They price their product too damn high and keep raising it. I love their stuff, but at +$4.xx, almost $5, I am only good for a couple a month. I could afford all I want, but it is value to me and if they don't see this in these tough times they will continue to languish. They could easily sell their 24oz for $2.95 - $3.45 and their ingredients would still be less than 30% of the sale (a restaurant rule of thumb). I could, at full retail, buy half a banana, strawberrys, yoguert, and ice for a buck and make this at home. Maybe their current price levels will support business in beachy/tourist areas, but beyond that their stores are empty, soaking up labor and overhead. If they price like I suggest I will be there twice a week instead of twice a month as will many others too, and I would also consider buying the stock. If you want to see the smartest marketing/pricing strategy in the past decade, look to Subway's $5.00 Footlong, Jamba needs to do this for $3 bucks, any smoothie, (and not by reducing the size). Under their current strategy, do not buy this stock. Just my two cents, take it, leave it, or add to it.
I just bought a Groupon for 2 Whirl'ns for $5, they are normally $5 each. WTH!, $5 for a frozen yogurt that is $3.95 at Golden Spoon (not to many of them around anymore - listening Jamba?). Missing it on pricepoint is not usually #1 on the list of reasons a business flounders, but for Jamba IT IS. #2 could be atmosphere, it's just not the place you want to hang around, including employee attitude. Skipping the Starbucks analogy, take In-N-Out burger for comparison, Jamba could take a lesson. Anyway, maybe someone should tell Jamba we are in a recession (dispite what our Gov't tells us) and price their stuff accordingly. The discount coupons on Jamba's website should be their menu price. Stock price is going to get worse from here.
What are your thoughts on my above "two thoughts" post? Also, I will tell you that I agree with you 100% that Jamba needs to improve both their quality and speed of service on a CONSISTENT basis. Sometimes it's good, sometimes it's bad, in my experience. They have to get it to the point where the "bad" experiences are extremely rare. I also agree with you that In-N-Out provides a great model to try and emulate.
1. This first thought is purely anecdotal. I was having lunch at Five Guys Burgers in downtown Pleasant Hill, CA yesterday. In that downtown center is a Paul Mitchell Hairstyling training salon. In this salon, (mostly) young women complete their training and offer hair styling services at discounted prices. You see a ton of them at lunch time, instantly recognizable because of their all-black Paul Mitchell garb (and typically colored or detailed hair of some sort). I watched as several of them went into the Jamba down the street. Then, 3 or 4 of them came into the Five Guys, original size smoothies in hand, and proceeded to order burgers. Here's what struck me. My guess is that none of those young ladies are rich. Yet, they had dropped $5 for a Jamba smoothie and were about to drop another $4-5 for a Five Guys burger. Takeaway: People seem to buy what they want, at some level regardless of price.
2. That said, I have said before and I will say again that I would be supportive of Jamba developing an everyday "Value Menu" as opposed to the ever-changing "special of the day or week." It seems to me that they could come up with several logical combinations (Oatmeal or breakfast wrap + drink, Wrap + smoothie, Salad + smoothie, etc.) that could offer such compelling value that perhaps the Paul Mitchell ladies would have grabbed their food there as opposed to Five Guys. Make the combinations such that they are good for Jamba in that they force attachment of a non-beverage item with a beverage, but at the same time so attractively priced that they might actually pull a consumer or two out of Chipotle, Five Guys, Quiznos, etc.
I would love to see a quarterly report where BOTH their traffic and average check size increased.
My guess is that none of those young ladies are rich. Yet, they had dropped $5 for a Jamba smoothie and were about to drop another $4-5 for a Five Guys burger. Takeaway: People seem to buy what they want, at some level regardless of price.>>>>
LOL. We are neighbors!! The girls that go to Paul Mitchell school are all rich kids! You didn't know that? They all come from rich families wasting daddy's money. I appreciate your posts though kpd, you're a sharp guy.
