Tropical Smoothie Café
Team One
Project Consultants:
Brenna O’Regan, boregan@radford.edu
Amanda Newsome, anewsome@radford.edu
Kemper Jones, ekjones@radford.edu
Chris Nguyen, cnguyen@radford.edu
Jeffrey Joyce, jajoyce@radford.edu
1
Table of Contents
Executive Summary
3
Franchisor Background Information
4
Product/ Service Description
5
Situation Analysis
6
Target Market
9
Site Location
11
Marketing Strategy
14
Recommendation
16
References
17
2
Executive Summary
Tropical Smoothie Café is a casual restaurant offering a variety of smoothies, as
well as food items, such as wraps, sandwiches and salads. It attracts health- conscious
people and this consultant team is considering whether or not is has potential in the
New River Valley.
Among thorough research into Tropical Smoothie Café’s history, a collection of
information has been researched as to how well this restaurant would fit in with not only
the New River Valley’s consumers, but with the existing restaurants. It has been found
that Tropical Smoothie’s clientele and target market is healthy, younger people, who are
focused on healthy living. It has also been found that Tropical Smoothie holds many
strengths and opportunities, such as its differentiation as being both fast food, and
healthy food. It also has a lot of growth potential and could possibly do well in an area
like the New River Valley. There is not much competition from existing restaurants
because the types of food and smoothie items are unlike many other menu items of
restaurants in this area. Information was gathered on the characteristics of the
populations of the towns in the New River Valley to better pick a potentially successful
site in which Tropical Smoothie Café would do well. The trade areas and the habits of
the existing populations of the towns were also taken into account. In all, the
consultant team concluded that Tropical Smoothie Café would do well in the New River
Valley, and more specifically, in the town of Christiansburg. This decision was reached
after careful consideration and research. The team believes that Tropical Smoothie will
not only be a good fit for the New River Valley, but that the New River Valley will also be
a good fit for Tropical Smoothie.
3
Franchisor Background Information
Tropical Smoothie Café is an upscale smoothie and deli café. It offers an
assortment of smoothie options as well as gourmet wraps, sandwiches, and salads. All
food items are made with only Boar’s Head brand meat and cheeses. There are
currently 195 franchise outlets in the United States and 4 foreign franchises. Tropical
Smoothie originated in Tallahassee, Florida in October 1997. In 1998, they started
serving gourmet wraps with coffee, in addition to smoothies. It was renamed from
Tropical Smoothie to Tropical Smoothie Café in 2000 to accommodate the full menu.1
Individual franchises as well as multi-unit franchises are available. It typically
takes about 60-90 days between the time the site is identified and the lease is signed
before the store is opened. Tropical Smoothie, Inc. trains franchisees in operations as
well as the marketing and management of the business. Location requirements include
highly dense areas with high traffic count, good visibility, and easy accessibility. 1
Each location is approximately 1,400 to 2,400 square feet in size. The
requirements for opening a Tropical Smoothie Café franchise is typically $75,000 in
liquid assets and your total investment will be between $200,000 and $300,000. There
is a continuing fee of 6% of gross receipts, excluding sales tax. 1 The cost breakdown
for starting the franchise is shown below:
Franchise Fee
Equipment
Signage
Leasehold Improvements
Initial Inventory
Architectural Plans
Initial Deposits
Grand Opening Promo
TOTAL
LOW
$20,000
$80,000
$7,500
$80,000
$5,000
$2,500
$3,000
$2,000
$200,000
MEDIUM
$20,000
$90,000
$10,000
$110,000
$7,000
$4,000
$7,000
$2,000
$250,000
HIGH
$20,000
$100,000
$12,500
$140,000
$8,000
$7,500
$10,000
$2,000
$300,000
4
Product/ Service Description
Tropical Smoothie Café provides a health-conscious mix of food in a family-style
environment. Tropical Smoothie Café promotes healthy eating and nutrition. It is a
convenient alternative to the unhealthy fast food options that are prevalent. The
products Tropical Smoothie Café offers are smoothies, sandwiches, wraps, soups, and
salads. A major way in which it promotes its healthy eating is by incorporating made to
order smoothies that help customers live healthy lifestyles. Such smoothies include
low-fat smoothies, power smoothies for those trying to gain muscle and energy, and
splendid smoothies, which reduces caloric intake with a Splenda substitute. Many of
these smoothies include fat metabolizers, vitamins, whey or soy proteins, energizers
and non-fat yogurt, along with fresh fruit.1
Consumer usage is increasing as the company itself is branching out and as
Tropical Smoothie Café is gaining recognition as a healthy and respected company.
