Ryan is an attorney and valuation specialist residing in Chicago. He chronicles his thoughts and research on FranchisePundit.com. You may reach him by email ryanknoll@gmail.com or mobile telephone 312-212-3423.
Pinkberry Craze
Frozen yogurt is hot again? Well, sort of. Given the implosion of the last frozen yogurt phase, you are wise to be cautious. The last frozen yogurt craze in the 1980’s and early-1990’s was lead by TCBY. According to the International Council of Shopping Centers, TCBY’s same store sales fell 10%-15% annually between 1997 and 2004, particularly when the low-cal and low-fat versions were introduced. The International Dairy Foods Association reported frozen yogurt production in the U.S. went from 118 million gallons in 1990 to 65 million gallons in 2005, a 45 percent drop.This time Pinkberry sure seems to be all the buzz lately, even being features in a recent American Express ad and having their hip tart frozen yogurt dubbed “Crackberry” playfully implying an addiction is possible. Here are photos of a Pinkberry in Manhattan. Founded by Shelly Hwang (coming off several failed small restaurant ventures) and Young Lee (a solo designer), they effectively brought to Los Angeles the tart frozen yogurt now famous in South Korea.Pinkberry has apparently been stretching the healthiness of its yogurt, and in early April 2008 settled a law suit where it was accused of misrepresenting its product as “frozen yogurt” and making bogus health claims, including that the dessert was “all-natural.” Pinkberry admitted no wrongdoing but is paying $750,000 to a local food bank and $5,000 to the “victim”. The article implies that the recipe is not all natural and has higher calories than the founder claims.Nevertheless, sales of the tart frozen yogurt are impressive. Pinkberry has put forth in the media unit sales of $250,000/month and has generated a plethera of copycats across the country, including Berrie Good, Yogurberry, BerrySweet, Red Mango, and recently Berry Chill here in Chicago. Pinkberry has supposedly ceased selling franchises for now.
The Concept
The hip tart frozen yogurt concept is simple:
- a few basic flavors of tart all-natural frozen yogurt
- a variety of berry and exotic real fresh-cut fruit toppings in addition to cereal and cookies
- curvy counter and furniture; accented with colorful hip floors and wall coverings
- at least 4 plasma TVs showing something “cool” like music videos or Japanese game shows
- at least 4 plasma TVs above the counter with an animated menu
- charge about $4-$7 for a tart yogurt and 3 toppings of brand-name cereal, fresh fruit, candy, and pastries.
Should you buy a franchise or role your own?
You can easily roll your own. Here are some basic supplies you’ll need to get started:
- get your 2 ice cream machines from Taylor, ($36,000 each)
- tart frozen yogurt mix from YoCream or Cielo
- cups from Jas Wholesale (supplies price sheet
) (500 ct = $59) - ultra modern flooring, counters, cabinets, and furniture from Ikea (~ $3,500)
I may be more biased to the “role your own” after seeing the success of a single-unit startup in Chicago called Berry Chill. It occupies a small storefront on State Street a few blocks of Michigan Avenue (the Magnificent Mile). The entrepreneurs got the location right, and executed the “feel” of the asian-inspired Pinkberry clones well enough. Berry Chill opened a few months ago during the middle of winter when the weather was below freezing. However, while most of the frozen custard places close for the winter, there was almost always a line at Berry Chill. I attribute most of their early success to copying a proven concept and selecting an excellent main street location with lots of tourists and local high-rise condo residents. I’m sure the store will do well over $1 million in sales during the calendar year. Coincidentally, there is a Cold Stone Creamery (with Soup Man) 1.5 blocks away with a larger store but *probably less than a third of the street foot traffic and it rarely has a line except in the evenings of summer days…what a difference a few blocks and hip attitude make.Would I buy one of the aforementioned franchises? Probably not. I’m a strong believer in historic trends, and I would not want to be financially tied to a concept so easily copied or a category that tanked so quickly in the past few decades. I would be very hesitant to open a unit in a suburban outdoor strip mall, as heavy immediate foot traffic seems to be part of the successful formula.If I was to franchise, I would go with the brand with the high exposure and recognition, which at this time is Pinkberry, unless one of the franchise clones have extremely flexible terms in the Franchise Agreement, such as permitting me to essentially change my store brand if I choose not to renew, and permit me to transfer all assets to my new business without penalty or encumbrance, and if the Franchise Agreement did not require me to refrain from competing for any period of time after owning a franchise. If the concept doesn’t work, I want out of the franchise obligations but I want to still have the option to utilize the assets I paid for (either sell them or use them in a similar/renamed business).
