This is the final installment of a three-part celebration of the industry's top turnaround stars. You can read the first installment, on Popeye’s Cheryl Bachelder, here, and the second, on Ruth’s Chris’ Michael O’Donnell, here.
Under the cobwebs in some business school’s library is a volume entitled, “Standard Procedures in Restaurant Turnarounds.” It’ll be covered with an inch of dust because anyone who’s spent time in the business will know the prescription: Expand your menu to draw new customers while tapping wholly new sources of revenue like catering.
Rare is the executive who hasn’t thought along those lines. Scarcer still is the one who was able to make the plan work.
So meet James D. White, the CEO of Jamba Juice. You might not know him, or of him, because he’s kept a low profile. But he’s quietly engineered what may be one of the most astounding turnarounds in foodservice.
White took over the chain in late 2008, as its glitter was starting to wear off. It’d drawn considerable attention, from consumers as much as the industry, as a “lifestyle brand”—a Starbucks that sold cold drinks instead of hot ones.
That’s great for a niche brand. But the concept’s limitations were becoming evident. It actually sold a liquid meal replacement in a cup—a relatively high-ticket smoothie that takes a considerable amount of time to finish, if you can consume it all. To say it’s filling is like referring to Lady Gaga as kind of different.
Jamba wasn’t where you’d stop for breakfast, lunch and dinner, day after day after day.
The chain’s management was addressing the problem by adding a smaller-sized serving and adding breakfasts you could suck up through a straw.
Enter White, who, significantly, was recruited from the grocery business, not another restaurant chain. He’d developed proprietary brands for the Safeway supermarket chain.
White quickly came up with a strategy. If you’d stopped any attendee of the Restaurant Leadership Conference and asked them on the spot for a plan, you’d have gotten almost the same thing:
--Cut expenses
--Expand the menu to bolster traffic
--Focus on service
--Emphasize franchising
--Expand overseas
--License your name to food products.
Fast-forward to the present. The chain now features products as diverse as soft yogurt and steel-cut oatmeal. Breakfast wraps are being tested in more than 200 stores.
Jamba’s memorable name appears on retail products ranging from trail mix to toy blenders. G&A costs were cut by more than 14%. Its franchisees include tennis superstar Venus Williams. “And we have zero debt on the books,” White told investors two weeks ago.
As far as we can tell, White didn’t log any time at Hogwarts before joining the restaurant business. He has no pact with the devil that we’re aware of. Nor is he using some special ray gun.
Yet he was able to execute a plan that stymied other chains, of all shapes and sizes. There’s no magic to it. Indeed, the difference was as simple as drinking a smoothie through a straw: He built a team and instilled a culture that enabled the strategy to work. The “how’s” were details that management could supply because of its experience and insights.
White provided the leadership to make the thinking and execution possible.
It sounds like an easy formula. But as Vince Lombardi famously said, You can use my playbook, but you still have to beat me on the field.
Showing posts with label Jamba Juice. Show all posts
Showing posts with label Jamba Juice. Show all posts
Friday, September 2, 2011
Tuesday, December 14, 2010
They really want to direct
It’s surprising that restaurant leaders have any time left to manage after fulfilling all their reality-TV gigs.
Chefs started it. They moved in fast-forward from cooking demos to cooking on TV to competing in televised cooking competitions to demonstrating for at-home audiences that tyranny thrives in restaurant kitchens. They can become celebrities without feeding a single consumer.
Now we have chain executives trailing the culinarians’ apron strings. Enough headquarters biggies have appeared on “Undercover Boss” to merit one of the annual rankings that the industry loves so much (“Top 100 ‘Undercover’ Chains”).
An episode featuring a disguised Don Fertman, the chief development officer for Subway, aired Nov. 21. Three weeks later, the show focused on Johnny Rockets CEO John Fuller.
Aren’t there other industries with photogenic officials?
Now other programs are following suit. This morning brought word of a new TV reality show, “The Mentor,” a program on the 24-hour Bloomberg business channel that matches the leaders of upstart companies with seasoned vets. The notion is to foster a meeting between Grasshopper and the Kung Fu master, all while the cameras roll.
An episode to air later this year will feature James White, the CEO of Jamba Juice, serving as a mentor to Michael Laundau, the leader of a franchised hair-drying business called Drybar. And, yes, there is a chain whose core service is using blowers on consumers’ hair.