According to the “Best of Hampton Roads,” Tropical Smoothie Café received the 2006
Silver award in Chesapeake, Bronze in Norfolk, Gold in the Outer Banks, Bronze in
Suffolk, and Silver in Virginia Beach.2 This type of recognition will definitely increase
usage because these honors were given out by a well-known source.
The trend of healthy eating has become more and more popular among young
people. According to Marian Salzman, chief strategy officer of Euro RSCG Worldwide,
in the article, “10 Trends in 30 Minutes,” more than 60% of women and teens in the U.S.
wear plus-size apparel.3 This type of obesity has led to the trend of nutritional eating
and healthy lifestyles.
5
Situation Analysis
The Situation Analysis includes a thorough SWOT Analysis, as well as a
description of Tropical Smoothie Café’s competition and a description of what factors
may impact the success of the company. SWOT Analysis will help the marketing
consultants understand what Tropical Smoothie Café’s opportunities in a given market
are by looking at its strengths and what it can take advantage of. It will also help in
avoiding and eliminating threats by understanding its weaknesses. SWOT takes into
account Tropical Smoothie Café as well as its competitors and is important in
distinguishing where Tropical Smoothie stands as an industry competitor. In creating a
SWOT Analysis, it is important to uncover the internal and external factors of a
company. Internal factors include the strengths and weaknesses of a company and the
external factors include the opportunities and threats.
Tropical Smoothie Café’s internal factors, the strengths and weaknesses, will be
discussed first. A strength of this company is that in the New River Valley there are not
many other companies that offer the similar products and specialize in smoothies. This
fact sets this apart from other businesses in the area. It also has a very wide breadth of
products. They offer smoothies, wraps, salads, sandwiches, and tortizzas. In addition,
Tropical Smoothie Café has a reputation for offering healthy food, which is very different
in compared to some of its competitors in the casual restaurant segment. This
franchise has also won awards based on its performance as a food retailer. One of the
weaknesses are that it takes more time to prepare and deliver food than traditional fast
food retailers and some people are not willing to take the time to buy the food if they
have to wait. Convenience is very important to customers and if they have to get out of
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their vehicle and go inside to order and pick up food, this may deter their decision to
pick Tropical Smoothie Café over competitors. Another weakness is that its price is a bit
more expensive than its competitors in the fast food business.
The external factors, the opportunities and threats, will now be discussed. The
opportunities of Tropical Smoothie Café are that it has the potential to grab a huge
market because of the fact that it is so unique and really there is nothing like it in the
New River Valley. This opens up an opportunity for them to draw customers from a
larger demographic area. The fact that Tropical Smoothie Café strives to provide
healthy sandwiches and smoothies with the highest quality gives the franchise a great
opportunity to capture the health conscious consumers before another competitor can
come in. The New River Valley is still a developing area but as it grows so does our
potential to increase our customer base and bring in more business. Every company
must look at the external factors involved that may hinder the further prosperity of their
company. Some possible obstacles that Tropical Smoothie Café may encounter would
be the competition already in place that the consumers are used to. Another major
threat is that there is no brand name recognition of this business by consumers in the
New River Valley. This is a serious problem because if consumers are not aware of the
reputation and do not recognize the franchise name then they may not feel comfortable
trying something new. It is obvious that Tropical Smoothie Café’s menu doesn’t just
cover the basic smoothie but also offers many different delicious items that you can eat.
However, you must look at some of the other competing companies and what they are
providing. While our vast selection in smoothies is available, the company may want to
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consider providing more than just wraps, soups and sandwiches. The trend for a healthy
life may alter, in which more than half of our smoothies would have to adapt.
Competition to Tropical Smoothie Café may include any provider of desserts or
beverages, as well as some small restaurants or fast food type restaurants. Within the
NRV some providers of desserts that we see as direct competition to Tropical Smoothie
Café are Cold Stone Creamery located in Christiansburg, Dairy Queen inside the mall
as well as the one just west of the mall, Empark's Ice Cream & Smoothies in
Christiansburg, The Ice Cream Crank in Blacksburg, Custard Corner in Christiansburg,
Pistachio’s in Radford, and TCBY Treats in Blacksburg. As far as food providers stores
such as Quizno’s Subs or a Subway could be direct competition. Tropical Smoothie
Café offers a healthier type sandwich and has an image of serving food that is good for
you that is why these places could be some competition. Along with these food places,
fast food restaurants could be a competition because some consumers might replace
the quick and healthier choice with a substitute which is closer or more convenient to
them.
