Twins and co-CEOs, Jon (front) and Marvin Gurman.
Image credit: Yeh! Yogurt & Café
Yeh! Yogurt & Cafe: Marvin Gurman, president & CEO at Yeh! Yogurt & Cafe, says the self-serve component of Yeh! is critica. It is "big, big. I wouldn't even go into the regular businesses," Gurman says. "Go self-serve or go home." His franchise, in addition to offering frozen-yogurt, makes sweet crepes, serves waffles, coffee drinks including espresso and cappuccino and has a make-your-own cookie concept. Customers can pick regular, oatmeal or chocolate cookie dough and various mix-ins, like coconut or candies. The server mixes the dough and cooks the cookie in two minutes. He started Yeh! in 2008 in Montreal. The franchise is largely in Canada, but is beginning to reach into the U.S., with operations in New York, Massachusetts and California. "Maybe it's because of our roots growing up in Canada, you need some alternative products," says Gurman.
By 2017, the entire U.S. frozen-yogurt industry, including both franchises and individual stores, is expected to bring in $931.5 million in revenue annually, according to a report from Los Angeles-based industry research firm, IBISWorld.
TCBY is the dominant franchise in the industry in the U.S. with almost 18 percent of the market, as of Oct. 2012, the most recent industry-market research IBIS has available. Pinkberry is close on its heels with 17 percent of the U.S. market, and Red Mango has 15 percent of the U.S. industry, the report says.
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Even as consumers pinched their pennies during and after the Great Recession, the frozen-yogurt industry flourished. U.S. consumers have become increasingly health conscious and are willing to pay a premium for tasty options that are low-calorie, says the IBIS report. When tart frozen-yogurt came onto the cool, creamy scene, made especially popular by Pinkberry, the frozen-treat industry got a second wind. Also, serve-yourself chains popped into the mix, giving dieters another way to cut back calories by limiting their portion size, further increasing demand. In the five years leading up to 2012, the frozen-yogurt industry grew by an average of 3.7 percent per year to $760.1 million in annual sales, across the entire industry.
In the next five years, as consumer discretionary spending picks up to pre-recessionary levels and the obsession with healthy-eating continues to accelerate, IBIS projects that the frozen-yogurt industry in the U.S. will grow at an even faster rate than it has in the previous five years. While there is expected to be growing demand for the frozen treat, IBIS says that pressure to sell it more cheaply will limit the pace of new-store growth.
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Menchie's says it wants to be the McDonalds of frozen yogurt.
One of the bigger frozen-yogurt franchises expects that it will be the independent operations and smaller franchises that suffer. Menchie's, the fourth-largest frozen-yogurt franchise in the U.S., holds almost 13 percent of the U.S. industry, according to IBIS. There are 310 Menchie's stores open across the globe and another 300 being leased or constructed, says CEO Amit Kleinberger. The Los Angeles-based frozen-yogurt franchise brand is already global, stretching from China to Guam, and expects to be open in Malaysia, Singapore, Pakistan and Saudi Arabia by the end of the year.
Menchie's focuses on making all of its guests have fun in the store and has developed a game for consumers to play on their mobile phones. Also, Menchie's aims to set itself apart by making clear that all of the milk that goes into Menchie's frozen yogurt comes from "healthy, California, happy cows," says Kleinberger.
Kleinberger, who launched in 2007, says he welcomes the competition. And he also thinks that he will be the only frozen-yogurt operation still around in five years. "By the year 2015, you will see the emersion of what are the big three, four, five brands in the world," he says. "And I believe that we are going to be absolutely the McDonalds of the frozen yogurt industry by being the largest and the most advanced in our many offerings, quality, service etc." Most of the mom and pops and smaller franchises will be put out of business, he projects.
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