The American consumer is BROKE. That said Starbucks is very expensive yet my friends and I go there at least once a week and have coffee. Starbucks has a far better model than Jamba Juice. They also have drive throughs and free internet and comfortable stores. Jamba makes you feel like you are shoplifting when you go there. "Here is your smoothie. Scram before I call the cops". They can't lower their price because their lease costs are very high as are their labor costs. The stores are barely profitable. Where this company will succeed they will sell their brand and various products at retail stores. This is where this company is a homerun investment. The stores need to make a small profit. I am certain they would lower their price on their products if they could get more customers. The stores I have visited in Chicago, Arizona, California, Florida, and Utah all have good customer traffic. The recession is going to last ten years or longer as we shake off the costs of the Iraq war and the housing bubble. We screwed up our economy and are now paying the price. Jamba's management did not run the economy off a cliff. Bush and the Democrats Washington and Wall Street crashed the economy. Now all of us in the middle are paying the price. When this stock hits $1.50 I will buy more shares. In five years absent a total collapse of the economy those who bought now will have some very nice gains. I don't believe the economy will collapse or the world will soon end. Whether we think positive or whether we think negative, they are only thoughts.
You are absolutely right Danny, the recession is going to take years because the excesses have to be worked out of the system and the pain has to be felt. We had the internet bubble and we just re-inflated with the housing bubble, well there ain't any new bubble to inflate although the Fed tried to do the stock market with QE1 and QE2.
I firmly believe any attempt at QE3 will result in a major market crash, people know it....more funny money should not be printed and that it is both wrong and ill-advised to do more QE, the best way to make the market move slowly up is to NOT DO any more QE.
Americans have no patience and will send Obama packing because he didn't turn everything around in four years, well the truth is no one could have and no one who replaces him will. Bachmann, Perry, they are a disgrace to the political system but bring them on and let them fall flat on their face for four years so they can be kicked out in 2016 when we are still in a recession, the govt is still broke, and there is still 9% or more unemployment.
I am extremely lucky, I have a secure job and am well set for the long term. No debt, own my home, savings in reserve, everything they tell you to do but that no American does because they are charging cruises and eating steak on their credit cards.
I am through ranting.
OK, I will add to it.
1) Chipotle charges $7 for a burrito and Taco Bell is $3. Chipotle is doing fine because of brand loyalty, which Jamba also has for smoothies.
2) I can buy the ingredients to make my own burrito as easily as I can buy smoothie ingredients. Invalid and weak argument which can be applied to almost all fast food/restaurant items. Go ahead and make it at home is what I say..
3) The emphasis on CPGs in stores shows that they are thinking and focusing outside the retail locations in the long term. They will never make it as just a smoothie shop and White, et all know that.
Great point Howard. When one thinks of a smoothie now, they think Jamba. The problem I see with the company, especially in regards to comparing them to Chipotle, is employees at the store level. When I go to a Jamba Juice, I think to myself, I wonder how many of these knuckle head kids working here are stealing money from this place. There's always too many employees, with absolutely no sense of management. They need to hire young, ambitious people, pay them a fair wage, and watch there SSS grow. I live in Northern California and when I go to a Jamba juice the employees are typically late teens, early 20's, very nice, but clearly smoke pot, and don't care much about the company they work for. And how much would you care if your making 7 bucks an hour? I've seen incredible laziness that I don't have time to get into. I really want to become a shareholder in this company especially at this current pps. This company has extreme potential. But, honestly, if a prospective investor walks into stores like this, do you think they would have confidence in upper management?
1. Chipotle offers value at $7, so does Taco Bell, but at each level.
2. I rarely buy ingredients to make my own smoothie, just making a point that I could do better at even at full retail (if I did I'd put rum in it). To further my point, I will eat at Chipotlie for a $9 meal, but I won't buy a Jamba afterwards, but I would if I ate a $4 meal at Taco Bell
3. Not sure how they will do in the CPG. The market currently seems to think they won't do too well. They can't just copy Starbucks model and expect to be successful.
I am simply saying their prices are too high. They are to the right on maximum profit curve. If they priced correctly their increased volume would better cover their labor and overhead.