Jamba Juice Case Study

Table of Content

Founded in April of 1990 by Cal Poly graduate Kirk Perron, Juice Club, Inc. opened its first store in San Luis Obispo, California. In 1993, Juice Club opened and started two other stores, one in southern California and one in northern California. Juice Club Inc, changed its name to Jamba Juice in 1995 and became known as one of the leaders in healthy juices and smoothies. Jamba Juice is now a chain of smoothie restaurants with over 700 stores in the United States.

Jamba Juice can be found in shopping malls, airports, colleges, inside other stores, and they have over 500 independent locations. Jamba Juice celebrates life. Their mission statements as well as their values portrays the importance of eating healthy, but enjoying what you eat. Jamba Juice’s mission is to become the world’s leading blender of fruit and other naturally healthy ingredients. The company believes that the passion of living a healthy lifestyle by both the customers and their employees is what has made Jamba Juice, Inc. uch a successful company. On the Jamba Juice website, it states that Jamba Juice has one, timeless purpose which is to inspire and simplify healthy living. Jamba Juice hopes that their values are reached through the many different offerings provided. The acronym F. I. B. E. R best sums up these values: Fun. Have FUN! Enjoy what you do. Live a healthy, energetic life. Integrity. Act with integrity. Be honest and honorable in all you do. Communicated openly and treat other’s with respect. Believe. Believe in yourself and Jamba!

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Lead with enthusiasm, passion, and confidence. Excellence. Achieve excellence in everything you do! Strive for only the best. Results. Deliver great results! Our success is measured by our results! The mission and values of Jamba Juice are simple and straight-forward. They are not entirely focused on the product served but are absolutely geared towards a healthy and happy lifestyle, something they want both their employees and customers to lead. The mission statement and the values of F. I. B. E. R show the company does have SMART Goals.

The mission of Jamba Juice is attainable through the values that make up F. I. B. E. R. The F. I. B. E. R. acronym is very specific, measurable, attainable, and realistic. Jamba Juice does not set a time frame that they would like the mission to be met, but all of the values form together to reach the mission of becoming the leading blender of fresh fruit and healthy ingredients. Products Jamba Juice began as a dedicated juice and smoothie bar and gradually expanded their products and services throughout the years.

They have created a variety of fruit and vegetable smoothies ranging from “a Coldbuster smoothie packed with antioxidants when you get the sniffles, to a Protein berry workout smoothie when you get back from the gym, to a Peanut Butter Moo’d chocolaty treat when your sweet tooth starts to ache” (Dess, 2012). Jamba juice has been expanding their product line since 1994 to compete with the likes of franchise chains such as Starbucks, McDonalds, and Tim Hortons.

Jamba has created new products like, on the go meals for a quick healthy fix, frozen yogurt to healthily satisfy your ice cream craving, and hot blends for the colder months in the northern regions. Jamba Juice has had to make adjustments in order to compete and expand the company, these new products have helped them stay afloat and grow the business to what it is today. “Jamba has been pursuing an aggressive expansion program evolving from a made-to-order smoothie company into a healthy, active lifestyle company” (Dess, 2012).

The products offered to customers range greatly but have the commonality of healthy eating and snacking. They are made with real fruit and 100 percent fruit juices and blended to your liking. For healthy lovers this company seems to be a perfect match with products rich in vitamins and minerals, as well as, proteins and fiber. In the expansion of their products they also offer supplements in the form of boosts and shots to combine with your order. These shots or boosts are ordered with your smoothie and give the customer a nutritionally packed meal with ingredients such as, wheatgrass, green tea, orange juice, and soy milk.

Jamba Juice products don’t stop at smoothies, they also carry baked goods, and on the go meals items packed with protein and fiber. Hot blends were added as well so that competition wasn’t lost in the colder regions and those products consist of tea lattes and the classic hot chocolate which of course is made with natural and organic ingredients, as well as, six varieties of Mighty Leaf organic tea pouches. Since Jamba’s products are made high quality ingredients the company had to be clever in their purchasing so that costs could be somewhat low.

