Getting All Juiced Up : Hot Sector of Retail Beverage Trade Hopes to Emulate Starbucks’ Success

Step inside and see frothy drinks with alluring names being whirred by shiny machines. Hear upbeat music playing in the background, and notice the vibrant interior colors that give off a warm, energetic feel.

Sound a lot like Starbucks? Well, it’s not, but there’s a reason it should.

After Starbucks revolutionized the coffee business by making cafe lattes a must for millions of Americans, the trendy juice bar has arrived with plans to make wholesome, fruit smoothies the country’s new “it” beverage.

Capitalizing on the growing demand for nutritious foods, hundreds of juice bars have opened in California and beyond, spawning a multimillion-dollar industry.

Because Southern California’s warm weather and penchant for healthy products make it a natural place for juice companies to thrive, new stores are opening every month, both mom-and-pop shops and stylish chain businesses with ambitious goals of expanding nationally.

“This is going to be bigger than frozen yogurt ever was,” said Dan Titus, who consults with prospective juice bar owners through his Chino Hills business, the Juice Gallery.

Last year, total juice bar sales reached an estimated $340 million, according to figures Titus compiled from juice companies and other sources. As of January, California had 275 juice bars, far more than any other state and already too conservative a count, considering the many store openings in recent months, Titus said.

Indeed, consumers can’t seem to get enough fresh-squeezed juices and slushy drinks with catchy names such as Razzmataz, Boysenberry Bliss and Femme Phenom. Smoothies are hardly new inventions, but today’s health-conscious customers see them as a way of enhancing their well-being, not just as frozen treats. Ranging in price up to $5, juice bars offer fresh-blended drinks made from fresh fruits, juices, crushed ice and nonfat frozen yogurt or sherbet, along with a wide assortment of add-ins such as protein powder, calcium and Ginkgo biloba, which is said to boost memory.

“I love the whole idea,” said Jennifer Koshatka, 27, who visits the Jamba Juice in Hancock Park at least three times a week for her favorite smoothie, Raspberry Rush. “They really are good, and they’re so healthy. It’s like having ice cream but not feeling bad about it.”

Jamba Juice is the premier juice bar chain--even some of its competitors credit it with transforming the so-what smoothie into the hottest drink from San Jose to Santa Monica.

Jamba Juice earned its reputation by offering high-quality juice drinks at clean, cheerful outlets in prime commercial areas such as Beverly Hills’ Rodeo Drive, Montana Avenue in Santa Monica and Pasadena’s Colorado Boulevard.

“Getting good real estate is half the game,” said David Robertson, president of Robeks, which has three Westside juice bars and two more under construction in West Los Angeles.

Along with Jamba Juice and Robeks, numerous other chains also have popped up in Southern California, including Juice Stop and Juice It Up, both based in Orange County, Arizona’s Surf City Squeeze and the Danville, Calif.-based Fresh Blend. These companies have a total of 265 stores, 132 in Southern California. By the end of the year, they will add more than 60 new sites.

Almost every juice bar chain is undergoing rapid growth, but none has attracted as much attention from investors as Jamba Juice.

Indeed, Kirk Perron, Jamba Juice’s founder and chief executive, said raising money has been the least of his company’s challenges. Howard Schultz, Starbucks’ founder and chief executive, personally invested in the company, along with several prominent venture capital groups, including Technology Venture Investors in Menlo Park, Trinity Ventures in San Mateo and San Francisco’s Rosewood Capital.

“I came across one of the stores shortly after it opened in Palo Alto, and I had to fight my way to get to the line,” said Bob Kagle, a general partner of Technology Venture Investors and Benchmark Capital, which has invested about $7 million in Jamba Juice.

“I wandered into the store and bought a smoothie, and of course it tasted delicious. But the thing that really captured my attention was that the people were real zealots about this thing. It seemed like everyone had a tremendous sense of affirmation about buying this smoothie.”

Kagle praised the Jamba Juice team for maintaining tight control of its operations, staying attuned to consumer demands and being passionate about its products--factors that could catapult it to Starbucks-type success.

In the next five years, Perron plans to open Jamba Juice stores in every major U.S. market, including airports and college campuses. It is likely Jamba Juice will go public to fund its expansion goals, but Perron stresses that there is no time-line or guarantee.

“We would be public if we felt we were ready,” he said.

Because the competition among juice bars already is fierce, proprietors say they cannot adopt slow-growth plans and expect to build brand loyalty.

“One of the reasons we tried to grow as quickly as we did was to establish market share in a community,” said T.J. Humphreys, chief executive of Juice Stop, based in Mission Viejo. “That’s why we decided to franchise, because it allowed us to go into markets we couldn’t do ourselves.”

Humphreys, now 26, collaborated with family members to open his first outlet in Lake Forest in December 1993, when he was a UC Irvine student.

Humphreys estimates that start-up costs for a juice bar generally run between $100,000 to $150,000. Although none of the companies would release annual store sales, Humphrey estimated sales range from $250,000 to $1 million a year at each outlet.

One of the challenges facing West Coast chains as they expand eastward may be convincing consumers in cold-weather states that they need frosty beverages in the middle of winter.

No one can be sure the trend will travel, but Steven Kent, a restaurant analyst at Goldman Sachs, believes that with some menu alterations in cold-weather states, juice bars can have national appeal.

“As a whole, the U.S. population is looking for fresher, higher-quality products,” he said.

The obstacle for West Coast-based companies, he said, will be to maintain the quality and consistency of their products in regions far away from senior management.

And just as Surf City Squeeze discovered, juice bar companies have to be careful not to grow beyond their means. The Scottsdale, Ariz.-based company filed for Chapter 11 bankruptcy protection in January.

“We expanded too quickly,” said Nicole Rayborn, franchising director for the company, which opened its first store in 1989. She would not elaborate, except to say Surf City Squeeze will continue to expand, but this time through “controlled growth and strictly through franchising.”

Whether the juice bar is a passing trend that will go out of vogue when the next new food comes along is another question that only consumers can answer. But juice bar owners feel confident they have created a permanent demand for healthful drinks.

“We’ve been waking up and having juice and coffee for centuries,” said Perron, 33, a former grocery store assistant manager who opened his first juice bar because he saw a need for quick, healthy meals. “Then Starbucks came along and evolved the experience and taste of coffee. We didn’t invent smoothies and fresh-squeezed juices, but what we’ve done is elevated the quality and built an experience around it.”

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Fruitful and Multiplying

THe following are some of the primary juice bar chains that have a presence in Southern California:

Fresh Blend: Opened in 1994. Based in Danville, Calif. Has 11 outlets, four in Southern California. Plans to open five more stores by the end of the year.

Jamba Juice: Opened in 1990 as Juice Club. Based in San Francisco. Has 53 outlets, 31 in Southern California. Plans to open 17 more stores by the end of the year.

Juice It Up: Opened in 1994. Based in Irvine. Has 20 outlets, all of them in Southern California. Plans to open 15 more stores by the end of the year.

Juice Stop: Opened in 1993. Based in Mission Viejo. Has 66 outlets, 31 in Southern California. Plans to open 19 new stores by the end of the year.

Robeks: Opened in 1996. Based in Santa Monica. Has three outlets, all in Southern California. Pans to open two more stores by the end of the year.

Surf City Squeeze: Opened in 1989. Based in Scottsdale, Ariz. Has 132 outlets, 43 in Southern California. Plans to open six more stores by the end of the year.

* Figures are from juice bar companies.