Jamba Juice - A Case Study in Building a Successful Juice Bar Chain

The story of Jamba Juice

Part 1 – Case Study - Jamba Juice

What were you doing in 10th grade?  Kirk Perron was thinking about his future and putting together a deal that would help launch the successful Jamba Juice chain. It sounds incredible but Kirk Perron bought the real estate for his first juice bar when he was in 10th grade. He borrowed money from a high school counselor, the librarian, and his school bus driver to put together the $12,000 down payment.

THE COMPANY

Kirk Perron opened up his first operation as The Juice Club in 1990 in San Luis Obispo, California. He hit on the idea for a convenient, delicious, healthful food store on a long weekend bike ride. An avid cyclist with a lifelong interest in health and nutrition, he wanted to offer an alternative to typical fast food fare. The idea was a hit and quickly spread.  In 1995, the company changed its name from The Juice Club to Jamba Juice. Today Jamba Juice has more than 700 stores nationwide offering a variety of healthy drinks and snacks and is considered the industry leader in the smoothie market.

THE IDEA

Jamba Juice is all about healthy food and fun. Jamba is from an African word that means “to celebrate.”  Walk into a Jamba Juice store and customers can choose from a wide variety of Jamba Juice specialties including smoothies, fresh-squeezed fruit and vegetable juices, breads, and pretzels. Jamba’s commitment to healthy products is reflected in its mission statement, “Enriching the daily experience of our customers, our community, and ourselves through the life-nourishing qualities of fruits and vegetables.” Smoothies are the bulk of Jamba Juice’s business. They are made with juice and fruit and often yogurt, sherbet, or ice milk. A typical smoothie gets most of its calories from carbohydrates and protein, providing a low- or no-fat, nutritious meal. Jamba smoothies are designed to meet “heart healthy” FDA requirements. Nutritional supplements called “boosts,” such as “energy juice boost,” containing ginseng and gingko biloba, and “immunity juice boost,” with echinacea and antioxidants, are available and can be added to smoothies. Jamba Juice also recently added a new low-calorie drink, the Enlightened Smoothie, to its menu.

Learn more about Jamba at www.jambajuice.com.

As you sit at the counter in a Jamba Juice, you can watch friendly, well-trained Jamba Juice employees whip, beat, and blend your smoothie right before your eyes. Stores also feature nutrition centers where customers can get a complete nutritional breakdown for each product. Outlets also feature a merchandising area, which has Jamba Juice juicers, mugs, hats, and T-shirts.

THE COMPETITION

Juice bars have been part of a growing trend. Barriers to entry are fairly low. Single-store outlets and small chains within a city or region are common, although Jamba has several large competitors.  New Orleans–based Smoothie King, for example, has 580 locations in 32 states, and Atlanta-based Planet Smoothie has more than 125 stores in 20 states. Other competitors include Juice Stop, Juice It Up!, Surf City Squeeze, and Orange Julius. Jamba Juice has positioned itself as a replacement for typical fast food fare. This means it also considers fast food restaurants indirect competitors. Jamba has had to fight to maintain its trademark in a competitive market. Several years ago a San Francisco juice bar called Jamm’n Juice was forced to change its name after Jamba complained that Jamm’n Juice and its animated fruit and vegetables were too close to the Jamba trademark and logo.

THE MARKET

Juice bars have existed for decades, often in health-food stores and gyms, and were associated with what was a small group of intensely health-conscious customers. That small demographic group boomed in recent years, fueling the market for fat-free foods, fitness equipment, and apparel. There has also been an increasing level of health consciousness among society generally.  However, Jamba Juice is optimistic about the opportunities for expanding the market by replacing fast food with good-for-you food. Retail sales of juice and smoothies exceeded $1.2 billion in 2006 and $2 billion in 2015, compared with $552 million in 2000. About two-thirds of Jamba’s customers are between the ages of 15 and 25— not exactly the same demographic group as the traditional health-conscious baby boomer. Age and education level are important selection criteria for opening new Jamba Juice outlets. Kirk Perron believes that the more highly educated potential customers are, the more likely they will be to stop in for a nutritious smoothie. In fact, many of the current and planned Jamba outlets are in college towns, and partnerships have been formed to open outlets in universities and airports. Jamba also has a licensing agreement with Whole Foods Markets, a partner that shares Jamba’s values and commitment to healthy living.

THE ISSUES

Purists insist that the best drinks come from completely fresh produce. Fresh produce can be hard to work with to provide consistent-tasting drinks. Also, the price of fresh produce can change drastically throughout the year. With fairly limited menus, juice bars are considered great as an add-on rather than a stand-alone retail establishment because they are usually not strong enough to draw customer traffic on their own. Personnel are important to the success of a juice bar—described as “bartenders,” they have to be able to put on a good show for the customer. There is a seasonality effect for smoothie and juice operators. For example, in northern climates, operators in enclosed downtown skyways or mall locations often see their business fall off in the summer when people are outdoors walking around.

This case study was prepared by Professor Linda Rochford, University of Minnesota, Duluth, and Steven Hartley from the following sources: Jamba Juice Corporation website and press releases: www.jambajuice.com; “Juicy Prospects,” Star Tribune, August 27, 2001, pp. D1–D2; Scott Hume, “Segment Rankings,” Restaurants and Institutions, July 1, 2004, p. 61; Celeste Ward, “Riney Creates Good Karma for Jamba Juice,” Adweek. com, March 18, 2004; and John Agoglia, “Squeezing Profits,” Club Industry, December 1, 2003, p. 12.

Part 1 Questions
1.Define in specific detail the industry segment for Jamba Juice and describe in detail 4 of the environmental forces (from the course) currently acting on their industry as a whole – with examples.  (6 marks)
Do you think Jamba’s founder, Kirk Perron, is conscious of the company’s corporate social responsibility?  Explain and provide at least 2 examples of how the company acts (or does not act) in an ethical manner.