In order to make profit from products the company was smart in purchasing supplies as they purchased all of its projected requirements for the following year from suppliers at the height of the season. This allowed for them to keep costs low while making high quality foods. This is essential in the success and consistency of their products. The customers have high expectations of the quality of the products they are buying and the company has a responsibility to meet those expectations while turning a profit.

Part of the service Jamba Juice provides is making the visit to the store an experience and not just a run and go establishment. They created a “theater” effect when visiting the establishment. Jamba “provided an environment in which all food preparation could be conducted behind glass and in the open so that customers could watch as their order was freshly made with all-natural ingredients” (Dess, 2012). Jamba wanted to make the “theater” experience their competitive advantage, this also allowed for their service to be unique and new.

Jamba was striving to make the customer experience memorable and create high foot traffic based on service. Jamba’s products and services focus on healthy living and are coasting on trendy new diets and fast paced living we have all become accustomed to. “Smoothies have been called to fast food of the new millennium” (Dess, 2012). People are slowly backing away from running through the drive through lane of fast food giants like McDonalds or Burger King. The public is becoming more health conscious and investing their health into places like Jamba Juice in order to clean up their diet.

The products that Jamba Juice is giving to its customers are more than just a drink, its infusing a new lifestyle, one of healthy treats and minimal calories. “Consumers are increasingly demanding products that support their interest in fitness and nutrition while also providing high quality taste and a “treat” they can feel good about” (Dess, 2012). They have positioned their products and services to meet those needs and are viewed as the healthy alternative to fast food and unhealthy eating habits. Products SWOT Analysis

A SWOT analysis is helpful in the determination of longevity of their products and services. Knowing what the strengths, weaknesses, opportunities, and threats are in regards to products and services will determine if Jamba Juice products are here to stay or will die out if the “trendy” juice bar/smoothie lifestyle fades away. Strengths Healthy food, ingredients, and lifestyle High Quality products Broad range of beverage choices Product line for die hard buyers (customer loyalty) Product line continuously growing

Service oriented employees, Deliver experience that nourish and enrich lifestyle Growing demand for products and services The “brand” of products Weaknesses Products only appeal to “healthy” demographic Customer base is not wide-ranging Similar to competitor’s products Not enough hot products throughout the colder regions The “healthy” contents of their products can be questionable (a lot of sugar) Products have wide range of drinks but not expansive on food items Opportunities The number of health conscious people increasing which will lead to needed xpansion of products and improved services. Growth in menu of hot blends and one the go meals Growth in meal products, more sandwiches, salads, healthy eating products Expansion of products and services into new markets The addition of new products to the menu Attain new customers with products and services that are exclusively for the fitness world Adding products to fitness centers around the globe Expanding stores services by including yoga or Pilates classes (this would require more space as it would be an added service that would need private square footage) Threats

Competitors with similar products and services growing immensely and very quickly Economics, people are not purchasing products such as these as they can be costly and seen as a “luxury” purchase Health trend moves toward something else other than smoothies Increase in cost from suppliers for high quality good and off season availability Jamba juice has many opportunities at this moment for their products and services. If they position themselves properly and stay ahead of the competition while expanding Jamba Juice can become more widespread, popularity will grow, and products and services will expand greatly.

Jamba Juice I believe is in a very good position with its products at this point because there is an enormous amount of opportunity for them to capitalize on at this point as the growing demand for healthy foods is increasing. Marketing Jamba Juice utilized a three part branding effort to carve out a niche in the market-place, differentiate themselves from competitors, and strengthen brand awareness and loyalty. This process is broken down as; Brand Communications Generating awareness and loyalty through the communication of the product benefits Development of an emotional connection with the customer Product

Optimizing and innovating Devoting resources to optimizing the current menu Developing new, appealing menu items Store Environment Presenting an energizing store environment Create memorable experience for customers Jamba Juice has relied heavily on grassroots marketing campaigns and product advocates spreading word of mouth to grow brand recognition and equity. Jamba Juice locations frequently host in-store events and participate within their footprint to build a bond with the community. Jamba Juice has been featured in publications and articles, increasing their exposure, even to territories they didn’t yet have stores.

