People may not always want to eat their fruits and veggies, but they’re increasingly drinking them.
Nékter Juice Bar Inc., the Santa Ana-based seller of healthy juice, smoothie and bowl concoctions, added about 30 locations in 2018. It ended the year with 140 spots in more than a dozen states.
Of note for the chain that initially eschewed franchise sales for fear of compromising quality, but then began to find experienced operators in other states, more than 80 of those locations were franchised.
Last September, it signed an area development agreement with 2nd Harvest LLC in Miami for 30 locations in Florida, Tennessee, Maryland, and Washington, D.C. The latter two areas are new markets for Nékter; 2nd Harvest principals include an operator of 60 Planet Fitness locations in six states.
Franchising efforts include selling corporate stores. Nékter recently refranchised six former company-run locations in OC.
Nékter systemwide sales last year grew nearly 20% to top $72 million, good for No. 22 among OC-based restaurant chains (see list, page 23).
Co-founder and Chief Executive Steve Schulze told the Business Journal in April the chain is tracking at about $90 million in annual sales, as it begins to open locations in Whole Foods Market grocery stores.
Three are ready thus far in Porter Ranch and Malibu, and on July 31, in Thousand Oaks, with more possible.
Growth
The chain says it wants to grow to 425 locations by next year.
It has 32 locations in OC, the site of most of its stores for the first few years after its 2010 founding. It employs 840 here.
It hit in the middle of the pack in Irvine-based Entrepreneur Magazine’s Franchise 500 and was No. 334 on Inc.’s tracking of the 5,000 fastest-growing private companies.
A franchised unit averages about $730,000 in annual sales with EBITDA of $127,000, Nékter’s franchise documents show. It collects 6% of that as a royalty and 2% for marketing.
It costs about $255,000 to $465,000 to open a location, filings say.
Healthy food-focused chains aren’t uncommon—Irvine-based Juice It Up, owned by Newport Beach private equity vets Chris Britt and Edmond St. Geme, had more than 75 locations and about $35 million in systemwide sales last year.
Up-and-coming healthy food chains often tap OC as a key market that’s geared toward healthy eating.
Most of those don’t grow large.
Even Jamba Juice—at one time Northern California-based and publicly traded—with 800 locations, didn’t meet the expectations some held for it, and was taken private in September for $200 million by Atlanta-based Roark Capital Group’s Focus Brands.
Focus also owns the Carvel ice cream, Cinnabon dessert, and Auntie Anne’s pretzel chains.
PE, Corporate Catering
Schulze is majority owner at Nékter with some debt; and at some point is likely to seek a private equity investor.
Nékter has kept its focus on proprietary juices, smoothies, acai bowls and a vegan ice cream, as well as grab-and-go items and a juice cleanse program.
Schulze says the focus is key to Nékter’s growth and the basis of a new corporate catering program in the works.
“People want healthier alternatives for lunch,” Schultze said during a recent sit-down at a recently revamped headquarters near Red Hill Avenue.
He’s working with an L.A. design firm on packaging, testing bowl sizes, negotiating with delivery companies, and prepping for a launch early next year.
Nékter has filled orders at Irvine Co. shindigs for 500 people and other events “as large as 2,000 to 3,000,” but the sweet spot of the new program is “12 to 30 people in an office” ordering out.
Just as with an earlier reversal on franchising, which has produced growth, Schulze studies industry trends to note potential pivots for Nékter.
Discussions are peppered with references to moves by other operators.
Adding catering falls under that activity, though it might produce “at most about 3% to 6%” of sales—perhaps $5 million at current levels. That’s better than losing business.
“Fewer people are going out to malls,” he notes for instance, which means less business for what was formerly an ideal concept for a food court. “More food goes out the back” of a restaurant in delivery or catering now, he said.
Starbucks Corp. is one model.
“They wanted to be a third place,” he said, referring to the community gathering concept the coffee chain once planned.
“Now every new Starbucks has a drive-thru.”