Factors that could influence Tropical Smoothie Café include any changes in the
economy’s status, such as any negative fluctuations in the market. If the economy is
not doing well, then consumers are less willing to spend as much money at these types
of food retailers. If its competitors decide to broaden their menus and include items that
Tropical Smoothie Café carry, for example is Starbucks were to add smoothies to their
list of drinks then competition would be added to that market and may cause Tropical
Smoothie Café to not perform as well and lose market share. Also, temperature
changes because of seasons may have an impact on how well Tropical Smoothie Café
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does during the year. In the cold weather, customers may be less likely to buy
smoothies as opposed to warmer weather when they are more appealing. They may
lose customers during the winter to places that serve warmer beverages.
Target Market
In order to correctly identify where Tropical Smoothie Café will be most
successful in the New River Valley, an analysis of its target market must be conducted.
The demographic profile of potential consumers as well as the psychographic trends
and behavioral characteristics have been delved into so that the type of consumer can
be better identified. There are some basic factors that must be understood for the target
audience. These include the ability for the consumer to have easy access to the
product, the ability of the product to be distinguished because consumers are not
inundated with similar products, and the willingness of the consumer to pay the price for
the product to create a reasonable profit margin for Tropical Smoothie. 4
These factors are among the many that will distinguish Tropical Smoothie’s
market from other companies as well as determining where the site should be located
and who marketing efforts should be aimed.
The demographic profile of Tropical Smoothie will help to determine
characteristics of who its potential consumers are. The consumers of Tropical Smoothie
are predominantly female. The age is ranged from 16 to 30. The ethnicity is mostly
White/ Caucasian. The income level ranges from middle class to upper class. The
geographic location is in urban areas. The marital status is mostly single. The education
level ranges from high school degree to Bachelor’s degree.
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After doing research for the target area it was found that the total population of
the NRV, mainly the Christiansburg, Blacksburg, and Radford area, is around 72,806.
Of the population around 34,873 are females which is 48% of the population, 63,167 are
White/Caucasian which is 87% of the population, and 42,220 are between the ages of
15-34 which is 58% of the population. These statistics show that Tropical Smoothie
Café has a large enough target market to be successful in this target area if Tropical
Smoothie Café is able to draw enough of a percentage of this market as its customer
base.
The psychographic trends help to understand the consumers better and to find
out their attitudes, beliefs and emotions towards Tropical Smoothie. Target consumers
are health- conscious. They are concerned with the condition of their bodies, through
exercising regularly, eating right, and advancing their knowledge by furthering their
education. They are young, intelligent, single and trendy. They live fast lives and rely on
fast food restaurants to provide meals on the go, but refuse to sacrifice their health for
the convenience. They share common interests in music, outdoor activities, exercises
such as Pilates and yoga, and the current fashion trends.
The behavioral characteristics help to identify the factors that target consumers
value the most. Some factors that are viewed as important include the price, quality,
and convenience in the location. These are important because the consumer is looking
for quality food with health benefits, but is at the same time still concerned with location
and price. Consumers will make purchase decisions based on convenience but will
want to make sure the food that they are getting on the go is not going to slow them
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down later. Purchases will most likely become habits that are grown from their routine,
and will be made anywhere from two to three times a week.
There is high growth potential of the target market because the image of Tropical
Smoothie Café and the products they offer are popular within a younger demographic
because it is new and trendy. Once the edge lightens and the products become more
main-stream, the market will widen and will grow to include more consumers. The
current target market is narrow and focused on a certain segment of the population, but
will later grow to include people with different demographics, as well as those with
different psychographic attitudes, beliefs and emotions and varied behavioral
characteristics.
Site Location
The site location for Tropical Smoothie Café is important because it needs to be
in a place that is easily accessible to its target markets. Many factors were considered
when deciding where in the New River Valley to place the franchise. These included its
trade area, the size of the franchise, possible locations, and cost. After conducting
demographic research on the New River Valley, it was concluded that Christiansburg
would be a location that would be most successful for Tropical Smoothie Café. This was
concluded because it has a very large trade area, including not only its own residents,
but those from neighboring cities, most notably Blacksburg and Radford. There are
many different retail types located in Christiansburg as well, including a shopping mall
and a power center.
