Hyekyung Hwang has a simple plea: please don’t let Pinkberry Inc. tank.
The 32-year-old owner of the upstart L.A.-based frozen yogurt chain is tired of coming up short. Ten years ago, a Coco’s she operated on Wilshire Boulevard and Normandie Avenue went under. Then, she tried Marina Restaurant at that location, only to have it suffer the same fate a year later.
“I want to be successful once in my life. I cannot fail with every single restaurant,” said Hwang. So, when she launched Pinkberry in West Hollywood last year, she swore it was the “last time” she’d give the foodservice industry a go.
Determined to return with a formula with long-term prospects, Hwang’s concept had to be straightforward, cost effective and stand out from the competition. Pinkberry only serves two flavors of frozen yogurt: plain and green tea. There is an array of toppings, but little else not even bottled water is on the menu. And the labor costs are low: there are three employees on a shift compared to Coco’s 20.
“A lot of frozen yogurt shops, they have chocolate chip and peanut butter and gummy bears and soda pop. Why do they open a frozen yogurt shop? They should open a cafeteria,” mused Hwang. “Everybody who is the food business should concentrate on their own items, not collect other items. That is going to fail, from my experience.”
Gummy bears and soda don’t work, Hwang believes, because they are easily replicable, and customers can go anywhere to get them.
She put a year into developing her frozen yogurt product, testing out the consistency and flavor (it was too icy at first) and making it soft-serve ready. The result is a frozen yogurt that tastes like real yogurt, uncommon in a market teeming with ice cream copycats.
The initial response wasn’t overwhelming. In January last year, when Pinkberry started heaping frozen yogurt into small, medium and large cups, storms swept through Southern California, literally dampening the tiny store’s sales.
Kayley Kim, operations manager for Pinkberry, remembers standing out in the rain, passing out samples of the yogurt on Santa Monica Boulevard. Takers were few. “It was so cold, people didn’t want to try it. They didn’t even want to give it a chance,” she said.
After the rain passed, business began to pick up. Little by little, people from the neighborhood came into the shop out of curiosity. They eventually became regulars and brought in friends. In turn, the friends became regulars.
By the middle of May, sales were chugging along. Lines formed outside the store in the evening: its hours are from 11 a.m. to midnight. On any given day now, Hwang estimates 1,300 to 1,600 people filter through the door, plunking down an average of $6 each. This year, Pinkberry estimates it will ring up $1 million in revenues in its 650 square-foot space.
Yogurt comeback
Nava Dordick and her daughter Michelle Laksman are Pinkberry faithful. “We come here every day from Beverly Hills,” said Dordick. Laksman often makes the trip with friends from Beverly Hills High School because the frozen yogurt isn’t “sugary and processed.”
Despite the loyalty of local customers, frozen yogurt across the country isn’t faring well. In the 1980s and the early 1990s, sales of frozen yogurt surged and it seemed as if every street boasted a Penguin’s or TCBY. But national sales declined precipitously during this decade, with Mintel International Group Ltd. estimating they were off nearly 18 percent between 2002 and 2004 to settle at $179 million in 2004.
Competition, both from ice cream producers introducing diet-friendly alternatives and the growing variety of eatery choices, whacked the domestic frozen yogurt industry. Unsure about how to retain customers in the marketplace brimming with rivals, frozen yogurt places fell further behind as diet fads, such as the low-carb diet, cropped up with a slew of products.
However, Bill Hawfield, who was president of frozen yogurt chain Penguin’s Place Inc. in its heyday and who currently heads Thousand Oaks-based business consultancy Hillcrest Associates, said the time could be right for frozen yogurt to make a comeback. After all, consumers are increasingly interested in products to support healthy lifestyles.
But Hawfield cautioned that not any frozen yogurt entrant would fly. It’s difficult to make a store distinguish itself in a crowded snack field: Jamba Juice Co., Robeks Corp., Baskin-Robbins as well as Starbucks Corp. and International Coffee & Tea LLC’s Coffee Bean are among those vying for customers’ mouths. He said it helps if shops cultivate novel items to draw a following and mentioned products aimed at diabetics as an example.
Matt Smith, vice president of marketing at Markham, Canada-based CoolBrands International Inc., the third largest supplier of ice cream to the United States and maker of Yoplait frozen yogurt bars, agreed that frozen yogurt alone isn’t going to sell itself because many consumers consider it an inferior form of ice cream.
“It is not as simple as turning the clock back to the late ’80s, early ’90s,” he said. “You have to find a unique way of positioning it to really attract people’s attention to try it again.”
The jury is still out on whether Pinkberry’s two-flavor concept will hit the sweet spot as the stores expand. Pinkberry is opening up 30 stores (among the locations are Westfield Century City mall, Canon Drive in Beverly Hills and Larchmont Boulevard in Hancock Park) this year and has plans for 40 next year, when it will take on New York and Northern California. Many new locations will be franchises.
Based on his experience, Hawfield said he wasn’t sure limiting the frozen yogurt selection would be effective. At Penguin’s, he said, chocolate, strawberry and vanilla made up about 70 percent of sales, but customers did enjoy different, rarer flavors. Sometimes, he recalled they would drive miles and miles to go to a Penguin’s that was serving their favorite flavor.
If the Pinkberry concept does take off, Hawfield warned it might have bigger problems to deal with. At Penguin’s, he said, the chain suffered as frozen yogurt places filled up block after block. Driven by the convenience factor, customers would go to the nearest frozen yogurt shop even if they preferred Penguin’s products.
Already, Hwang has heard shops imitating Pinkberry are in the works. But she has mapped out a strategy to stay prosperous even as competition mounts. She wants to secure the best locations, spread quickly to build name recognition and create a cool, design-driven atmosphere to generate a hip vibe. The look of the West Hollywood location was crafted by Young Lee, a Parsons School of Design graduate and Hwang’s boyfriend.
Pinkberry’s pared-down operations make it a good fit for franchising. There isn’t a complicated menu to learn or intensive employee requirements. And because the size needs aren’t large the Pinkberry spot in the Century City mall is a miniscule 150 square feet the chain will have an easier time than its larger counterparts beefing up its real estate.
“After we have all the brand power, then I don’t really worry about the rest of the copycats coming out,” she said. “When we keep quality for our yogurt, be humble, then, this will be fine.”