This national exposure increased brand awareness and provided a starting point for market penetration in areas they ultimately expanded to. Such articles were featured in the Wall Street Journal, Time Magazine, USA Today and the New York Times. Jamba Juice frequently uses press releases in the Wall Street Journal to announce promotions and specials, rather than using a print or television advertising approach. A sample from one of these releases: “For a limited time, from Oct. 29, 2013 to Nov. 3, 2013, Jamba Juice will be extending a special $2 offer (with coupon) on all oatmeal flavors in celebration of National Oatmeal Day.

For more information on nutrition, product offerings, and to see a list of participating stores, please visit the Jamba Juice website. ” (Blua, 2013) These press releases inform consumers about specific promotions and also provides a brief history and introduction to the company. Lastly, upon openings of new locations and events, Jamba Juice invites and encourages media outlets to come, cover the events, and increase their exposure through these media outlets. One example was the first store opening in South Korea which was featured in an investor relations article: “President, chairman, and CEO James D.

White was present at the grand opening along with Thibault de Chatellus, senior vice president Global Franchise and Development for Jamba Juice, to congratulate the SPC team on their success. They were joined by SPC’s official spokesperson for Jamba Juice in South Korea, Olympian Tae-Hwan Park … A popular figure in South Korea for his active, healthy lifestyle and energetic, outgoing personality…” (Jamba Inc, 2011) At these events, Jamba Juice routinely introduces a spokesman to represent the community they are penetrating and appeal to the masses.

By coupling the Jamba Juice brand with a well-known spokesman’s endorsement, Jamba Juice experiences fewer resistors upon market penetration. Finance Over the past three years, Jamba Juice has tried to improve their financial standing in the highly competitive world of healthy drinks. In the last several years, Jamba Juice has not only struggled with a marked downturn in the economy; they also had to deal with new competition in the form of the fast food giants, McDonalds, Starbucks and Canadian coffee chain, Tim Horton’s.

Jamba Juice, however, has been able to survive due in part to a loyal customer base and an increase in the more health-minded consumer. Some financial analysts consider the stock price of an organization as an overall indication of the success of the organization. Jamba Juice, over the past five years has seen a solid growth in the price of their stock, starting out at a low of around $3. 00 per share in January 2009; it recently closed at a little over $12. 00 and has shown an increasingly positive price increase over the past 5 years. (Yahoo Finance, 2013)

Between 2008 and 2013, Jamba Juice has seen a somewhat positive trend in their net income, starting at a loss of ($149,163,000) in 2008; they were able to turn a profit in 2013 with a small gain of $302,000. This is quite an impressive increase in profitability, considering the relatively high cost of ingredients and an increasing but small market share. According to Jamba Juice’s investor relations website, the third quarter earnings for 2013 show a net income of $2. 7 million compared to $4. 1 million for the same period in 2012. The company has shown a 6. % decrease in revenue from the same time period in 2012. (Jamba Inc. , 2013) Another interesting point to note is that for the second quarter 2013, the net income increased by 51% as compared to the same time period in 2012. That being said, it seems as though Jamba Juice may be on the road to recovery and profitability from the turbulent last few years. The financial reports and income statements are included in the appendix of this report, but now that we have this information, we can make an educated guess as to the financial state of the organization.

In order to consider the financial stability and success of Jamba Juice, we can use the SWOT analysis and SMART goals in order to consider all pertinent information from the company’s financials. First we look at the SWOT analysis: Strengths, Weakness, Opportunity, Threats; in terms of their financial statements. First, the strength of their increasing net income is a good sign for the potential future of the organization. In the second quarter of 2013 for instance, their net income increased by slightly more than double from the previous period.