These draw in many people to the area and it would be beneficial to Tropical
Smoothie to have its location take advantage of this type of trade area. For the most
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business it was decided that it would be best if Tropical Smoothie was a free- standing
store. This was decided upon because as long as it is in an area with high traffic and
high visibility, it will do very well. It is a casual restaurant that is unlike most of its
competitors and will therefore create its own market share and will become the primary
destination. With a free- standing store tropical smoothie can use its bright colors and
building design to draw customers in. It will also have easy parking, convenience, and
flexibility with hours of operation. Because there is nothing really like Tropical Smoothie
in this area a free standing store will draw buzz from consumers wondering what it is
and what the franchise has to offer. Some disadvantages, though are that it will have no
cost sharing, since it will not be within a center and will have to endure high advertising
expenses. There is also the initial cost of building a free standing building. The prior
thought of how Tropical Smoothie is so different than other retailers could be a
disadvantage because consumers like things that they already know and feel
comfortable about. This means that Tropical Smoothie needs to create its own buzz and
convince customers that it is worth trying. The New River Valley Mall is still under
reconstruction and there are opportunities surrounding the shopping mall. The Mall’s
property owner, Pennsylvania Real Estate Investment Trust, is going to be opening a
power center adjacent to the mall, as well as adding additional stores around the Mall to
draw in more crowds.5 Tropical Smoothie could gain from either becoming a
freestanding location within the upcoming power center or it could immediately be built
at a location in the already existing area around the Mall.
It was decided that the franchise should not wait for the power center and to
open up a location within the existing New River Valley Mall area and become an out-
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parcel upon its region. Previous out-parcels were sold for an average of $24.64 per
square foot,5 and because the range of franchise locations is 1,400- 2,400 square feet,
we decided that the location should be 1,900 square feet and rent would therefore be
approximately $46,816 per year. Also with a 1,900 square foot store Tropical Smoothie
Café can accommodate a good amount of sit-in customers around lunch time adding to
the customer convenience. Other locations looked at and researched, included a retail
location within a shopping center in Christiansburg. Foothills Plaza shopping center
doesn’t have the number of anchor stores that can bring in as many customers as a
location by the mall because the surrounding stores in Foothills Plaza don’t have the
same target markets. Foothills Plaza shopping center had a 3,000 square foot retail
location that was being sold for $33,000,6 so the price for the location near the New
River Valley Mall is comparable, although The mall location is more expensive and has
fewer square feet of floor space, it has much better visibility and is much more
convenient to the customer making it a better location for Tropical Smoothie based on
our customer base. Also as we said with our franchise being located close to a mall
whose target market is similar to that of Tropical Smoothie Café means that they will
gain customers that may not have planned Tropical Smoothie Café as their destination
or even know what it is but decide to try it out leading to more loyal customers that know
Tropical Smoothie Café is the healthy alternative to food options in the mall. The free
standing structure separate from the mall draws customers in that are driving by with no
intent of going to the mall but decide to give Tropical Smoothie Café a try based on
what the see from the highway. The large percentage of consumers that shop in
Christiansburg are from Blacksburg and Radford and so a location set in Christiansburg
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would not be catering to this town alone but would be sharing the area with consumers
from the other two towns, and these people that travel to Christiansburg are going to be
the main consumers of Tropical Smoothie. Tropical Smoothie will have consumers that
are going to be traveling from either Blacksburg or Radford primarily for its restaurant
because of its uniqueness, but will also capitalize on the consumers that are going to be
in Christiansburg fulfilling other retail needs such as in the mall or elsewhere. Many will
happen to stop by because of the convenience, visibility, curiosity and healthy
advantages Tropical Smoothie Cafe offers its consumers.
