Irvine-based Yogurtland hopes to grow revenue with additions to its menu intended to draw customers earlier and often.
The new efforts are similar to how larger restaurant chains have tried to increase business at different times of the day. Irvine-based Taco Bell Corp., for instance, launched a national breakfast menu in March 2014.
Yogurtland will instead aim for late morning and early afternoon, adding items such as Greek yogurt to its standard lineup of frozen yogurt topped by everything from chocolate sprinkles to gummy treats made from rice.
The company’s efforts come amid recent declines in average sales at its restaurants and executive departures last fall.
Chicago-based restaurant consultant Technomic Inc. estimates the chain’s U.S. sales grew 34% between 2012 and 2014 from about $116 million to about $156 million.
The number of restaurants in the chain grew at a faster rate, going from 184 in 2012 to 265 in 2014, according to the data, an increase of nearly 44%.
Average revenue for an individual restaurant dropped to $610,000 in 2014, down by 13% from 2012, according to Technomic.
Yogurtland now has about 300 stores in 15 states and four foreign countries, with most locations in California. About 90% of them are franchised.
Founder Phillip Chang—who relinquished his chief executive role to then-Chief Operating Officer Huntley Castner in January 2014 to pursue overseas relief and religious work—returned to Yogurtland in July.
Castner left at the same time, and several other executives also split with the company, including Larry Sidoti, who headed franchise development. Irvine-based Ruby Restaurant Group hired Sidoti in February for a similar role.
Laina Sullivan, who reported to Sidoti as director of development at Yogurtland, also left. In December, she signed on as vice president of business development for Irvine-based juice and smoothie chain Juice It Up!
Craig Takiguchi joined Yogurtland in August as vice president of brand management, covering operations, marketing and franchising—areas last overseen by executives who left.
Chang is once again president and chief executive.
“Phillip … knows what he wants,” Takiguchi said. “He wanted to reset the brand.”
More Than Frozen Yogurt
The new products are the company’s first big move to make that happen, he said.
The first goal is to add business beyond Yogurtland’s strengths in evening hours and on weekends.
That won’t be breakfast, Takiguchi said.
But it is expected to bring a new dimension to the menu.
New products in testing include Greek yogurt to tap a lunch or “grab-and-go” customer; frozen yogurt cakes to service events and parties; and cookie sandwiches to add a dessert to the chain’s offerings.
Takiguchi said Yogurtland can offer customers convenience throughout the day without taking on entrenched early-morning giants like Starbucks.
“We want to offer quality, value and choice,” he said. “But the customer decides what that means.”
Yogurtland stores open at 11 a.m., he said, but sometimes don’t get customers until mid-afternoon.
“More than 70% of our [revenue] comes after 3:30 p.m. [during the week], and more than half comes on the weekends.”
That means only about 15% comes during the workweek between 11 a.m. and 3 p.m.
Takiguchi said the new efforts are a “natural brand extension” of a product customers currently see only as a dessert.
Greek yogurt—high in protein and with new, less-sweet toppings, such as granola or fresh fruit—could be seen as a healthier lunch option, he said.
Work Ahead
Yogurtland has a tough job ahead but is right not to aim at breakfast, said Darren Tristano, executive vice president of Technomic.
He cited its core product’s similarity to ice cream; younger customers shifting to “the next great thing;” and the segment’s saturation after a decade of growth as reasons for frozen yogurt’s woes.
“When small, rural towns have two yogurt shops, that’s saturation,” he said. “Frozen yogurt is a one-trick pony.”
A recent report on frozen yogurt stores by New York-based market researcher IBISWorld Inc. shows 23% annualized revenue growth from 2009 to 2014 but projects 3.4% growth per year from 2014 through 2019.
Technomic’s Tristano expressed mixed sentiments on Yogurtland’s pending push for new business.
He said a breakfast attempt by Yogurtland would fall flat—restaurants need “a drive-thru and a coffee program” for that to work. But its plans for “lunch and late morning” fare could boost sales if the company can convince customers of convenience.
“During peak times, they might be willing to ‘grab-and-go’ if the line isn’t too long,” and new toppings could help, too, he said.
Takiguchi said that the public’s growing desire for convenience and innovation are driving the changes at Yogurtland.
“We’re trying to be opportunistic, as well as careful,” he said.
He said that today’s slimmer corporate ranks at Yogurtland could speed innovation there, a key reason for Chang’s return to run the company.