This is significant because Jamba Juice is a somewhat seasonal brand, in the summer and warmer weather, they tend to do more business than in the colder months, and this is just the nature of their business. They offer smoothies and cold beverages that are conducive with warm summer days, so the fact that their profits doubled for the same period shows that their brand is gaining more strength in the market. Unfortunately, this strength of increased profitability can also be a weakness at certain times of the year.

We can see from Jamba Juice’s stock prices from July to December, as noted in the appendix; July through September is clearly their busy, more successful months. This may be a weakness as compared to other chains, including Starbucks and Tim Horton’s, who offer both hot and cold beverages, which is a year round need for consumers. Jamba Juice has the opportunity to increase their profits by making more service agreements with farmers and agricultural groups in order to lower their operating costs by decreasing the cost of inventory.

As seen from the financial reports, the cost of sales has decreased dramatically from 2008 to 2013, dropping by more than $30 million, but from 2012 to 2013, it has increased by around $1 million, which may be a trend towards higher cost of operations, only time will tell. The threats associated with Jamba Juice are obviously their competitors, the major fast food chains which can offer cheaper products to consumers, but in terms of their financial threats, again the increasing cost of fresh fruits and vegetables is always going to dig into their profits.

So if they are able to find a supplier which could provide them with produce at a price that would work for the company, it would be a successful business venture. Current financial data as of close of business 12/31/13 shows the stock price of one share of Jamba Juice at $12. 43, as a comparison, Starbucks closed at $78. 39. Starbucks P/E ratio was around 7,800 whereas Jamba Juice is -127. It goes without saying that Starbucks and Jamba Juice are indeed drastically different organizations; they are still direct competitors in a sense. As another comparison, Tim Horton’s closed at 62. 8 and has a P/E Ratio of 22. 3. (Market Watch Inc. , 2013). The P/E ratio is a good indicator of the financial stability of the company in the eyes of investors. Essentially the higher the ratio, the more confidence investors have in the business and the more comfortable they feel with investing more in their stock. Seeing that Jamba Juice has a negative P/E ratio can have signs that investors are not willing to bet on the success of the organization, it may be too risky. Another important ratio to consider is the current ratio, which shows the ability of the organization to pay their debts in a timely manner.

It is important for a company to have a current ratio of at least 1, as it shows that their revenue are high enough that they can handle their expenses and still be healthy financially. Jamba Juice has a current ratio of 0. 83, in comparison, Tim Horton’s has a current ratio of 1. 3 (Tim Horton’s Inc. , 2012), Starbucks is 1. 9; in terms of financial strength of Jamba Juice, it is fairing at the lower end of the spectrum among its competitors. We chose to focus on the Current Ratio and the P/E Ratio because they are strong indicators of the financial stability and investor confidence in Jamba Juice.

Comparing these two figures to those of their closest competitors, Jamba Juice does not hold much strength in terms of their financial ability. These trends may change, as this was the first year that Jamba Juice actually was able to turn a profit and get on the right track. It is reassuring that they are able to double their profits in the second quarter 2013 from the previous year. I think Jamba Juice is on the road to success, but only time will tell if they are able to have the right business sense to make their organization successful. Human Resources

The role of a human resource management within an organization is to “suggest to the management team how to strategically manage people as business resources” (Bianca, 2013). The Human Resource team has various functions from recruiting and hiring to benefits and compensation. HR professionals could be considered consultants on many levels within an organization. “They advise managers on many issues related to employees and how they can help the organizations achieve its goals” (Bianca, 2013). Jamba Juice has done well in positioning the people of the organization where they can be the most valuable.

