Jamba Juice sets big growth goals as segment's leader: Eyes market-share gain from up to 100 units

Nation's Restaurant News,  Dec 20, 2004  by Alan J. Liddle

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SAN FRANCISCO -- With the improving economy helping Jamba Juice Co.'s overhauled executive team to squeeze out strong store-level performances, the leading smoothie bar chain is accelerating its expansion and targeting sales increases that far exceed analysts' projected growth rate for the company's segment.

"Traffic counts are up. Average checks are up," Jamba Juice president and chief executive Paul E. Clayton Jr. said. The 461-unit chain--known for its smoothies, yogurt blends, baked goods, fresh juices and nutritional "boost" supplements--in its latest full fiscal year exceeded its annual new-unit-opening numbers of the prior three years combined by adding 38 company and 30 franchised locations.

Jamba Juice is targeting the opening of an additional "80 to 100 stores" in the current fiscal year to end next June, of which 60 to 70 would be corporate outlets, Clayton said.

Clayton has accomplished a thorough revamping in the executive suite since his February 2000 arrival at the San Francisco-based company, which had been founded a decade earlier by Kirk Perron, who now is a consultant to the board. At the same time, he has presided over store-design refinements, new-product rollouts, evolving marketing strategies and enhancements to staff training and development.

Previously, Clayton had served as president of Burger King North America, where he was responsible for more than 8,000 company and franchised restaurants; and before that he had been Burger King Corp.'s senior vice president of worldwide marketing.

Clayton declined to provide specific sales for the current year so far, but the company reported fiscal 2004 systemwide food and beverage sales of about $259 million, up 21.88 percent from the year before. The company said the 12-month period saw a 16.80-percent hike in total units, to 431 as of June.

According to an annual report issued by Jamba Juice, the chain's average store sales volume rose by about 8 percent, to exceed $650,000, in fiscal 2004--marking, "a year early," the chain's achievement of a goal to reach that level. The company noted that the last three months of the fiscal year had marked the eighth consecutive quarter of comparable-store sales growth.

Fiscal 2003 saw a 10.62-pecent increase in systemwide sales, to $212.5 million, and a 6.34-percent rise in total units, to 369, the company reported.

"Our goal is to grow sales 25 percent annually by focusing on brand development initiatives that will expand our customer base and increase their visit frequency," Clayton stated in the report.

Figures from Dan Titus, a smoothie and juice bar consultant and analyst based in Chino Hills, Calif.. indicate that Jamba Juice's sales growth appears to be substantially better than the aggregate 8-percent increase he forecast for the entire juice bar segment this year and next.

Titus and his company, Juice Gallery Multimedia, annually publish the "Juice & Smoothie Bar Analysis," an overview of the U.S. market. The former smoothie bar operator said there now are about 4,200 juice and smoothie bars in America, including kiosk operations. Of that total, he added, about 3,100 are run by "major players"--companies with 25 or more units--while the remaining 1,100 are in the hands of independent operators.

Such census numbers suggest that, locationwise, Jamba Juice controls about 11 percent of the entire juice and smoothie bar market and about 15 percent of the locations fielded by chains.

The juice and smoothie segment "is not going to see huge growth," Titus predicted, "but it's not going away either" because "[interest in] health is not going away."

While segment leaders Jamba Juice and 360-unit Smoothie King of Kenner, La., have leveraged their status as pioneers in order to gain market share, a lot of imitators with apparently good concepts have come and gone, Titus said. He cited the "fierce loyalty" of Jamba Juice patrons and how some would-be competitors have failed to "crack the Jamba Juice mystique."

But he cited as noteworthy competitors such rivals as Juice it Up! Franchise Corp. of Irvine, Calif., and Robeks Corp. of Manhattan Beach, Calif. Juice It Up says it has some 70 units, in California, Florida, New York, Texas and Washington. Robeks claims about 65 Robeks Fruit Smoothies & Healthy Eats outlets in 11 states and the District of Columbia.

Another large brand is Maui Wowi Fresh Hawaiian Blends, a Greenwood Village, Colo.-based chain with more than 320 outlets.

According to Titus, City Blends Cafe Inc. of Westlake Village, Calif., with some 165 locations in California, Texas and numerous Eastern and Midwest states, has a business model different from most juice and smoothie bar companies. City Blends, he said, has targeted growth within health clubs and makes its money on equipment and food supplies, not franchise fees or licensing revenues, by distributing highly automated blending and dispensing systems along with the concentrates and other products those systems use.