With all this screen time, chains should forget about sales boosters like catering or takeout and focus more intently on negotiating contracts for residuals and syndication.
Chefs started it. They moved in fast-forward from cooking demos to cooking on TV to competing in televised cooking competitions to demonstrating for at-home audiences that tyranny thrives in restaurant kitchens. They can become celebrities without feeding a single consumer.
Now we have chain executives trailing the culinarians’ apron strings. Enough headquarters biggies have appeared on “Undercover Boss” to merit one of the annual rankings that the industry loves so much (“Top 100 ‘Undercover’ Chains”).
An episode featuring a disguised Don Fertman, the chief development officer for Subway, aired Nov. 21. Three weeks later, the show focused on Johnny Rockets CEO John Fuller.
Aren’t there other industries with photogenic officials?
Now other programs are following suit. This morning brought word of a new TV reality show, “The Mentor,” a program on the 24-hour Bloomberg business channel that matches the leaders of upstart companies with seasoned vets. The notion is to foster a meeting between Grasshopper and the Kung Fu master, all while the cameras roll.
An episode to air later this year will feature James White, the CEO of Jamba Juice, serving as a mentor to Michael Laundau, the leader of a franchised hair-drying business called Drybar. And, yes, there is a chain whose core service is using blowers on consumers’ hair.
With all this screen time, chains should forget about sales boosters like catering or takeout and focus more intently on negotiating contracts for residuals and syndication.
Thursday, November 19, 2009
Raiding retailers for restaurants' new stars
If recent executive changes are a telltale sign, the restaurant industry is losing faith in its ability to revive sales. Companies determined to crack the formula have looked past the trade’s own talent bench in recent weeks to fill vacancies with code breakers from the world of retailing.
The new CEO of Outback and Carrabba’s parent company was previously focused on selling perfumes, cosmetics and holiday ornaments. Liz Smith, formerly president of Avon Products, seems an unlikely candidate to head OSI Restaurant Partners, a company long led by men who’d worked their way up from restaurant-level jobs. But OSI noted that Smith had experience in running a highly efficient company. They didn’t have to explain that Avon, almost purely a sales company, is light on payroll and structure, heavy on incentive-based performance.
Officials also mentioned that Smith had to keep Avon in touch with customer preferences if its product line was to stay relevant, a skill some say has languished inside OSI’s headquarters in recent years.
A talent for embellishing a brand was similarly one of the characteristics cited by Dunkin’ Brands in explaining why it’d reached outside the industry for its new “chief global customer and marketing officer.” John Costello, a veteran of Home Depot and Sears, “is one of the most talented marketers and brand builders in the retail industry in America," crowed Nigel Travis, CEO of the Dunkin’ Donuts and Baskin-Robbins parent. Indeed, Costello is a member of the Retail Advertising Hall of Fame.
The selection underscores that Dunkin’ is less a restaurant than a to-go bakery with extensive food and beverage options. It’s more of a retail storefront than a place where you’d go for dinner, or at least at present.
Even less of a disconnect is the promotion of supermarket vet Susan Shields to chief marketing officer of Jamba Juice, the smoothie chain. A key component of Jamba’s comeback plan is putting its name on more retail products through licensing deals. Those Jamba-branded items already range from a toy blender to a new line of trail mix that’s about to hit stores. Who better to blaze that new revenue channel than someone who worked at the Safeway grocer chain?
At the same time, dollars are dollars and finance is finance. So why not go outside the industry for your next chief financial officer, as McCormick & Schmick’s did in hiring Michelle Lantow? But it’s no coincidence, the upscale seafood chain said, that she came from a retail apparel manufacturer, Lucy Activewear.
Lantow was instrumental in revamping Lucy’s e-commerce operations and plotting its move into brick-and-mortar retail locations, the company noted in announcing her appointment. CEO Bill Freeman observed that those qualifications should serve M&S well as “we continue to focus on greater connectivity with our guests.”
One of those efforts, apparently, was the chain’s development of a group-sales program aimed at companies that are embarking on a road show to hawk their goods and services. M&S is pitching its banquet service as a one-stop shop that spares those road warriors the hassle of having to scout out a function room and banquet facilities at each stop of their dog-and-pony tours.