Industry Developments
Forbes has a good article on the current status of the Frozen Yogurt industry. Reformulations of the frozen yogurt to a low-fat with fruit mix seem to be working:
MaggieMoo’s International also reformulated its smoothie line, changing it from non-fat to a low-fat, lactose-free ice cream or fruit smoothie called Zoomers. The company made the change after conducting blind taste tests with consumers, 67% of whom preferred a tasty, low-fat smoothie to a non-fat smoothie, says Debbie Benedek, senior vice president of brand marketing. Flavors include a Triple Berry Pomegranate that’s packed with antioxidants.
After changing its frozen yogurt production process, within six months Dreyer’s/Edy’s Slow Churned watched a double-digit decline in frozen yogurt business turn into double-digit growth, says Suzanne Ginestro, senior brand manager for Dreyer’s and Edy’s Slow Churned ice cream. (Dreyer’s is known as Edy’s east of the Rockies.) By using the slow churn method, fat is better dispersed throughout the product, making it feel richer and creamier. A similar change also boosted the brand’s light ice cream sales.
Similar Posts:
- A New Culture to Yogurt Franchises
- More Independent Tart Frozen Yogurt Outlets
- Better Burger Burnout Coming?
- Dippin’ Dots Competitors
- More calories in a smoothie than a double cheeseburger?
Ryan, you continue to amaze me. An excellent article.
FuwaFuwaUsagi
FuwaFuwaUsagi wrote on April 14, 2008 @ 9:42 pm:
Thanks FuwaFuwaUsagi. It was a fun concept to research and evaluate.
Tart yogurt, which really means “sour”, is going to wear off. If they had a trade secret recipe like Dippin’ Dots or patented process then maybe it would have more staying power. But it is just an ordinary flavor that anyone can duplicate, and the small store ambiance is also able to be copied.
It’ll be like Cyber Cafe’s and wraps – cool for a few years but then not so cool when too many people try to copy it and it is indistinguishable.
It was written:
Tart yogurt, which really means “sour”, is going to wear off.
My reply:
IMNTBMFHO, part of the brilliance of Ryan’s post is revealed below:
“I would not want to be financially tied to a concept so easily copied or a category that tanked so quickly in the past few decades.”
and…
“permitting me to essentially change my store brand if I choose not to renew, and permit me to transfer all assets to my new business without penalty or encumbrance”
Also…
“If the concept doesn’t work, I want out of the franchise obligations but I want to still have the option to utilize the assets I paid for (either sell them or use them in a similar/renamed business).”
One of the nice thing about TheFranchisePundit’s suggested implementation is that it preserves the requisite flexibility to allow an owner operator to adapt to changing market conditions in a proactive manner without incurring substantial penalty.
To the best of my knowledge those same machines that churn out tart yogurt may be used for regular soft serv too.
I had a problem many years ago where I had a “C” location and I churned through a few concepts before I found the one that was the right concept at the right time.
That softserve ice cream shop may not make it, but a salad and soup place might, or maybe it is subs, or pizza, BBQ, or Tacos. No matter what, with me too concepts, I want to preserve my flexibility to adapt to the market.
