Article
Who will be left standing when fro-yo battle is over?
Fro-yo's segment's growth and appeal are sustainable in the longterm but will lead to maturation in larger markets.
February 10, 2014 by Cherryh Cansler — Editor, FastCasual.com
When it comes to frozen yogurt, the fast casual market has it cornered. From biggies like Pinkberry, Yogurtland and Red Mango to small, mom-and-pop shops, it seems nearly every city has at least one go-to fro-yo stop. That's because it's hip and trendy but also because of the health halo it wears, said Darren Tristano of Technomic. It also helps that fro-yo is on trend with customization and the increasingly popular tart/tangy flavor profile. Fro-yo not only targets women ages 16-34, but also has broad consumer appeal.
Technomic watches 35 fro-yo brands with four or more stores, and between 2011 and 2012, sales were up at those chains by 22.9 percent, an increase from $937 million to $1,151 million. The number of units also increased by 27.9 percent, up from 2,612 to 3,340. And those numbers don't reflect all the locally-owned, independent shops popping up all over the nation.
Yogurtland, which opened in 2006 in California, now has 263 locations throughout the United States, Mexico, Guam, Australia, Venezuela and the Middle East. It expects to have 75 additional locations either open or in development by the end of the year, expanding to more than 400 total locations by the end of 2015, said Larry Sidoti, the chain's VP of Development. He contributes fro-yo's popularity to more consumers focusing on healthier lifestyles and fresh food. Yogurtland, he said, specializes in high-quality and great-tasting products, which has fueled its success.
"The self-serve model creates an interactive experience that engages customers and allows their imagination to run wild," Sidoti said. "Our success can be directly attributed to the quality and great-tasting frozen yogurt we produce."
Is it too trendy?
Although a hot trend, neither Sidoti nor Tristano expect fro-yo to fleet any time soon. They both agree, however, that while competition is still growing, only the "best" brands will survive.
"I do believe the demand for frozen yogurt will be around for many years to come," Sidoti said. "That said, there will be consolidation within the industry and as is the case in many market segments, a few high-quality brands will continue to thrive."
The segment growth and appeal is expected to be sustainable in the long-term but the continued growth is leading to maturation in some larger markets, Tristano said.
"Likely, we will continue to see small chains and independent operators shutter restaurants in more mature and saturated markets," he said.
Yogurtland is on a mission to be one of those brands left standing, Sidoti said.
"We will continue to grow aggressively but responsibly with the goal of maintaining the highest average unit volumes in the industry," Sidoti said.
Fro-yo availability slightly increasing at non-fro-yo shops
Although fro-yo-focused brands are obviously seeing the most demand for the frozen treat, a few other restaurant brands are dabbling in it.
"Chains like Wow Bao in Chicago (have) fro-yo but have a limited selection and accommodate customers vs. competing," Tristano said. "If we see major chains like McDonald's, Burger King or Wendy's adding fro-yo, the game will be on. "With the success of smoothies at McDonalds, I don't think we are too far off from a major chain going in this direction. The question is, 'Who will be the first?'"
Read more about trends.
Cover photos: Wikipedia
About Cherryh Cansler
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