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Food & beverage 2011-10-31

Smooth ride to profits

By Feature Writer
Smooth ride to profits

Aiming to establish itself as the premier health and wellness café, US-based Smoothie Factory has recently forayed into the Indian market. In an interview, James Villasana, President, Smoothie Factory shares the brand’s expansion strategy

Namita Bhagat (NB): Could you share the idea of launching Smoothie factory in India?

James Villasana (JV): India is experiencing tremendous growth within the supplemental food products and beverage category. More and more young and educated consumers are embracing healthy lifestyle and increasingly seek to enhance their long-term health and quality of life. This is congruent with Smoothie Factory’s core mission to establish Smoothie Factory as the premier health and wellness café by meeting the complete dietary needs of health conscious consumers by providing delicious smoothies, healthy meal choices, and nutritional supplements as the best prices. While our core demography tends to be 18-34, we also appeal to a broader demography overall, 15-50. We believe in the simple concept of providing guests with reasonably priced smoothies, served quickly, in attractive, clean, pleasant surroundings every day.

NB:  What were the challenges that the company face while foraying into India?

JV: We recently expanded in Asia in 2009 and have master franchisees in China, Vietnam, Saudi Arabia, Qatar, UAE, and Australia. We have understood from our existing experience of emerging markets that local trends, customs, and values needs to be imbibed in the existing brand structure. I am happy to say that we have successfully started our expansion. The market in India is vast, but from the feedback and talking to a lot of groups and individuals, the response is positive. The interest is really overwhelming.

NB:  How did the company view the Indian market for launching its operations?

JV: We find India large and very diverse. After a lot of brainstorming, we made a strategic decision to divide and develop the brand within the country by region and in some cases hubs to effectively capture business opportunity and imbibe the local culture, language, and business workings. The site selection criteria are critical for the potential success of a new Smoothie Factory store. Individuals that have moderate to high disposable income purchase nutritional products and luxury snack items and focus our locations based on age, median household income, population density, and traffic. Having a high residential or work time population is very important to us as smoothies tend to be impulse purchases and we can attract most within a five kilometer radius.

NB: Could you share the expansion plans for India via franchising?

JV: In India, Smoothie Factory’s strategy is to partner with a reputable and capable local Master Franchisees to develop and operate new Smoothie Factory stores through Master Franchise Agreements. Smoothie Factory works with our master franchisee’s to develop a three year geographic expansion strategy that target areas which not only have favorable demographic profiles but which can also be serviced and supported by Smoothie Factory India’s operations infrastructure. For each targeted region, Smoothie Factory will select a large city to serve as a ‘hub’; a team of professionals will be appointed in hub cities to support the goal of opening seven or more stores in the hub in the first two years. Once stores blanket the hub, then additional stores will be opened in smaller, surrounding ‘spoke’ areas in the region. To oversee the expansion process, we create a Zone Vice President to direct the development of the region and to implant the Smoothie Factory culture in the newly opened stores.

NB: What kind of franchise partners is the brand seeking?

JV: Our long-term objective is to become the most recognised and respected smoothie brand in Asia.  We consider the execution of a Master Franchise Agreement for India to be a significant step towards achieving our strategic plans for international expansion in Asia. We look forward to partnering with like-minded groups that share our passion for the health and wellness industry, sufficiently capitalised, and experienced both in business and the hospitality industry. Like any retail business, our business requires a reliable partner to achieve significant growth objectives as well as effective ROI.

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