FuwaFuwaUsagi
I tried all the liquids yocream , rainbows end everything they all taste like lemony yogurt water not the real thing I was looking for , I spoke to the dairy who manufactures these mixes for company’s such as golden spoon tcby and rainbows end he claimed he’s been testing and attempting to recreate the pinkberry powder taste but its impossible to do so without using the powder which is not kosher and since most dairy’s are kosher they cannot use it in their manufacturing facility.. But I did find the powder pinkberry uses they buy by drums and mix in with their yogurt base and that makes the difference , ( My friend who manages a pinkberry tipped me off to this) apparently the company is based in California with locations everywhere throughout the world.. the companys called Cielo Usa web address http://www.cielousa.com try for yourself they offer free samples to try out , I would suggest you try the cielo and yocream or any liquid or powder and see for yourself , it really is the secret ingredient pinkberry uses , I hope this helps you out in your search to recreate your own pinkberry yogurt
I asked Cielo and they seemed to lead me to believe that they don’t supply pinkberry. Do you think you can ask your friend and see for sure. I am really curious who they use. thanks
[...] driving the growth of the tart frozen yogurt industry will continue for several more years. But a crash similar to the previous frozen yogurt industry is likely to [...]
Jo – I saw your post and will give you $100 if you email me – no lie!!
I am desperate to find the actual taste of Pinkberry so i can recreate it myself…please contact me!
All I need is the inside scoop on how to mix it..is it lemon juice with the powder?
Thanks in advance
The first dumb assumption is two Taylor freezers for $36,000 each. They are not that much money.
This article was great! I’ve recently purchased a frozen yogurt shop (check out our website) and found this article to be very helpful. I’d like to pose the question of what happens when people get tired of the tart flavor? How do I prevent the past from repeating itself here? I think I have already helped myself by offering 6 different flavors with the ability to increase to 10 and only one of those flavors being tart based, and my concept is self serve so we charge by the weight, putting the customer in total control of cost (to them), portions, and toppings. But will this be enough to survive the “trend”?
jo wrote on May 12, 2008 @ 7:05 pm:
hi jo
can I offer you $50 to share the correct ingredients and measurements of the Pinkberry formula?
Thanks
Gus
GUS wrote on September 2, 2009 @ 10:16 pm:
Sorry just read the other offer
I have a post in the forums under Frozen yogurt trend. As posted, I live in the Kansas City Area and have been researching the self serve frozen yogurt concept for a while now. Besides being a new trend to the KC area Im wondering how this concept will fare in the winter months, just like any other ice cream shop I guess. My take on this, is your customer experience. If you can make the customer feel at home and want to sit and stay at your location then it would help attract business. But it seems in doing this high end metro type atmosphere that adds a bunch to your build out costs. not to mention this concept needs a very high foot traffic location which is also very costly. This could become a very expensive fad?? But I do like this concept and would like to pursue it but want to study up a bit more.
Tim wrote on April 13, 2009 @ 11:03 am:
The $36k price I listed was for top of the line Taylor machines like the C713, and the price includes delivery, installation, etc. II would set aside that much to be safe. I’m sure you can find it for less with a little bargaining and shopping around. Used equipment can be found for half.
I will offer $$$ to anybody that will share their secret ingredients and measurements to make good yogurt? I’m opening up a self serve frozen yogurt and really need help. Please.
Thanks,
Kiwi
davidle32@yahoo.com
sure for 2,500 I will give you all the info you need from what mix I use, what machine, how to set machines up, health codes, architect drawings, etc. I will even provide direct phone contact for any questions during your process. I spent alot more then this through trial error, with my architect and lost time and thousands paying extra rent since I did some things wrong in the beginning. If you are really serious and can afford this payment, I will help you. for ref, I have my own shop and am typing this from my self serve shop as we speak. You will save time, money, headache, etc.
bbi@uicalumni.org
Need HELP wrote on January 20, 2010 @ 10:45 pm:
Great article Ryan , I took your advice and tried Cielo and Yocream and found Cielo Yogurt to be the better product it tasted identical to Pinkberry and I dont need a $15,000 walk in freezer to stock the Mix like I would with a liquid mix, also I found the Liquid to be a real inconvenience to stock , due to short expiration dates and a required 2 day thaw process which I found to be difficult to forcast my usage. I did find that taylor machines were cheaper than you listed I found new ones for around $16,000 each and used ones for far less around $7,500. I went for the used since these machines are made to last, and its working out fine.. Thanks again for the great article