Marketing Strategy
One main way that Tropical Smoothie hopes to attract customers is to use the
advantage of being a free standing building with visibility from the road. The team also
looked at putting an ad out in the Christiansburg News-Messenger which has a
circulation of 4,273 and will cost Tropical Smoothie $500 for 23 newsletters. Tropical
Smoothie will send out these newsletters three weeks prior to the grand opening. After
the company has allowed its target market to acknowledge the franchise, Tropical
Smoothie will then have a newsletter placed three times throughout the month, attached
with coupons and specials during that time frame. Being close to a mall, managers can
send an employee around to pass out flyers there at a wage of $7.00 an hour and $199
for 5,000 color flyers from axisflyers.com. Through this the franchise will further its
advertising within the mall area for those possibly from out of town or not familiar with
the site location. Another strategy is to have a frequent customer card where you can
earn free smoothies and sandwiches after purchasing a certain amount. The total cost
for these customer cards is based upon the price of the card and is pending on how
14
many customers sign up and use their frequent customer cards. Tropical Smoothie will
also offer a daily smoothie special, in which they will take half off that particular
smoothie that is designated to that particular day. With these promotions Tropical
Smoothie will attempt to sway customers to the location through either frequent visits or
specific days in which they can enjoy their discounted smoothies. The hours of
operation will be from 7 A.M. to 7 P.M. allowing the customers to get a smoothie in the
morning to jumpstart their day or eat a healthy lunch while on break. Being open tell 7
P.M. allows customers to grab something quick and healthy after a long day of work or
shopping. These hours will be Monday through Saturday with Sunday’s hours being
from 7 A.M. to 5 P.M. To ensure that the customers are happy the company will have
comment cards out as well as a phone number on the receipt that they can call if they
aren’t 100% satisfied. The franchise wants its customers to come back, therefore if
there are specific changes that have been noticed through the customers, it needs to
know about them and at best change them to the best of the company’s ability. As part
of the marketing strategy it will make sure to advertise that it is a healthy, good, high
quality alternative to fast food and will strive to make every customer feel like they are
its most valuable customer, as opposed to the competition which primarily provides
unhealthy food with little customer service. Tropical Smoothie largely promotes a
variety of healthy products for the customers to select from. Along with health being a
factor in the company’s presentation the product will be presented in a quick and
prestigious fashion. The company will propose tests for its employees to produce a well
established product at the fastest time. This will help with the promptness of the product
15
as well as the quality. This test will be held every three months in order to maintain the
efficiency of the employees.
Recommendation
Based on the research conducted of this franchise and whether or not it would do
well in the New River Valley, the consultant team has decided that it will be successful
and recommends that Tropical Smoothie Café be built. This decision has been reached
after research was complete and all factors weighed. The team feels confident that the
franchise will do well in the New River Valley, and that there are no other restaurants
that have a combination of Tropical Smoothie’s healthy menu items and variety of
smoothies, wraps, salads, and sandwiches. The company’s target market could best be
reached in Christiansburg and the team believes that its free-standing location by the
New River Valley mall will attract health-conscious, young crowds from not only its own
population, but also from the college aged population that can be found in the
surrounding areas of Radford and Blacksburg. Overall, the New River Valley would
benefit from the placement of a Tropical Smoothie Café franchise and the team
recommends that one be established.
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References
1. Tropical Smoothie Café. 2006. Retrieved October 2006 from
http://www.tropicalsmoothie.com/
2. The Best of Hampton Roads.2006. Food and Dining. Retrieved October 2006 from
http://home.hamptonroads.com/best/winners/Index.cfm?meta=6&cat=344&postback=1&
group=year)
3. Retail Traffic. 2006. Retrieved October 2006 from
http://retailtrafficmag.com/news/even
4. Bank of America. 2006. Targeting Your Market. Retrieved October 31, 2006 from
http://www.bankofamerica.com/smallbusiness/resourcecenter/index.cfm?template=rc_st
artingyourbusiness&context=rc_targetmarket
5. PREIT. October 31, 2005. Company Release. Retrieved November 5, 2006 from
http://www.snl.com/irweblinkx/file.aspx?IID=102991&FID=1971938&printable=1
6. Loopnet. (n.d). Foothills Plaza. Retrieved November 4, 2006 from
http://www.loopnet.com/xNet/MainSite/Listing/Profile/ProfileSE.aspx?LID=1346724
9&linkcode=10850&sourcecode=1lww2t006a00001
7. Wikipedia. October 17, 2006. Christiansburg, Virginia. Retrieved October 29,
2006 from http://en.wikipedia.org/wiki/Christiansburg%2C_Virginia
8. Wikipedia. September 16, 2006. Blacksburg, Virginia. Retrieved October 29, 2006
from http://en.wikipedia.org/wiki/Blacksburg%2C_Virginia
9. Wikipedia. October 1, 2006. Radford, Virginia. Retrieved October 29, 2006 from
http://en.wikipedia.org/wiki/Radford%2C_Virginia
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