They have done this by focusing on the following human resource related functions “Attracting and retaining quality individuals who execute the business strategy while building the platform for future growth” “Leadership ensured that stores were fully staffed and trained in order to provide the energetic and memorable Jamba store experience” and; “An employee shared appreciation of community involvement was key to developing and sustaining emotional connections with customers; commitment to the communities where Jamba operated was vital to maintaining customer loyalty and sustaining the passion of Jamba team members” (Dess, 2012).

Jamba Juice has a strong company culture and with that comes a strong human resource department that must enforce and promote their mission and values through hiring and training the right people for the company. HR has a very important function is regards to maintaining the employees training, developing their skills, and advising management how to assign employees to different roles throughout the organization. HRs role is to help the employees adapt successfully to the organization as a whole.

Jamba recognizes that performance of its leaders and employees is vital to its long-term growth. “Jamba recruited and retained leaders with broad experience in management and industry… Attracting and developing team members who provided superior service was paramount to producing the positive customer service experience that Jamba strived for” (Dess, 2012). The corporate culture of Jamba Juice is one of the internal resources that have given this company its competitive edge and the HR department has had to hire the right people who will reinforce the beliefs and values of the company.

The employees are responsible for creating the Jamba experience and it is the hiring and recruiting process of the organization that has been able to make it possible. In order for Jamba juice to expand they had to hire the right team of people. The company focused on people who shared the vision and possessed the many core values of the company. “Jamba aims to promote a healthy, active lifestyle for our consumers but we also live that mission in all that we do as a Company and as individuals,” said Kathy Wright, vice president Human Resources, Jamba Juice Company (Duis, 2011).

Jamba’s success is a direct reflection of its employees and their dedication to the growth and expansion of the brand. Not only has the HR department hired the right people but it has also received awards for its treatment of the workforce. The national restaurant association has granted Jamba Juice with the Winning workforce award in 2004. “This coveted award honors the nation’s top five restaurant-and-foodservice operators that truly understand that enhancing employee satisfaction ultimately leads to achieving customer satisfaction” (Butler, 2004).

By providing the employees with the right tools and training programs, Jamba has been able to deliver the “theater” experience and win customer loyalty directly effecting sales and growth. Jamba has been able to inspire its employees which leads to longevity and motivation among staff members. “Jamba sought to hire customer service oriented people and provided team members with extensive training, financial incentives, and opportunities for advancement when they fulfilled service expectations” (Dess, 2012).

The Human Resource team holds high expectations of their hires however, the company believes in rewarding and the fair treatment of employees as well. The company culture supports the ideals the leaders have set forth from the beginning of the hiring process, through the training courses, to the promotion of highly skilled, deserving employees. Training employees is one of the most important tools you can give to staff members as it builds skills and motivates employees.

When a person is trained properly they become confident in their job and produce better results. For example, Jamba launched a new product called The Sixteen, a smaller version of their larger smoothie drinks. When the new product was introduced the HR training team wanted to get the company excited and set the tone for success. Training was imperative to having the new product do well. The team incorporated a comprehensive training road show and tool kit so that they could alleviate and any manager concerns around working through operational issues. Managers couldn’t wait to train their teams and reported feeling elated about the training preparation and materials they received, since a well-trained team combined with a great product would “wow” customers every time. (Butler, 2004). Jamba was able to get their employees excited and gave management the proper tools for success. There was even more excitement for employees when Jamba, staying true to its core values, got involved in community outreach which was part of the launch of the product. On the “Sixteen Celebration Day”– customers were invited to donate money to children’s organizations and receive a free Sixteen smoothie.

This encouraged great word-of-mouth support and awareness of the new smaller size. With that, the launch was supported with radio promotions, street teams, publicity and an online promotion all of which strengthened the employees and customer loyalty. The training program and success of this launch is paving the way for strong growth in number of customers and content employees. Now, “Jamba intends to use the program as a blueprint for future efforts in training; employee and customer satisfaction; and community involvement efforts (Butler, 2004).

