Local beverage brands poised for future expansion - City Business
Mar 23rd, 2017Michael Joe , Reporter March 21, 2017
As consumer demand for nutritional drinks and specialty coffee reaches new heights, top local franchises are riding the wave to growth here and abroad.
Smoothie King grew its international presence in 2016 with new locations in Dubai and the Republic of Trinidad and Tobago, and opened 100 stores in the U.S., the most in a single year since CEO Kim Wan purchased the company in 2012 and set an ambitious goal for expansion.The Metairie-based company had about 500 stores at the time; it currently has 861 stores worldwide. Plans this year to add 130 new stores domestically and more overseas may not quite add up to Wan’s goal of having 1,000 stores by the end of 2017, but company executives say they have not given up trying.“We think it will be in early 2018, but we are definitely working hard toward that goal,” said chief development officer Kevin King.
Smoothie King’s accelerated growth in recent years is due to a confluence of factors, including the ability to attract more franchisees with a capacity to open multiple stores as the company has matured. “It’s not just any one thing,” said chief operating officer Tom O’Keefe.
The effort started nearly five years ago when Smoothie King hired a consulting group to conduct market research that centered on focus groups in four cities – Miami, Philadelphia, Houston and Dallas – and included people between 25 and 55 years old with high and low brand awareness.The focus groups told researchers that Smoothie King had the top product in the market and a strong name, but they also thought that the former logo – a yellow oval – looked too industrial and that store design and aesthetics could be improved, O’Keefe said.
The yellow logo has since been replaced with a red crown, and new stores no longer have bright, cartoonish-colored walls. The menu has been re-organized around the concept of “purpose-driven” smoothies. And new vegan, vegetable and Greek yogurt product lines reflect evolving consumer trends.“I think that the consumer reaction has been really strong,” said O’Keefe, who noted that examples of the new store design can be seen at the Magazine Street and Riverwalk locations.
Market researchers say increasingly health-conscious consumers and growing demand for nutritious snacks and convenient meal replacements will drive a taste for smoothies to the tune of $15.8 billion by 2022, according to Global Industry Analysts, Inc.
Smoothie King’s year-over-year, same-store sales have outpaced its competitors, with 95 percent of revenue increases attributed to more transactions. Average unit volume has increased since 2012 by more than $320,000 to about $500,000 now, according to O’Keefe.
Those performance numbers are encouraging existing franchisees to open additional stores – 67 percent of new stores last year were opened by them – and new investors who want to open multiple units. Back in 2013, the company had more single-store operators than multi-store operators. Now, it’s the opposite.
“We had a lot of organic growth with our existing base, which is obviously an easy way to grow, and we’ve recruited a lot of new players from the outside,” O’Keefe said.
Meanwhile, PJ’s Coffee, the local franchise owned by Ballard Brands, continues to expand beyond the New Orleans area as the coffee shop industry grows along with consumer confidence in the economy and disposable income among higher-wage earners.
Coffee shop revenues in the U.S. are projected to increase from $12 billion in 2016 to $46.2 billion in 2021, according to industry reports compiled by the Small Business Development Center Network.
Last year, PJ’s opened its first traditional store in Houston and inked its first overseas venture with master franchisee TRG International in Vietnam, a country the company says has a throughout-the-day coffee culture that is similar to New Orleans. Two locations in Ho Chi Minh City have already opened – the first in September and the second in December – and TRG plans at least 10 more stores over five years.
“It’s an exciting time for the company, and we’re just getting started,” said David Mesa, chief development officer of Ballard Brands, in a news release.In addition to the stores in Vietnam, PJ’s has more than 80 locations in six states.