Jamba Juice wants to take over America with a swelling army of franchisees and more juice than ever before.
The juice and smoothie chain announced new incentives to boost franchising, with the goal of adding 500 new stores in the U.S. in the next five years. Jamba Juice hopes to draw in new franchisees and encourage current franchisees to open more shops with a 50 percent reduction in initial franchise fees and a three-year graduated royalty reduction plan.
“As we prepare to celebrate our 25th anniversary in 2015, we thought it would be a great way for us to launch what we view as the most significant growth-initiative franchising incentive plan in the history of the brand,” says Jamba Juice CEO James White.
With the new initiatives, Jamba Juice hopes to double its annual unit growth rate. In 2013, the smoothie chain opened 52 franchise-operation locations and two company-owned stores.
The initiatives represent the second phase of Jamba Juice’s mega franchising push. In recent years, the company has rapidly gone from primarily a company-owned chain to a franchise system. In April of 2009, the company had 499 company-owned locations and 233 franchise stores. As of April 1, 2014, the company owns only 263 of the chain’s stores in the U.S., while franchisees operate 544 locations in the U.S. and 47 international stores. White says that with the new franchising campaign soon around 80 percent of the chains’ locations will be franchised.
Jamba Juice hopes to expand geographically with the incentives, focusing on a number of key markets including the Baltimore and D.C. areas, Dallas, Atlanta, Northern New Jersey, Raleigh/Durham and New York City. The chain will be hosting roadshows in these key markets in August and September.
Jamba Juice’s choice to double down on the New York City market has been contentious among some investors. Last week, Engaged Capital took a 7 percent stake in the company, with the intention of boosting what the activist hedge fund saw as an underperforming stock. Engaged Capital called for the chain to close up unprofitable New York City locations, in addition to cutting general and administrative expenses, eliminating non-core products and refranchising company owned locations.
White says that, while Jamba is open to investors’ suggestions, the company sees New York as a “great opportunity for this brand.” While the company will continue to refranchise locations, Jamba Juice is betting on two things for its future success: more, new franchise-owned locations and more juice.
Juice seems like a no-brainer for a brand that literally has the beverage in its name, but Jamba's bread-and-butter in recent years has been its smoothies. However, with the recent juicing craze, the company is bringing freshly-squeezed juice back to the top of the chain’s menu. Five hundred shops across the U.S. now serve freshly blended juices, with options such as “Veggie Harvest” (apples, carrots, beets, supergreens and ginger) and Kale Orange Power (orange, kale and bananas).
According to White, there has been a 3 to 4 percent lift in same-store sales at shops that have added juice to the menu.
“We just launched the largest juice platform for any national company,” says White. “[Jamba Juice] attracts a consumer that has almost an unquenched thirst for these healthier beverages.”
The company is also hoping to cash in on the recent interest in drinkable meals by adding “whole food boosts,” or add-ins like Greek yogurt and kale, to its classic boosts comprised of vitamins, proteins and grains.
Health-conscious customers have helped chains that embrace a healthy and fresh image, such as Chipotle, make huge profits. Today, even less likely restaurants like Taco Bell and Chick-fil-A are trying to bring in new customers by emphasizing healthy menu offerings. Jamba Juice has the perfect brand for an increasingly nutritious market – the chain and its growing masses of franchisees just need to figure out how to cash in on it.
In April, Jamba Juice reported a 0.3 percent increase in same-store sales for the first quarter, and a net loss of $244,000, compared to a loss of $1.2 million in the same period last year. Total revenue fell to $51.6 million from $55.7 million in 2013.