Time to call on Smoothie King
Steve’s breakdown: Lots of good things are happening down at Smoothie King but it doesn’t YET seem to include advertising. So if you’re into health drinks, give’m a ring. 985-635-6973
COVINGTON, LA: Four years into new ownership, Covington, La.-based Smoothie King is in turnaround mode, with a new prototype and logo, streamlined menu, improved average unit volumes and expansion into new markets at home and abroad.
Wan Kim, the former South Korean franchisee of the brand, bought the parent company from founder Steve Kuhnau in July 2012.
“When I bought the company, the AUV was around $340,000,” Kim said, noting that, with an initial investment cost of around $250,000, the return on investment wasn’t that great.
“Now the AUV is around $482,000. We are looking close to a one-to-two ratio, and I think it’s becoming a very good opportunity for a lot of people,” he said.
The process hasn’t been easy or without mistakes. Kim himself found it impossible to manage his 110 South Korean locations from company headquarters near New Orleans, so in October 2015 he sold them to Shinsegae Food, which is also the master franchisee for Starbucks in South Korea.
An attempt to open company-owned locations in Singapore also failed, and the 10 locations there were closed a few months ago.
“I don’t think we had a good management team,” Kim said. “Also, it was just out of reach. It’s too far and we couldn’t go there that often. It’s 32 hours [of travel] from New Orleans to Singapore.
“So that was a good lesson,” he added. And he has resolved to open both company-owned and franchised locations in the United States, but to leave overseas operations to franchisees.
That has started with franchisee Al Ghurair Retail, which opened the first Smoothie King location in the Middle East, in Dubai, on Sept. 1, with plans to expand throughout the Gulf Cooperation Council countries of Bahrain, Kuwait, Oman, Qatar and Saudi Arabia, as well as the United Arab Emirates.
The Dubai location is the chain’s 821st location worldwide.
Plans also are underway for franchisee Cinnaworld Ltd. to open four locations in Trinidad and Tobago, with the first one slated to open this year. That will be the chain’s second Caribbean location, with one already open in Grand Cayman.
Meanwhile, president and chief operating officer Tom O’Keefe, whom Kim hired in January 2013, has been undertaking a rebranding based on research by WD Partners, which conducted 6,000 online surveys.
O’Keefe said the company scored well on smoothie quality and the name, which respondents said connoted strength, but the restaurant spaces and logo didn’t resonate.
Apart from developing a new logo that emphasized the brand’s name, with the two words under a crown, and a prototype that included a drive-thru and a more streamlined space for retail items such as protein powders, O’Keefe and his team also developed an overall marketing message: “Smoothies with a purpose.”
But it’s the customers, not the company, that determines what that purpose is, O’Keefe said.
“Don’t assume why a guest comes in. Let them define for us why they came in, and irrespective of that purpose, we have a product that can fulfill it,” he said. “It can vary from weight gain to weight loss. It could be, ‘I need energy;’ ‘I want an indulgent snack;’ ‘I want a meal replacement.’ Whatever it is, they tell us, and we say, ‘Fine.’”
To that end, Smoothie King rearranged the menu into four smoothie categories: Fitness, Wellness, Slim and Take a Break.
They also introduced new items, such as Greek yogurt, and limited-time offers such as watermelon specials over the summer and a line of coffee-based smoothies that are currently available.
The new coffee items are:
• Cinnamon Latte High Protein, which has whey protein, a protein blend, cold brew coffee, almonds, non-fat dry milk, Turbinado sugar and ground cinnamon
• Raspberry Mocha High Protein, with raspberry purée, cold-brew coffee, whey protein, protein blend, almonds, Turbinado sugar, nonfat dry milk and cocoa
• Vanilla Coffee High Protein, which is the same as the raspberry mocha one, minus the raspberry
• Almond Mocha High Protein, which is similar to the vanilla one, but with more almond
Kim said the thought process for introducing new items starts with the customer.
“It’s not just, ‘Oh, watermelon, great!’ My first question is, ‘How are we going to help people’s lifestyle by introducing this product?’ [With the coffee smoothies], we really thought about what purposes people have in the morning. So if you are an early workout guy, then you need a very healthy post-workout smoothie that has a lot of protein, but it would be great if it had coffee in it, too.”
The coffee smoothies are in the Fitness section of the menu.
Kim has also increased the number of company-owned restaurants in the system, from one unit to 27 locations.
“I always believe I need to put my skin in the game, because then I can tell my franchisees that I’m making this decision not only on behalf of them, but on behalf of me,” he said, adding that having more locations allows the company to conduct more market tests for new items.
Kim said he had targeted the Washington, D.C., area as a new market for company-owned locations, with possible further expansion into the Northeast.
O’Keefe added that there was still plenty of space to backfill in the chain’s southern stronghold, however.
“We reinvigorated the brand,” O’Keefe said. “We kind of blew some air into the sails and there was a lot of natural traction that took hold because of that.
“We are a three-year-old startup, even though we had a 40-year head start.”