JERSEY CITY, N.J. – Ice cream is thought of as the classic frozen treat, but with the popularity of frozen yogurt reaching an all-time high within the United States, convenience store retailers should consider adding it to their offering, according to a Convenience Store News webcast held today.
The web event, "Cool Profits: The Experts Discuss Implementing a Frozen Yogurt Option in C-stores," was sponsored by Donper America.
Looking at the TCBY brand of yogurt as a case study, Donper Vice President of Sales Denny Romer said frozen yogurt saw immense growth from 1981 onward and peaked in the mid-1990s. In 2010, TCBY rebranded itself and responded to shifting trends by going to 50 percent self-serve units, leading to solid company growth and contributing to frozen yogurt's dramatic nationwide resurgence over the past five years.
"It's evident that this treat is something that deserves notice," Romer said.
From 2008 to 2013, frozen yogurt saw 21-percent annual growth. Its resurgence began in California and spread across the southern U.S. and through the Midwest, with sales growing steadily in both summer and winter months.
Today, frozen yogurt is a $1.3-billion industry, and market research projects continued success for several years to come.
"Not only is it a growth business, it's a profitable business [compared to ice cream]," Romer said, noting that frozen yogurt boasts a 79-percent average margin compared to the 35-percent average margin of packaged ice cream.
According to experts, adding frozen yogurt to a convenience store can be a smart play because of its cost- and labor-effective nature; its ability to turn a c-store into a destination; and its wide acceptance as a healthy snack. C-store chains that have already added frozen yogurt programs include RaceTrac Petroleum Inc., RoadRunner Markets and QuikTrip Corp.
Frozen yogurt isn't just a one-size-fits-all proposition, either. Retailers can choose from multiple types of applications, said John Barnes, co-founder of Yumz Gourmet Frozen Yogurt. Kiosks are the most common, while a through-the-wall setup creates "a mini frozen yogurt store." A fully-wrapped unit minimizes space used on the store floor, and a program that offers frozen yogurt from behind the counter may be suitable for stores where space is at an absolute premium.
Operational models include full-service and self-serve, but in general, consumer preference leans heavily toward self-service, according to Barnes. "In our opinion, self-serve is king," he said. "Self-serve empowers customers" to have whatever they want and as much as they want.
For pricing, retailers can choose between weigh and pay, where prices vary and customers pay by the ounce, or fixed price, where customers pay for a certain size of cup plus a price per topping. Fixed price profitability tends to be better, according to Barnes.
Other things to consider for a frozen yogurt program are:
- Day-to-day operations required by the type of units used;
- Marketing and branding operations, including promotions, signage and loyalty programs;
- Ease of machine assembly and disassembly;
- Which companies are available to service the equipment, and what they charge; and
- What kind of added seating and/or refrigeration space will be required.
As for the frozen yogurt itself, retailers can choose between a liquid or powder product format. Liquid offers a creamy taste, simple preparation steps and consistency, according to Courtney Firlit, associate brand manager for foodservice frozen yogurt at The Dannon Co. Powder product includes no live cultures in the yogurt, is time consuming to prepare and can result in inconsistent product depending on staff training, she said.
From the customer’s perspective, 94 percent feel that flavor is the most important factor when buying frozen yogurt, Firlit added.
It's important to offer both vanilla and chocolate flavors, but other top Dannon YoCream brand flavors include Cake Batter, Cookies n' Cream and Peanut Butter. Mixing flavors and carrying many kinds of toppings lets retailers provide as much variety and customization as consumers could want.