By Alisha Gomez
Mike Nguyen didn’t plan on a meltdown when he opened his frozen yogurt shop.
“When we started looking into opening a yogurt shop and finding locations, we didn’t know the economy was going to be this bad,” said Nguyen, who opened Yogurtlicious in Fullerton. “As we got closer to our opening, there was an even bigger drop in the economy.”
Yogurtlicious is one of several shops trying to nab a piece of the frozen yogurt pie in Orange County, which has seen a wave of shops pop up in recent years.
The county counts shops from several industry heavyweights such as Los Angeles-based Pinkberry Inc., Buena Park-based Cherry on Top, Sherman Oaks-based Red Mango Inc. and Anaheim-based Yogurtland Inc., as well as mom and pops.
That’s led to what some call an oversaturation, as imitators have sought to cash in on the Asian-flavored frozen yogurt buzz spurred by Pinkberry.
“We’ve even seen frozen yogurt machines pop up in the back of liquor stores,” said Dan Kim, chief executive of Red Mango.
The slower economy has led to a slew of closures and businesses for sale. Google “frozen yogurt shops in Orange County” and an array of “for sale” advertisements floods the search results.
Case in point: C & #233;fiore in downtown Fullerton. The shop only was open about a year before it shut down in January, breaking its five-year lease, said Terrison Quinn of Santa Ana-based real estate brokerage Grubb & Ellis Co.
Even Red Mango and Pinkberry have closed underperforming shops. Red Mango closed four; Pinkberry two. None of the closures was in OC. Both have said the closed stores were in bad locations.
“Real estate is such an important aspect in our business,” Red Mango’s Kim said. “Stores that have opened in good locations haven’t seen a drop in business other than what you would expect when it gets a little colder. We’re aware of the pullback in spending by people, but we’re still seeing relatively strong sales.”
A cup of frozen yogurt can run anywhere from $2.50 to $5, possibly more, depending on toppings and where you get it from.
“From a consumer standpoint, it’s a luxury, and they’re asking, ‘Do I need it?'” said Jack Kyser, founding economist of the Los Angeles County Economic Development Corp., which also tracks OC.
Don’t tell that to frozen yogurt shop owners.
“Consumers are being more cautious about where they are spending their dollars,that’s true of all retail segments,” said Alexis Eldridge, spokeswoman for Yogurtland. “But we’re still in that affordable luxury category. And we’re good for you. We haven’t been hit hard like other (retailers).”
Retailers are going into their second year of tough sledding, according to Kyser.
A Los Angeles County Economic Development report last month showed that OC taxable sales are running down about 6% from a year ago.
“The frozen yogurt story seems to be a wave that has peaked,” he said. “But there are still people getting into the market.”
Kyser says it’s like many things: “It looks deceptively simple.”
Jewlee Yu of Bliss Coffee & FroYo in Orange agrees. Her shop is on the border of Orange and Tustin, in the Orange Villa Shopping Center.
“The first thing out of my mouth is, ‘It’s not as easy as you think,'” she said. “Everyone wanted to open a frozen yogurt shop because of Pinkberry and jump on the Pinkberry bandwagon. Well, Pinkberry isn’t doing that well right now. You’ve got to invent something better than what already exists.”
Opening a frozen yogurt shop isn’t cheap.
It costs anywhere from $200,000 to $400,000 to open a Red Mango store, depending on the location, how much conversion work is needed and who the landlord is, Kim said.
It’s even harder for independent shop owners. This July will mark Yu’s second year in business.
“I haven’t paid myself in two years, and I’ve put a lot into this business,” she said. “I’m not making a ton of money.”
Yu opened as a frozen yogurt shop in 2007 but quickly added French-style crepes in early 2008. Now she’s adding Intelligentsia Coffee, an upscale “green” type of coffee known for using select growers and environmentally friendly practices.
Nguyen of Yogurtlicious said it’s hard to say how long he’ll give this business. He opened his self-serve yogurt shop in October.
“I’ve always believed in this business,” he said. “Whatever we have to do, we will, even if it means struggling to hang onto it.”
Struggle he has. After going over budget, he and his wife had to sell one of their cars. Friends have lent them money.
“We’re barely making enough to cover costs,” Nguyen said. “Right now I’m just trying to pay all of the bills on time.”
The building’s landlord, Fullerton Townsquare Partnership, let the Nguyens pass on rent a couple of months.
Still, Yu and Nguyen are optimistic, especially as the weather warms up.
“December was especially hard because of the economy and the weather being terrible,” Yu said. “January picked up a bit as well as February, when it wasn’t raining.”
Ongoing Expansion
Others have no plans to slow down. Pinkberry recently opened its seventh OC store, in Fullerton. It also just opened in two new markets: Santa Barbara and San Jose.
The Santa Barbara and San Jose locations are exceeding expectations, according to the company. Fans still are loyal, according to Pinkberry.
Red Mango expects to open about 40 stores this year, the same as last year. Those shops will be franchised and are planned for cities such as Dallas, San Antonio, Chicago, Boston, New York, as well as in the Bay Area.
Yogurtland
Yogurtland plans to open some 90 stores this year, all franchises, according to spokeswoman Eldridge. It’s planning four to seven more stores in the county this year. So far, stores under construction are in Anaheim Hills, Brea, Newport Beach and the Market Place in Irvine, with additional locations still in the works.
“We’re very positive about Orange County,” Eldridge said. “We’re on track to meet our sales goals there.”
Yogurtland, which opened its first shop in Fullerton in 2006, had a good year in 2008, she said.
“2009 might not be as strong as 2008, but we’re very pleased because we’re on target,” Eldridge said.
Cherry On Top, which didn’t return calls for this story, counts about 13 stores in Southern California, nine of which are in OC. The company, which got its start in 2007, franchises all stores. It’s set to see five more self-serve shops open, two of those in OC, according to the company’s Web site.
And whether they are self serve, offer several flavors or specialize in tart frozen yogurt, they share one thing in common,all are counting on loyal customers to get them through a tough economy.
Nguyen of Yogurtlicious said new faces have popped in,a good sign. That still does not take away that competition is a few doors down,a Yogurtland shop opened up across the street from him.
“That’s tough because now we’re really competing against the big guy,” he said.
Yu of Bliss Coffee is seeing the same thing happening. A Cherry on Top shop is opening on the other side of Orange.
Her advice: “Offer something more, otherwise you won’t survive.”
