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Tuesday, Mar 21, 2023

Yogurt Chain Hot Property for Ice-Cream Veteran

A decade after Pinkberry pioneered tart frozen yogurt, the Santa Monica dessert chain has been snatched up by the parent company of Cold Stone Creamery.

Pinkberry’s sales have cooled off in recent years as copycat brands mimicked the company’s flavors and colorful store motifs.

But revenue could receive a boost now that Kahala Brands of Scottsdale, Ariz., which owns Cold Stone and a dozen other quick-serve eateries, has taken control.

“If you look at the know-how Kahala has because they own Cold Stone, then add the ability to add franchising and real estate, I think they can make a good go of it,” said Kevin Burke, managing director at investment bank Trinity Capital in Brentwood.

Kahala Chief Executive Michael Serruya said in a statement that he aims to use Kahala’s best practices to maximize Pinkberry’s potential. Terms of the deal were not disclosed.

Earlier this year, Kahala bought frozen dessert chains Tasti D-Lite and Planet Smoothie.

Pinkberry launched in a tiny West Hollywood store in 2005, sparking a craze for what fans dubbed “crackberry.” It now claims 260 stores in 20 countries, most of which are franchises.

The frozen yogurt market has grown drastically in the wake of Pinkberry’s initial popularity, and it’s still going strong. Last year, frozen yogurt retailers grew at a faster rate than ice-cream shops, according to Chicago research firm Technomic. SweetFrog, CherryBerry, Orange Leaf Frozen Yogurt, Tutti Frutti and Yogurtland topped the list.

The fierce competition has lured customers away from Pinkberry, which hasn’t always kept up with new trends.

“Just because you’re first doesn’t mean you’re going to be the best,” said Technomic analyst Lauren Hallow.

For example, newer brands such as Yogurtland allow customers to serve themselves from a bank of yogurt machines, mixing flavors such as pumpkin pie and caramel almond bar before choosing from a variety of toppings including graham crackers and gummy worms. While Pinkberry has toppings, too, none of them is self-serve.

“Frozen yogurt itself isn’t good enough, it’s kind of lost its novelty,” said Hallow. “Self-serve customization is key.”

Kahala could choose to place Pinkberry alongside its nondesert entities, which include Kahala Coffee Traders and Blimpie, so that the brands can give each other a boost, she added. The new owner should also be able to help Pinkberry find locations with plenty of foot traffic.

A site near a university, for example, would ensure a flurry of customers in the evening to make up for slow sales in the morning.

Burke also anticipates that Kahala would look for new ways to market Pinkberry, such as selling it in grocery stores.

But restaurant analyst Bonnie Riggs of New York research firm NPD Group Inc. cautioned that the brand will only thrive in affluent metropolitan areas. After all, a large Pinkberry frozen yogurt with toppings costs nearly $8.

“The market just isn’t that big for high-end indulgent products,” she said.

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