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The Big Chill

Outgrowing their trendy phase, smoothies are here to stay.
March 1, 2000
URL: http://www.entrepreneur.com/article/19148

When you look up the word "smoothie" in the dictionary, you won't find the definition you might expect: (smooth'e)n.a healthy, refreshing fruit-blended beverage that can be mixed with sherbet or nonfat frozen yogurt. As a matter of fact, you'll find something completely different: (smooth'e)n.a smooth-tongued person, one who behaves or performs with deftness, assurance and easy competence, especially: a man with an ingratiating manner toward women.

Oookay . . . so how on earth did our modern-day definition surface from this antiquated dictionary entry? Well, none of our experts can put their finger on it, but the low-fat blended beverage we know and love today had to originate somewhere. One guess is that it sprang from the sweet and frothy variation known as the Orange Julius, invented way back in the early 1930s. And although this famous precursor hasn't taken on the "smoothie" moniker--nor has Webster's made an effort to alter its outdated definition--the now-world-renowned beverage concept has gone from fad to favorite, garnering $1 billion in 1999 sales nationwide.

Blending In

Though differing opinions exist concerning the pioneer behind today's fruit shakes, New York City-based Restaurant Systems International Inc. (RSI) started blending up smoothie franchise opportunities back in 1981 with a concept dubbed Banana's Ultimate Juice Bar. Smoothie King in Kenner, Louisiana, followed in 1989. Innovators Jamba Juice and Surf City Squeeze downright invented the "California-style" juice-bar concept, marketing through bright and tropical graphics, securing coastal locations, and tempting passersby with tantalizing fresh-fruit scents that lure the body-conscious to their buffets of nutritional supplements.

Today, industry leaders like Smoothie King, Jamba Juice and Planet Smoothie have garnered premium locations in their home states, and with establishments like Dairy Queen and Baskin Robbins launching their own blended fruit drinks, one might feel the smoothie industry has reached semi-saturation. But according to Dan Titus, founder of Juice Gallery, a publishing and research company in Chino Hills, California, that's certainly not the case.

"There are 1,800 successful juice bars in the United States right now, yet Burger King has more than 11,000 units," says Titus. "Juice bars are a fledgling industry driven by two things: They're a healthy meal alternative and a great convenience product."

Chris Cuvelier, president of Juice and Smoothie Bar Consulting in San Francisco, agrees, contending the national market isn't even close to saturation. "Though California and Utah have become competitive when it comes to locations, there are [several] marketplaces where the trend is just now taking off," he says.

Smoothies fill an important niche in today's fast-paced lifestyle. By supplying a liquid alternative to those whose bodies just can't take any more caffeine, they've gained acceptance by fulfilling the modern day grab-and-go philosophy, while simultaneously increasing sippers' levels of self-esteem about opting for a low-fat form of nourishment instead of the familiar drive-thru artery-blockers. Intent on moving toward untapped territories and educating the public on their products' nutritional values, smoothie proprietors are embracing the new millennium.

Tight Squeeze

Banana's Ultimate Juice Bar has been riding on the smoothie bandwagon for more than a decade. Franchising since 1981, parent company RSI Inc. has at least 100 operators co-branding the Banana's smoothie concept with one or more of the three other food concepts RSI provides.

RSI primarily targets the East Coast, where smoothies are seen as more of an impulse buy or a snack item than a destination purchase or a meal alternative. Banana's stores are usually erected in high-foot-traffic areas such as transportation centers and malls, where consumers embrace smoothies more for the convenience factor than the health factor. That's why co-branding is so essential: "In our opinion, you need more than smoothies," explains Steve Beagelman, RSI's vice president of franchise development.

Martin and Maria Mascia, 35 and 33, respectively, bought their co-branded concept in 1996. Intrigued by the surge in smoothie popularity, they bought an existing Everything Yogurt, Salad Café and Banana's franchise at Ocean County Mall in Tom's River, New Jersey, with $150,000 in savings.

The Mascias had sales of $400,000 last year and, at press time, were planning to open a Treat Street concept--RSI's latest development--to sell a variety of impulse snack items in one kiosk. Primarily selling smoothies, the Treat Street kiosk will be set up in another section of the same mall. "There's plenty of foot traffic," says Martin, "so there's definitely room for two."

Fruits Of Labor

Visual presentation is paramount for juice bars, with décor ranging from spirited, bright and colorful logos to mesmerizing and uplifting wall murals contributing to their appeal. It was this fun and appealing image that attracted David and Jill Williams, 33 and 35, respectively, and Jill's mother, Kathy Horne, to buy a Zuka Juice smoothie bar in Salt Lake City in 1997. The partners were soon itch-ing to grow and expand, but there was a big problem--their area was full of company-owned Zuka stores. "The [franchisor] really wanted me to go to Texas or somewhere else to open more," explains David.

Last December, intrigued by a concept called Jabooka Jooce, based in Maui, Hawaii, the partners purchased the corporate entity and trademark registration. They now offer Jabooka Jooce franchise agreements for freestanding locations at costs ranging from $102,000 to $192,000. Aside from the product, the marketing image is a big part of what sets them apart from competitors. Colorful surf scenes and ripe-fruit graphics create an attitude that makes it cool to be in a Jabooka Jooce store, says David. "Our graphics and presentation help bring the customers back again and again."

Chill Out

In addition to co-branding, another fresh trend in the smoothie industry is decreasing in-store square footage or implementing kiosk and cart concepts. For 17 years, Maui Wowi Marketing Inc., based in Englewood, Colorado, has offered tropical-themed, maintenance-free kiosks that can be rolled into any special event, festival or venue. "We provide everything you need to make a go of this," says Michael Haith, 37, president and CEO of Maui Wowi. "We teach the business from the ground up, like how to deal with all the administration, and we connect you with the people who will help you locally."

Maui Wowi franchisees have taken their carts up and down the sun-drenched coasts of Australia, selling smoothies on the beaches; college students have set them up in their student unions, operating the kiosks with friends. The idea is to go where people gather. Using the Internet as its main marketing tool, Maui Wowi is slowly expanding nationwide, offering entry-level investments (one cart, unprotected location) as low as $12,950 and standard franchises (three carts, protected territory and events) at $54,450. The franchise fee and equipment add to the cost of an initial start-up.

Kris Nieb in Denver discovered Maui Wowi while working for a catering company at an event where one of the kiosks was located. Nieb's boss was so impressed with the concept, he became part owner of Maui Wowi, and Nieb began working at one of the kiosks. He found it so fun and easy, he wanted to do it on his own. In 1998, with personal savings and some financial assistance from Maui Wowi, Nieb purchased his own kiosk.

Now with three carts, Nieb travels nationwide, working weekends and spending his weekdays being a 21-year-old kid. Without a suit and tie or a 9-to-5 routine, Nieb generated $75,000 in sales last year. "I've always told myself that if I could have a job wearing shorts and Birkenstocks, I'd be happy," says Nieb. He had no business background, but Maui Wowi taught Nieb the ins and outs of operations, from finding good locations and produce managers to finding the best bananas for the best price.

In the new millennium, do smoothies have a place on the upper echelon of the fast-food ladder? You betcha. "Consumers want a place they can swing by and get a product that's convenient, healthy and great-tasting," says Martin Sprock, 34, president and CEO of franchisor Planet Smoothie Inc. in Atlanta. And that demand has thus far been fulfilled only by the smoothie--a fulfillment that will surely alter future dictionary editions, solidifying a proper term for the much-loved blended fruit beverage.

Smoothie Operators