http://www.businessweek.com/articles/2013-11-06/as-smoothie-store-sales-slow-jamba-juice-turns-to-machines

Retail

As Smoothie Store Sales Slow, Jamba Juice Turns to Machines


Jamba Juice (JMBA) isn’t expecting 2013 to be a sensational year. Same-store sales were down 3.4 percent in the third quarter—typically a busy season—and the company expects them to be flat for the year. Part of the problem is heightened competition: McDonald’s (MCD) is in the smoothie market, and others like Dairy Queen and Panera (PNRA) spent the summer promoting their rival drinks.

But the smoothie chain is hoping to see improvement from something it calls “JambaGo,” a self-serve machine that can be installed in cafeterias, schools, and convenience stores. Jamba Juice makes money by selling the prepackaged, pre-blended smoothie ingredients to JambaGo vendors, like a soda maker selling syrup to the owner of a soda fountain. The advantages: Jamba doesn’t need to build a store and the labor costs are much lower compared with hiring staff to concoct made-to-order drinks.

The company expects this model to help expand its brand more quickly and cheaply. Last quarter, however, revenue from the JambaGo program amounted to just about $400,000. But having recently landed a deal with Target (TGT) to put JambaGo machines in 1,000 Target Cafés, the company will soon have installed more than 1,800 machines (up from only 404 at the start of 2013). By contrast, there are currently about 850 Jamba Juice stores.

Based on a goal of $2,000 in annual revenue per JambaGo, the rough math for 1,800 machines is $3.6 million—a decent boost for a company that took in $228.8 million in revenue last year. Another 1,000 are planned for 2014, which would bring in another $2 million in annual revenue.

This would mean beating serious obstacles from competitors and declining juice consumption in the U.S., but the company is betting its “better-for-you” branding will be persuasive even in mechanized form.

Venessa-wong-190x190
Wong is an associate editor for Bloomberg Businessweek. Follow her on Twitter @venessawwong.

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