There’s no word yet if a retailing veteran was tapped to head it up. But if you hear someone greeting the guests with a “Welcome to McCormick & Schmick’s,” shoot me an e-mail, okay?
The new CEO of Outback and Carrabba’s parent company was previously focused on selling perfumes, cosmetics and holiday ornaments. Liz Smith, formerly president of Avon Products, seems an unlikely candidate to head OSI Restaurant Partners, a company long led by men who’d worked their way up from restaurant-level jobs. But OSI noted that Smith had experience in running a highly efficient company. They didn’t have to explain that Avon, almost purely a sales company, is light on payroll and structure, heavy on incentive-based performance.
Officials also mentioned that Smith had to keep Avon in touch with customer preferences if its product line was to stay relevant, a skill some say has languished inside OSI’s headquarters in recent years.
A talent for embellishing a brand was similarly one of the characteristics cited by Dunkin’ Brands in explaining why it’d reached outside the industry for its new “chief global customer and marketing officer.” John Costello, a veteran of Home Depot and Sears, “is one of the most talented marketers and brand builders in the retail industry in America," crowed Nigel Travis, CEO of the Dunkin’ Donuts and Baskin-Robbins parent. Indeed, Costello is a member of the Retail Advertising Hall of Fame.
The selection underscores that Dunkin’ is less a restaurant than a to-go bakery with extensive food and beverage options. It’s more of a retail storefront than a place where you’d go for dinner, or at least at present.
Even less of a disconnect is the promotion of supermarket vet Susan Shields to chief marketing officer of Jamba Juice, the smoothie chain. A key component of Jamba’s comeback plan is putting its name on more retail products through licensing deals. Those Jamba-branded items already range from a toy blender to a new line of trail mix that’s about to hit stores. Who better to blaze that new revenue channel than someone who worked at the Safeway grocer chain?
At the same time, dollars are dollars and finance is finance. So why not go outside the industry for your next chief financial officer, as McCormick & Schmick’s did in hiring Michelle Lantow? But it’s no coincidence, the upscale seafood chain said, that she came from a retail apparel manufacturer, Lucy Activewear.
Lantow was instrumental in revamping Lucy’s e-commerce operations and plotting its move into brick-and-mortar retail locations, the company noted in announcing her appointment. CEO Bill Freeman observed that those qualifications should serve M&S well as “we continue to focus on greater connectivity with our guests.”
One of those efforts, apparently, was the chain’s development of a group-sales program aimed at companies that are embarking on a road show to hawk their goods and services. M&S is pitching its banquet service as a one-stop shop that spares those road warriors the hassle of having to scout out a function room and banquet facilities at each stop of their dog-and-pony tours.
There’s no word yet if a retailing veteran was tapped to head it up. But if you hear someone greeting the guests with a “Welcome to McCormick & Schmick’s,” shoot me an e-mail, okay?
Wednesday, June 17, 2009
Let's hear it for restaurants' smash fest
There’s a lot to be said for sledgehammers, especially if we’re talking mental health. Or economics. Think about it: Despite a calamitous scene right out of “Batman,” not a single restaurant chain went postal this recession. Oh, sure, there were a few eyebrow-raising moments from Quiznos and Burger King. But sanity, and profitability, more or less prevailed.
And for that, you have to acknowledge the role of the sledgehammer. If you don’t believe me, consider the words of Hudson Riehle, statistician and economist for the National Restaurant Association and definitely a Commissioner Gordon kind of guy. “The recessionary environment is fundamentally rewriting boundaries of market and brand definitions,” he said during a confab held last week by NASDAQ.
The translation for those of us who giggle when we hear “standard deviation”: Frustrated by the drop in business within their usual strongholds, savvy restaurateurs took a sledgehammer to the walls that once defined their segments. They busted out.
Fine-dining chefs opened burger joints. Quick-service burger places focused on coffee and raided the full-service sector for items like ribs, Teriyaki bowls and mac and cheese. Taco Bell crowed that it was now a place for the health-minded, and revealed in recent days that it would develop family style meals like the casseroles now offered by sister concept Pasta Hut—er, Pizza Hut.
