Juice and Smoothie Business -- Can you compete with the big guys?
Juice is Juice, right? Wrong.
The big trend is fresh juice--and if you are going to compete with the big chains and supermarket juices, you need to give your customers a reason to pay you a premium. Making the juice in front of them is one reason, but the other is having the best process. The process is called cold press. A machine just converts that organic and natural vegetation into juice with no added ingredients without extra processing (like pasteurization) or being stored in a container. The benefit of a cold press juicer over the traditional centrifugal juicer--which the food spins very fast in a round container and is impacted by blades--is that very little heat is added to the vegetation. Ingredients with less liquid content are reduced to a pulp state and then pressed to get the juices out. Fruit with high liquid content is put directly into the press. The press can be one that moves down and exerts over 1,000 PSI of pressure or a screw type. Proponents believe that nutrients are killed off by heat and that they deliver up to 60% more nutrients than the traditional centrifugal juicers. And based on a Choice report there is some truth to the claim that cold press is the best form of juicing.[link] And the cold press juicers start at around $2,500 and weigh over 100 lbs. Another reason to the cold press process in better is that it squeezes more juice out--as much as 30-50% more juice!! (fn1) Norwalk seems to be the leading juicer
The Raw Food Movement is
perceived promoted as being the most healthy form of eating (in this case drinking). And a lot of Hollywood celebs are promoting it.
Although there is no proof that drinking vegetables can cure diseases, the claim that consuming fresh fruits and veggies can help prevent diseases seems logical to most people. It is certainly more healthy than ice cream. And people will pay more for it. The chains imply that their products can prevent cancer, and retard the aging process because their products are anti-oxidants. They remove oxidants from your body. And the new fad is including super foods which tend to come from foreign place like Brazil which apparently are more powerful than our domestic fruit. There is no exact definition of the term "Super Food," and health claims regulated in the same manner as as vitamins. The FDA seems to allow (with in reason) health claims that are not exactly backed up by rigorous scientific studies or for that mater any real studies--as long as you explicitly state someplace that your statements have not been evaluated by the FDA., and products are not intended to cure or prevent diseases.
In our opinion, you will not be able to succeed on price competition. The point you have to get across is that your juice is worth the extra money because it is more "natural" "organic" "fresh" and "healthier." People can see the raw ingredients that go into the juice and know the cost of ingredients his higher than coffee or ice cream. Also some people are substituting a juice for lunch. Hence, the upper income consumer is willing to accept a price point just shy of $10--and maybe a bit more in some cases.
Smoothie products--fresh fruit blended with a frozen dairy product and vitamins-- are less popular then they were in the 1990's because, the raw foods movement means that consuming dairy products and sweeteners are out. Smoothies go back to the 1960's when ice cream vendors started to make a more healthy product. So that's why they usually have a milk shake like consistency and are sweet. Wikipedia Link Now that the calories are posted people are realizing that they might as well be eating ice cream--at least they would enjoy that more. Vitamins are perceived to be more healthy if they come from a "natural" source rather than a powder that's tossed in the blender.
Big Companies getting in on the trend. In recent years, big companies have been positioning themselves to take advantage of this oncoming trend. Coca Cola and Pepsi have purchased Odwalla and Naked Juices respectively. Campbell Soup, owners of the V8 brand which is not perceived as fresh or natural, purchased natural juice maker Bolthouse Farms. But these are supermarket plays. You'll pay about 5 times as much as you would for a soda, but will you buy every day? Most of us know that fresh juices won't last more than a couple of days in the fridge--but who goes to the Supermarket every other day?
But the 800 pound gorillas in the room are Starbucks and Warren Buffet's Berkshire Hathaway. They are concept testing cold press retail outlets where they can charge a big markup to give the consumer's what they want--super fresh, super organic, super natural, super healthy drinks. Starbucks may add fresh juice to it's numerous stores, or go with a retail outlets called Evolution Fresh, while Berkshire will be starting Juice Press outlets. And other investors are buying expanding existing juice chains. These players have marketing expertise, and in the case of Starbucks have been successful in charging customers big markups for non-alcoholic drinks i.e. coffee. The daily Starbucks experience for many people is more about defining a lifestyle than enjoying quality beverage. It's clear that the company that can help us re-define our lifestyle around a daily trip to the juice place will make billions.
Juice and Smoothie Franchises
Well, you have to wonder if it is worth the money to buy a franchise. There are a lot of advantages--a almost turnkey business, name recognition, and marketing. But there's one major dis-advantage--the franchise fee. Franchise costs seem to be rather high for this type of business. And many of the franchises are stale--focused on not as healthy smoothies.
Thinking about a franchise just because of the training? Consider a consultant. We found Paul Baudier. He is an independent consultant who specializes in getting people set up in the cold-press juice business. He doesn't work off commission from equipment sales or franchise fees--you pay him for his advice and business plans. He has many years of experience. Paul can be contacted at firstname.lastname@example.org
City Blends www.cityblends.com This chain emphasizes the health benefits of their low sugar product developed by "a collection of nutritional experts, fitness consultants, and juice bar professionals went to great lengths to develop nutritionally superior blends originally to Make the Country Healthier" They provide a "turn key" line of products for a small shop in health clubs. This does not appear to be a franchise, they seem to be in the business of selling equipment signs, furniture, ... Prices are not provided on their website.