Human resources has a large impact of the success of the company first and foremost with employees which transcends to its customers. Human resources, is instrumental in the success of an organization and the recruitment and hiring of its employees, the training they receive, and the treatment and support of its upper level management throughout to the line staff. “Jamba designed a training that was spirited and informative; delivered a product customers wanted; created a launch that was fun and meaningful to employees and the community; and let employee enthusiasm radiate to customers.

Integrity and respect are also Jamba values, and the program reflected the respect the company has for the capability of its Managers to process new research, undertake a change in attitude, train their own team, and create a fun and supportive environment in which to make team members and customers happy. ” (Butler, 2004) Educating and training managers is crucial because they are the people responsible for training of the employees in the individual stores. Human resources within Jamba has linked trainings with the core values, not just the bottom line.

With a department enforcing such high standards and ideals into their management staff they are able to deliver great employees to the customers, streamlined service, and products the customers want. Conclusion Jamba Juice has cultivated a reputation for producing high quality, healthy products. The brand equity established can help in introducing future revenue streams, piggy-backing from these flagship juices. Due to the nature of the business, Jamba Juice has developed a key base of loyal customers which can help increase the Jamba Juice brand, exposure, and future market penetration.

Jamba Juice had the benefit of being a first mover in this growing health foods industry, which the company was able to harness into sustained growth. One weakness Jamba Juice faces is a limited product offering. Their main focus is on fruit based drinks, which unlike coffee, isn’t a huge expenditure annually. The gourmet fruit smoothie market is a niche which has to compete for consumer business with the coffee and other industries. By not offering full lunch and dinner options at their locations, Jamba Juice is alienating meal-seekers, and instead caters to a specific, buy-and-go clientele.

Jamba Juice is at a disadvantage when compared to locally owned restaurants that focus on food, but also offer a smoothie menu. Smoothies are typically a seasonal beverage. Consumers will purchase smoothies more frequently during hot months, but favor warm drinks during the fall and winter seasons. By not offering a hot alternative, Jamba Juice is limiting their potential sales. Jamba Juice is fortunate in the aspect that there are multiple avenues for the company to expand.

The company can expand their juice line to include new, popular trending flavors to appeal to the masses and capitalize on the consumer trends to increase their market share. Jamba Juice can also increase their reach by aggressively expanding their territories, and penetrating new markets whose citizen’s share the companies ideals for health and nutrition. Jamba Juice can explore adding related product lines to their portfolio. Similar products that would fit within Jamba Juice’s key values would be items like granola, meal replacement/energy bars and nutritional supplements.

Increasing these product lines could also lead to strategic alliances with health food stores, gyms, airports and college campuses. Jamba Juice’s pricing structure can threaten their market position. Jamba Juice smoothies are priced $1. 26 more than McDonald’s smoothies, which also have a greater reach. Jamba Juice does use premium products in developing their juices, and as long as their core customer’s continue to value this, McDonalds shouldn’t threaten their overall market due to this differentiation.

McDonalds and other cheaper alternative wills end up poaching less educated, casual customers, and not their key demographic. Jamba Juice must contend with competition from other gourmet franchises like Starbucks entering the market. Starbucks’ president of channel development and emerging brands Jeff Hansberry stated “Our customers have been making requests for healthier food and beverages; Evolution Fresh is the gateway to providing customers with healthier alternatives. We’ve hit on a major lifestyle trend. ” Starbucks has a strong brand name and differentiated product offerings which can poach business from Jamba Juice.

Increase costs to buying and transportation of their raw goods can become problematic for Jamba Juice. Costs of agricultural products continue to rise, along with the cost of fuel. These increases can potentially drive up Jamba Juice’s pricing, either cutting into their profit margin or alienating lower-income individuals. Lastly, like most companies in today’s landscape, Jamba Juice is threatened by swings in the economic landscape and possible recessions. These drinks, while nutritious, are still luxury items, and consumption can wane during times of frugality.

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