It’d be like a pizza chain going into the sandwich business. Which, of course, Domino’s did as a way of cultivating a lunch trade. Beforehand, execs said, many of its outlets didn’t even bother to open until dinnertime.
Kentucky Fried Chicken went the other way. Buckets are what move at dinner, so it added Kentucky Grilled Chicken in hopes of selling more buckets to families.
Some operators needed a sledgehammer dropped on their toes to get hoppin’. A number of McDonald’s franchisees opposed the burger giant’s multi-million-dollar effort to recast itself as beverage specialist. Now, USA president Don Thompson told CNBC, 40% of the customers who buy a coffee drink where stopping at a unit specifically for that reason. It’s incremental business in a big, big way. No wonder the field-level opposition seems to be waning, at least here in the New York market.
The smash-and-charge approach definitely seems to be working. Jamba Juice, a chain whose products once all came in a cup, tested solid food in just six units before deciding to roll the wrap, salad and flatbread array into all of its California stores. The reception was enough to prompt CEO James White to predict the menu could generate as much as 20% of an outlet’s sales.
Yet, Riehle asserted, returns will likely surge as the economy improves. He explained that the diversifiers are winning “credibility” from consumers who might once have seen the brands as a one-trick pony. Now they’re being viewed as brands with a variety of viable options, which promises to expand the concepts’ scope and foster more frequent visits.
“We used to call it ‘the veto vote,’ where someone in a party would say, ‘No, I don’t want to go there because they don’t have whatever,’” Riehle said, no doubt making some bloggers feel old. The diversifiers are smashing that common objection, he suggested.
The industry might also stand to gain handsomely from the biggest boundary smash of all: Licensing, a sleeper part of the business that’s currently surging into a major trend. By moving beyond ready-to-eat food, into products as strange as body cologne (Burger King), pajamas (BK as well), casual wear (BK and Chuck E. Cheese's), and toys (Jamba Juice and McDonald’s), the chains are erecting their own Alaskan pipeline into new revenue sources.
And the key: Once again, the sledgehammer, used this time to smash pre-conceptions and limited forms of thinking about what a brand represents. The new perspective is to view a restaurant-chain brand name as more of a lifestyle badge, which adds considerable topspin to the licensing movement.
But it all comes back to that sledgehammer. So, please, stop drooling over your Blackberry and give heavy construction tools their due. Make this today Sledgehammer Appreciation Day.
And for that, you have to acknowledge the role of the sledgehammer. If you don’t believe me, consider the words of Hudson Riehle, statistician and economist for the National Restaurant Association and definitely a Commissioner Gordon kind of guy. “The recessionary environment is fundamentally rewriting boundaries of market and brand definitions,” he said during a confab held last week by NASDAQ.
The translation for those of us who giggle when we hear “standard deviation”: Frustrated by the drop in business within their usual strongholds, savvy restaurateurs took a sledgehammer to the walls that once defined their segments. They busted out.
Fine-dining chefs opened burger joints. Quick-service burger places focused on coffee and raided the full-service sector for items like ribs, Teriyaki bowls and mac and cheese. Taco Bell crowed that it was now a place for the health-minded, and revealed in recent days that it would develop family style meals like the casseroles now offered by sister concept Pasta Hut—er, Pizza Hut.
It’d be like a pizza chain going into the sandwich business. Which, of course, Domino’s did as a way of cultivating a lunch trade. Beforehand, execs said, many of its outlets didn’t even bother to open until dinnertime.
Kentucky Fried Chicken went the other way. Buckets are what move at dinner, so it added Kentucky Grilled Chicken in hopes of selling more buckets to families.
Some operators needed a sledgehammer dropped on their toes to get hoppin’. A number of McDonald’s franchisees opposed the burger giant’s multi-million-dollar effort to recast itself as beverage specialist. Now, USA president Don Thompson told CNBC, 40% of the customers who buy a coffee drink where stopping at a unit specifically for that reason. It’s incremental business in a big, big way. No wonder the field-level opposition seems to be waning, at least here in the New York market.
The smash-and-charge approach definitely seems to be working. Jamba Juice, a chain whose products once all came in a cup, tested solid food in just six units before deciding to roll the wrap, salad and flatbread array into all of its California stores. The reception was enough to prompt CEO James White to predict the menu could generate as much as 20% of an outlet’s sales.