Maui Wawi Coffee and Smoothie http://www.facebook.com/MauiWowiHawaiianFranchise www.mauiwowifranchise.com This franchise system has won a lot of awards. For what it's worth, they have made Entrepreneur Magazine's top 500 franchise list from 2006-2010. Investors need to have $45 in liquid assets and $100,000 in net worth to qualify. The initial franchise fee is $36,500 to operate up to 3 stands or mobile units, and $27,500 to operate a retail store. They will help you get financing. (Note that these numbers are just for the franchisee fee, not for equipment, advertising, furniture ...) In an interview on Bloomberg a spokesman indicated that it only took $70,000 to get going with a trailer. But investors should be careful. The website Unhappy Franchisee reports that some of their franchises have not done that well. They report a 49% failure rate on SBA loans taken out by franchise buyers; and has made there list of Worst Franchises in America. unhappyfranchisee.com/category/franchisor/maui-wowi-franchise. But they have introduced a process of franchisee vetting to make sure prospective franchisees will be successful. This includes site selection and a franchisee peer review.
Orange Julius This is the brand you remember from the mall. It’s now called DQ Orange Julius and is part of Dairy Queen. See info above.
Juice It Up On their Franchise Website, the estimate that it will take between $137,000 and $290,000 to get a new franchise off the ground. They charge a $20,000 franchise fee, but if you have served in the armed forces they offer a $10,000 discount. The royalty is 6% and there is a 2% marketing fee on gross sales. They require a $250,00 net worth with at least $50,000 of that being in liquid assets. They did not say if your home’s equity could count toward the $250,000. There are many locations already established in Orange County, and you may be better off buying an existing franchise. They now emphasize selling fresh juice while still selling smoothies to long time customers.
Jamba Juice bills their product as a healthy alternative to eating ice cream. They combine frozen yogurt, fruit juices, fresh fruit, and special vitamins/supplements. If you have ever tried to make them at home, you know it’s not easy to do with a house hold blender. And when you consider buying all the stuff, clean up … it’s easier for a lot of people to just go out for one. Well, opening one of these is not as easy as plugging in a blender and buying some fruit. According to their website the to qualify for opening a new franchise, you need to have a net worth of 1 million dollars, and $350,000 in liquid assets. Retail/Restaurant experience, and you must be willing to open 3 to five locations. They take cuts of gross sales amounting to 6% royalty and a 2-4% marketing fee. There is a $25,000 franchise fee for the first ten years. They estimate it will cost around $350,000 – 640,000 to start a 1,200 sq ft store. They are looking to open stores in upper income areas with a median age less than 38. But they are willing to put stores into other larger businesses.
They are controlling their brand!! It’s a hot concept, and they don’t want to over saturate the market. But when we checked out their website, they were not currently opening new franchises in California. Your best bet might be to buy an existing franchise. See our franchise page for info about how to find one for sale. But they will have to approve you, and the franchise agreement runs out after ten years.
Robeks www.robeks.com/franchise.aspx and www.robeksfranchise.com They estimate the cost of opening a franchise to be between $200,000 and $330,000. In addition to the initial franchise fee, they charge 9.5% in royalty and advertising fees. The average gross revenue is $350,000/year. You need to have a net worth of at least $350,000 and liquid assets of at least $100,000.
Surf City Squeeze http://www.surfcitysqueeze.com/franchise.html This Scottsdale company, Kahala Corp, has around 140 Surf City locations. Currently it looks like they are focusing their expansion efforts north of the border. They sell the OC lifestyle with surfer themed stores. They have locations in Brea, Buena Park, and Huntington Beach When we checked their website, the franchise information feature was not working. We read elsewhere that it costs $30,000 for a ten year franchise agreement, and they take a 6% royalty of gross sales. It will cost about $100,00 to get your location up and running.
VeggieFruitRevolution JuiceBar www.TheVeggieFruitRevolution.com Their vision is to provide liquid nutrition from organic fruits and vegetables. They do not use ingredients from the commercial food industry. Home Juicing is time consuming for many families and families are confused about what foods are best to Juice. A franchisee would also offer: educational material, food coaching services, their proprietary High-Nutrient Detox Cleanse, a line of salad dressings made from ingredients such as cashews and almonds, prepared vegan foods, and vegan snacks. They are currently franchising their concept. You can contact Gloria Montoya VeggieFruitJuiceBar@gmail.com for their Uniform Franchise Disclosure Statement. (We don’t have info on franchise costs or requirements.)
Education and Information
The Juice and Smoothie Association of America www.smoothiecentral.com (Reader Comment: There is not a lot of info on this site. It seems to be a sales tool for a consultant service.)
Barron's Magazine Drink Up 7/23/12 This article dis a great job forecasting the national trend toward super premium natural juices. A lot of the info in this article came from their research. http://online.barrons.com/article/SB50001424053111904346504577531063244598398.html#articleTabs_article%3D1
FN1 We haven't seen proof of this, and the figures may be taken off the side of the box which the juicers come in.
© 2012 OCBusinessStartUp.com