Works have been driving volume of about
$400,000
a
9
year.
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30324 •
404-888-9951
• Fax: 404-888-0925
"Our greatest challenge will be to communicate to customers that a smoothie is a
true meal replacement, but we believe the potential is tremendous," says Sahene. "We
believe that juice and smoothie concepts will spur the same level of interest in the late
1990s that yogurt did in the late '80s and coffee did in the earlier part of the `90s."
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