Yet, Riehle asserted, returns will likely surge as the economy improves. He explained that the diversifiers are winning “credibility” from consumers who might once have seen the brands as a one-trick pony. Now they’re being viewed as brands with a variety of viable options, which promises to expand the concepts’ scope and foster more frequent visits.
“We used to call it ‘the veto vote,’ where someone in a party would say, ‘No, I don’t want to go there because they don’t have whatever,’” Riehle said, no doubt making some bloggers feel old. The diversifiers are smashing that common objection, he suggested.
The industry might also stand to gain handsomely from the biggest boundary smash of all: Licensing, a sleeper part of the business that’s currently surging into a major trend. By moving beyond ready-to-eat food, into products as strange as body cologne (Burger King), pajamas (BK as well), casual wear (BK and Chuck E. Cheese's), and toys (Jamba Juice and McDonald’s), the chains are erecting their own Alaskan pipeline into new revenue sources.
And the key: Once again, the sledgehammer, used this time to smash pre-conceptions and limited forms of thinking about what a brand represents. The new perspective is to view a restaurant-chain brand name as more of a lifestyle badge, which adds considerable topspin to the licensing movement.
But it all comes back to that sledgehammer. So, please, stop drooling over your Blackberry and give heavy construction tools their due. Make this today Sledgehammer Appreciation Day.
Friday, June 12, 2009
Is Wendy's/Arby's shopping for another chain?
Last October I had lunch at a midtown Wendy’s with Roland Smith, the newly named CEO of the chain and its adoptive parent of a few weeks, Wendy’s/Arby’s Group. Smith and his team were blitzing the media to discuss how the company formerly known as Triarc was going to generate more value for shareholders as a two-concept fast-food franchisor.
Among the more surprising routes mentioned by Smith was the acquisition of more brands. The company had just spent $2.3 billion to buy Wendy’s after more than a year of contentious pursuit. Was it really open to other deals?
Fast forward to yesterday morning, when Wendy’s/Arby’s announced plans to raise $550 million in debt. About $125 million will be used to pay off outstanding loans—the equivalent of paying off a big credit-card bill. The other $425 million, the company said, would be used for “general corporate purposes.” It listed seven specific possibilities, including “acquisitions of other restaurant companies.”
Most of the other options are moves that would likely appease shareholders—things like new unit development, paying a dividend, or buying back stock. Yet the company’s share price dipped. “There’s clearly some hesitation on the part of investors,” Bob O’Brien wrote on a Barron’s blog. “The likeliest source of concern: that Wendy’s would make another big-ticket acquisition.”
Back in October, Smith wouldn't discuss possible acquisition candidates, nor even what kind of companies might have been on his shopping wish list. The only clue he provided was a comment that any target would have to be a high-quality rather than a low-cost provider.
It’s a safe presumption that it would also have to be a potential or current franchisor, since that’s Wendy’s/Arby’s business. Smith didn’t say anything about menus, but presumably the company would want something that wouldn’t compete with its burger or sandwich chains. That means it’d have to specialize in something like chicken, pizza or beverages.
The criteria are smoky at best. But there are plenty of candidates that would fit.
Jamba Juice, for one. It’s the hands-down leader in the smoothie segment, with a healthy average ticket.
Church’s has traditionally been a value provider, but it might be an affordable play in the chicken market, and is widely reported to be for sale.
The chain's sister concept, Caribou Coffee, would also meet Smith's vague criteria.
There are also any number of upstart, high-quality pizza concepts currently competing on a regional basis.
Since co-branding figures large in Wendy’s/Arby’s growth strategy, a dessert add-on might also make sense. A regional soft-serve specialist, maybe?
This, of course, is all speculation. But a $425-million down payment makes a lot more sense than “general corporate purposes.” That’s a lot of new carpet and paper clips.
Among the more surprising routes mentioned by Smith was the acquisition of more brands. The company had just spent $2.3 billion to buy Wendy’s after more than a year of contentious pursuit. Was it really open to other deals?
Fast forward to yesterday morning, when Wendy’s/Arby’s announced plans to raise $550 million in debt. About $125 million will be used to pay off outstanding loans—the equivalent of paying off a big credit-card bill. The other $425 million, the company said, would be used for “general corporate purposes.” It listed seven specific possibilities, including “acquisitions of other restaurant companies.”
