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The Honolulu Advertiser

Posted on: Sunday, July 25, 2004

Smoothie trade juicing up

By Andrew Gomes
Advertiser Staff Writer

Three fast-growing smoothie bar franchises are entering Hawai'i with expansion plans that could put the freeze on industry leader Jamba Juice's unchallenged dominance in the market.

Mike Reid opened a Planet Smoothie in Waipi'o this year. He runs the smoothie bar with his family at 94-1235 Ka Uka Blvd., Suite E.

Gregory Yamamoto • The Honolulu Advertiser

Planet Smoothie, Maui Wowi and Robeks Fruit Smoothies & Healthy Eats collectively are aiming to open roughly 30 locations in the next few years, which would heighten competition for Jamba and a handful of small independent operators.

Of the three regional chains, two — California-based Robeks and Colorado-based Maui Wowi — recently contracted with local franchisees to open stores. The third player, Louisiana-based Planet Smoothie, opened its first two shops here earlier this year and is scouting for more.

While some of the smoothie bar newcomers say they are finding it difficult to compete for prime locations against aggressively expanding Jamba, a general optimism prevails that there is room for rivalry that gives consumers more choices for the health-oriented drinks.

"I think there's always room for growth," said Val Reid, the local Planet Smoothie franchisee who opened a store in Waipi'o in February. "Competition is good."

Until recently, Jamba had been the only major smoothie bar chain in the state, where there are also a handful of smaller operators such as Zeus Juice, Lanikai Juice, Vita Juice, On the Juice and The Juice Stop.

As with many national or regional restaurant and retail chains, popular smoothie bar franchises have taken longer to find their way to Hawai'i after explosive growth on the Mainland.

The smoothie shop, which often combines offerings of fresh-squeezed juices and healthy foods, is not a new concept. However, it wasn't widely exploited until entrepreneurs used it as a vehicle for franchising in the 1990s.

According to the national Juice and Smoothie Association, franchises grew to outnumber independents four years ago, and big chains led the rise in industry revenue that reached $1.6 billion last year, up from $919 million in 2000.

The strong industry expansion has been led by California-based Jamba, which was established in 1990 as Juice Club and today has more than 420 stores in 25 states.

The MacNaughton Group, a local real estate development firm, partnered with Jamba Juice Co. in 1999 to establish Hawai'i's first Jamba store.

Doing business as JJC Hawaii LLC, the company has opened 21 locations, and has leases for five more, including one inside Sears at Ala Moana Center and another outside the Ke'eaumoku Wal-Mart scheduled to open in October. More leases are being negotiated.

Greg Meier, JJC Hawaii president, said he's not sure how many Jamba stores he'd eventually like to see, but there will be more.

"We're going to continue to go one store at a time based on customer demand," he said. "The demand has been strong for the Jamba product."

Meier said Hawai'i Jamba stores, seven of which are on Neighbor Islands, have been some of the best performing for Jamba Juice Co., which owns 5 percent of JJC Hawaii.

Robeks, Planet Smoothie and Maui Wowi hope to tap into the strong market demand. The most ambitious of the three is Robeks, which is one of the smaller, younger chains in the business, with 54 stores in seven states.

The company, established in 1996 by a former investment banking executive with global financial services firm Smith Barney, has hopes of opening 300 stores over the next three years.

In Hawai'i, Robeks would like to open 18 to 20 stores over the next five to seven years, according to area developer Dmitri Spadaccini, who took on the franchise with his wife, Lei, and is negotiating leases for a few initial stores.

Spadaccini, who has studied the local market and different smoothie franchises for more than a year, said he concluded that there is probably room for two or three major smoothie operators here.

"I think the smoothie product has proven itself to be a winning concept in Hawai'i," he said. "That has been proven by our competitor over here. We wouldn't have dedicated so much time and money if we didn't think there was room to compete."

Maui Wowi is closer to Jamba's size, and has been around longer. The brand was established in 1983 by a Utah couple, but only started franchising in 1998 under direction of an investor.

The chain has grown to about 300 locations featuring "fresh Hawaiian blends" at kiosks and retail stores. A company spokeswoman said one kiosk operator in Hawai'i occasionally does business at special events, though two more operators are expected to begin doing business soon.

Planet Smoothie was started in 1995 by a restaurant operator who developed about 100 shops mostly in the South. About 50 more in the immediate development pipeline.

Reid, the local Planet Smoothie franchisee, said she wants at least six stores open in the next two years, in addition to the Waipi'o shop and one that a partner opened on Maui in April.

Finding good locations, however, has been tough because of Jamba's presence. "Everywhere we go we are getting beat out by our competitor, Mr. Jamba himself," Reid said. "He is making our job a little bit more difficult."

Jamba operator JJC Hawaii has used a strategy to open all of its new stores near or next to Starbucks, which has 43 locations in Hawai'i where it is operated by the same group operating Jamba.

The affiliation gives JJC Hawaii advantages to open smoothie bars next to an established coffee retailer — a strategy that Robeks and other smoothie bar operators use to capitalize on high customer traffic associated with popular coffee shops.

"It really works well," said JJC Hawaii's Meier. "We've got a couple of great brands, and they synergize well."

Besides gourmet coffee retailers, Robeks prefers sites near quick-serve restaurants, health clubs, supermarkets and drug stores.

Pablo Gonzalez, owner of Lanikai Juice, said the coming competition doesn't scare him — he survived Jamba opening its first Hawai'i store across the street from his then-2-year-old Kailua shop in 1999.

"When they opened, I think I have two options: I kill myself, or I do something to survive," he said. "I was really brave. I made it."

Gonzalez said he concentrated on finding local sources of high-quality ingredients such as organic juices, organic honey and exotic fruits like the two cases of dragon fruit he bought from a Big Island farmer last week.

"I'm going to Wahiawa right now to pick up some pineapple," Gonzalez said during an interview last week. "You think the president of Jamba Juice is going to pick up fresh fruit? I am like Kua 'Aina in the smoothie business. The other corporations like Jamba are like McDonald's."

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.