When husband and wife Danna and Adam Caldwell opened the first Menchie's in Los Angeles back in 2007, they didn't anticipate that it would be the start of one of the largest franchises of its kind.
Menchie's had approximately $140 million in sales in 2013, an increase of more than 17 percent from the year prior, according to Chicago-based market research firm Technomic. Units also grew almost 20 percent during this period. Now with 500 stores in 35 states and 15 countries, this chain now includes partners Elie Balas and Amit Kleinberger.
"Since we started franchising in 2008, we've evolved the business as the largest self-service franchise in the world," Kleinberger says. "We've been able to create an experience for guests, and that's what drives our business."
FE&S spoke with Kleinberger to learn more about Menchie's mission and the frozen yogurt segment.
FE&S: How has the frozen yogurt segment evolved in recent years?
AK: The frozen yogurt industry is becoming smarter and more sophisticated, just as the food industry is in general. It's difficult to see the changes unless we compare the market year after year, but it has been transforming by leaps and bounds. This is because people have figured out that what they eat reflects how they feel, and this is driving the food industry today. Still, no one wants to give up taste for nutrition. The frozen yogurt segment is ahead of that trend and will continue to stay relevant.
FE&S: With the number of frozen yogurt brands in the market, it can be difficult to set a concept apart. What makes Menchie's unique?
AK: We began formulating our own flavors about five years ago. This took a great deal of time, effort and resources. We also invested a significant amount of money into product development. The result is a greater variety of flavors and a healthier product profile. Our frozen yogurt contains probiotics and added protein, is either no fat or low fat and low in carbohydrates. We also have varieties that are gluten free and sugar free and others with no artificial flavors or colors. We offer a total of 14 flavors at each site, not including sorbet. Our soft-serve machines are our bread and butter and the most expensive investment for our locations. Each store has a total of seven units that are designed exclusively for our franchises and can create custom changes to our product.
FE&S: Which flavors sell best, and how have you differentiated your offerings?
AK: Our best-selling flavors include classics like chocolate and vanilla and different flavors like cookies and cream as well as our tart products. In developing new varieties, we've partnered with other brands, including Hersheys, Swiss Miss, Dole, Oreo and Mondelez. We recently announced a new strategic alliance with Reese's Peanut Butter Cup brand.
FE&S: What do you predict for the future of the frozen yogurt segment?
AK: The foodservice climate is changing, and food and brands are now more about the experience. We figured out the winning formula is multidimensional in terms of the guest experience. The leader in desserts will be self-serve frozen yogurt due to the healthier profile. It will become the new ice cream and continue gaining market share.