Most of the other options are moves that would likely appease shareholders—things like new unit development, paying a dividend, or buying back stock. Yet the company’s share price dipped. “There’s clearly some hesitation on the part of investors,” Bob O’Brien wrote on a Barron’s blog. “The likeliest source of concern: that Wendy’s would make another big-ticket acquisition.”
Back in October, Smith wouldn't discuss possible acquisition candidates, nor even what kind of companies might have been on his shopping wish list. The only clue he provided was a comment that any target would have to be a high-quality rather than a low-cost provider.
It’s a safe presumption that it would also have to be a potential or current franchisor, since that’s Wendy’s/Arby’s business. Smith didn’t say anything about menus, but presumably the company would want something that wouldn’t compete with its burger or sandwich chains. That means it’d have to specialize in something like chicken, pizza or beverages.
The criteria are smoky at best. But there are plenty of candidates that would fit.
Jamba Juice, for one. It’s the hands-down leader in the smoothie segment, with a healthy average ticket.
Church’s has traditionally been a value provider, but it might be an affordable play in the chicken market, and is widely reported to be for sale.
The chain's sister concept, Caribou Coffee, would also meet Smith's vague criteria.
There are also any number of upstart, high-quality pizza concepts currently competing on a regional basis.
Since co-branding figures large in Wendy’s/Arby’s growth strategy, a dessert add-on might also make sense. A regional soft-serve specialist, maybe?
This, of course, is all speculation. But a $425-million down payment makes a lot more sense than “general corporate purposes.” That’s a lot of new carpet and paper clips.
Wednesday, June 3, 2009
Beverage wars give rise to healthy counter-attack
Fast-food chains are scrambling like frat boys at a kegger to grab more coffee and smoothie servings. So how are the intended victims protecting their cup counts? In one of the great ironies of the business, drink specialists are countering with promises of better fast food.
The Reuters news service carried an exclusive yesterday about Starbucks’ plan to replace its anemic food offerings with a new line-up of better-for-you choices. "Food has been the Achilles' heel of the company,” executive vice president of marketing Michelle Gass told reporter Lisa Baertlein. “That statement will be long buried after we launch this program."
The new selections will reportedly include salads, breakfast sandwiches made with egg whites, and a variety of baked goods sweetened with sugar rather than high-fructose corn syrup, which nutrition scolds put in the same category as Communism, puppy kicking and bathroom-grout mold.
The baked products will also be produced without dyes or artificial flavorings. Preservatives will also be eliminated wherever possible, Starbucks said. The new array’s tagline will be “Real Food. Simply Delicious,” Gass told Reuters.
The news came to light a few days after Jamba Juice informed investors that it expects a new menu of “healthy on-the-go” food choices to generate as much as every fifth sales dollar (see below). Included are grab-and-go wraps, salads and sandwiches.
The meal-in-a-cup specialist is also encroaching on Starbucks’ turf a bit with new cold teas. Then again, Starbucks plans to extend its Vivanno smoothies line.
Jamba: Big dollars won't be coming through a straw
The blenders will keep whirring, but Jamba Juice expects a still-in-test food menu to generate as much as one-fifth of the smoothie chain’s future sales.
“I don’t think that 20% target for the overall mix longer term would be out of the question,” CEO James White told investors last week.
His optimism is based on a six-unit test of food options like sandwiches, wraps and salads, which are now being rolled into 200 California stores for a more extended trial.
White also cited research indicating that 27% of Jamba’s drink customers consume their smoothies with food, purchased currently from other sources.
“They’d welcome high quality health foods offered at Jamba locations,” White said in a conference call with analysts. “In fact, when asked many of them have wondered what’s taken us so long.”
Right now, the only Jamba product that can’t be sucked through a straw is the steel-cut oatmeal introduced earlier this year. “It actually beat any of our internal projections and gave us great confidence to move forward on the current plan,” White said.
That new emphasis on food “transforms our business model and company” by drawing new customers and increasing sales from current fans, he contended.
Meanwhile, the franchisor is continuing to pursue a licensing program that’ll soon put the Jamba name on a variety of retail products. One of the more unusual is a blender from Think Wow Toys that kids can use to churn up their own smoothies.
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