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Thursday, Mar 28, 2024

Menchie’s Joins Fro-Yo Frenzy

Frozen yogurt franchise Menchie’s Group Inc. is planning a sweet takeover. The Encino-based yogurt brand, known for its bright green and purple décor, has 400 stores under development worldwide. Company officials say they are opening an average of 10 stores a month and hope to have 300 stores open by the end of the year. To date, the company currently has 185 locations, including 14 in the Valley. “The goal is to be the McDonalds of frozen yogurt,” said Menchie’s CEO Amit Kleinberger. Menchie’s is tapping into an increasingly crowded and popular food niche. Competitors range from frozen yogurt pioneers such as TCBY to upscale yogurt chains such as Pinkberry and Red Mango, which have hundreds of stores each. Additionally, industry observers say the company must differentiate itself from brands such as Ben & Jerry’s that offer frozen yogurt in the grocery aisle and chains such as Jamba Juice and Coldstone Creamery, which recently entered the frozen yogurt space with new menu options. Plus, there are other emerging mom-and-pop operators offering frozen yogurt, or fro-yo, at the neighborhood sweet shop who have their sights set on being the next blockbuster brand. Menchie’s, in fact, started out in 2007 as a single location in Valley Village. As the popularity of frozen yogurt has soared, Menchie’s has rapidly expanded its global footprint. Today, the company has stores in the United States, Canada, Japan and Australia. And this year the frozen yogurt brand plans to expand into England, France, India, the United Arab Emirates, Saudi Arabia, Jordan, Kuwait and China. Kleinberger said he isn’t afraid the company’s expanding too fast. “Growth is not an objective,” he said. “It’s a result.” Menchie’s growth is a testament to the brand’s success and ability to stand out in the crowd of competitors, he said. Growing competition At Menchie’s locations, consumers choose from a wide variety of flavor options that rotate daily, ranging from classics such as chocolate and vanilla to unusual flavors such as root beer float and maple nut. The stores are self-serve and cater to families by offering chalk boards, free toys and fake tattoos and party rooms that can accommodate a group. Costs for a treat range from 39 cents to 41 cents per ounce at stores in the L.A. area and vary based on topping choices. Frozen yogurt — the healthier hybrid of yogurt and ice cream — is making a comeback after a decline in the 1990s as more consumers seek healthier alternatives in their diets, said Corey Henry, spokesman for the Virginia-based National Yogurt Association. The rising demand also is spurring more business opportunity — and competition for existing operators. Frozen yogurt retail outlets have increased from 3,000 in 2006 to nearly 5,000 in 2011, as the frozen yogurt industry grew by some 31 percent, according to recent data from the association. Some companies have differentiated themselves by offering diverse flavors and toppings, Henry said, declining to comment specifically on Menchie’s. “Consumers are very savvy,” Henry said. “You can’t just roll out just any old frozen yogurt.” Indeed, jumping onto a hot food trend has proven rewarding for some operators and challenging for others. In recent years there have been several popular eateries such as Rubio’s Baja Grill, known for its fish tacos, rotisserie chicken chain Boston Market, and Krispy Kreme Doughnuts Inc. that grew too quickly and were forced to downsize when store sales did not meet company expectations. But Menchie’s cost structure, appeal and ability to operate on a lean basis makes for a high chance of success in the market, said Darren Tristano, executive vice president of Technomic, a Chicago-based research and consulting firm focused on the food industry. Menchie’s lower price point makes it ideal for locations in middle- to lower-income markets and does not pigeon-hole it to high-end areas and shopping centers. “There are a lot of U.S strip malls dying to have a Menchie’s,” Tristano said. Consumer’s growing interest in frozen yogurt as healthy and affordable luxury also paints a positive picture for Menchie’s. Over the past five years frozen yogurt has increased its share in the frozen dessert market, which includes ice cream and gelato and generates some $6 billion annually. “Americans are looking for price point and indulgence,” Tristano said. “Menchie’s offers a better value for the American consumer.” Perfect Fit Successful franchise companies select franchisees who can be successful “ambassadors for the brand,” said Art Diaz, director of The Franchise Center at the College of Business Administration at The University of Texas at El Paso. Franchisors who do not conduct the proper due diligence before granting a franchise could damage their brand if the franchisee fails to represent the company well or run the business effectively, he said. Menchie’s requires franchisees to pay a $40,000 franchising fee, an ongoing royalty fee of 6 percent and a 2 percent marketing fee, Kleinberger said. In total, the cost to open a Menchie’s is about $375,000. Future franchisees also must attend Menchie’s University, a program that aims to educate owners on how to run successful operation. When considering potential franchisee owners, Kleinberger said first and foremost he looks for owners that fit into the company’s culture and cater to its family-centric audience. “Our mission is to make people smile,” he said. “We ask ourselves, ‘Is this person one that propels people to smile?’” He also recognizes the importance of selecting franchisees with some business acumen. “After the smiles we consider whether franchisees are competent and are ready and willing to do what it takes to build the business.” Kleinberger, meanwhile, has no plans of slowing the brand’s expansion plan. He is eying franchise opportunities in Europe, South Africa and Australia. “When we are in arms-reach of every community around the world, we will slow down.”

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