Jamba Juice's JambaGo Machines Pour Into School Cafeterias
Trying to become as ubiquitous as McDonald’s and Starbucks but with lower operating costs and a healthier menu, Jamba Juice delivered self-service smoothie machines to more than a hundred school cafeterias this fall. The JambaGo machines operate like a 7-Eleven Slurpee machine. A liquid mixture spins around with grounded ice, producing a quick-service twist on the company’s typical blended smoothies.
But the new machines aren’t just a lucrative business proposition for Jamba Juice. JambaGo’s lasting effect could be drawing more children to the breakfast table, reversing abysmal school breakfast participation rates across the country.
“I could put water in the cup, but because ‘Jamba’ is on the cup, kids will show up,” said Carrie Sams, the company’s national sales director for JambaGo. “Even in places where the only frame of reference (for a machine like this) is a blue slushie, they know they are doing something good for themselves because they immediately associate Jamba with something healthy.”
Jamba Juice pointed to the example of the single-campus, 700-student Crane R-III School District in southwestern Missouri. Breakfast participation rose by 15 percent and lunch participation rose by 10 percent during a trial program last fall, according to district food service director Ken Llewellyn.
“The segment of student population that was captured by the addition of the Jamba smoothies has been significant,” he said in an email passed through a Jamba Juice spokeswoman. “Now in it's second year, JambaGo continues to be an integral component to the Child Nutrition Program at Crane R-III.”
Llewellyn wrote that the district paid off the cost of machine in a semester because more students eating school meals meant larger reimbursement checks from the federal government.
By the end of October, 239 JambaGo machines had been deployed. Jamba Juice expects to hit 1,500 by the end of 2013. The company declined to name other school districts with JambaGo machines. Sams said locations included schools in communities from a broad range of socioeconomic statuses, spanning “west to the east to everything in between.”
A presentation the company released in May listed 16 machines in Missouri and one in Virginia. The largest school district in San Francisco, Los Angeles and San Diego said they didn’t have JambaGo.
A “small number” of the JambaGo's will be at colleges and universities, convenience stores and corporate dining halls.
At the University of Southern California in Los Angeles, the school’s hospitality division bought the machine this summer and orders shipments from Jamba Juice of the liquid base needed to refill the machine. Operating costs are low since no new employees are needed as a result of adding JambaGo.
“It’s doing the volume Jamba Juice told us to expect,” said USC Hospitality Director Kris Klinger. “Customers have been pleasantly surprised with the product. There’s a good chance we might want to add another one on campus.”
Analysts have lauded JambaGo, but are waiting for the company to offer details about its economic model.
“They need to do that to give the program some more credibility,” said Conrad Lyon of investment bank B. Riley & Co. before the company released its most recent financial results Nov. 1.
Those figures showed Jamba Juice was set to have its first profitable year since it went public six years ago. Chief executive James White has orchestrated a turnaround for the 22-year-old Emeryville, Calif.-based company by franchising more stores, selling Jamba Juice-licensed products at grocery stores, introducing tea, frozen yogurt and other food to the menu and expanding into Asia.
The company will end up with nearly $6 million in capital spending this year and expects as much as $10 million in capital expenditures in 2013 as it embarks on a long-term initiative to use analytics to keep track of customers, try out new concepts and redesign its stores.
“We are entering a new phase in which we'll create new ways to build on our heritage, and accelerate our growth as a leading global healthy active lifestyle brand,” White said on a Nov. 1 conference call with investors and analysts.
Sams said the idea for JambaGo came out of existing programs with schools that help them raise funds and encourage wellness by selling smoothies.
“They want kids to make good snack choices,” Sams said of school officials. “They would rather have them buy a smoothie at a price affordable for students than go down the road and buy less healthier option with those dollars.”
The smoothies sold at schools come in small sizes unless bought separate from a regular meal. Made with fat-free milk and fruits, they are compliant with recently enacted federal school meal guidelines that double the amount of fruit required to be served. Flavors should regularly rotate.
In Florida, Jamba Juice has piloted JambaGo machines at gas stations with food courts along highways.
“We fit right in the middle of those turnpikes in convenience stores,” Sams said.
Jamba Juice has nearly 800 physical locations, about half of which are in Southern California. More than half of the locations are owned by franchisees.
In a report issued in August, the analyst Lyon wrote, “...the JambaGo initiative not only appears to be a compelling profit center, but a magnificent opportunity to build brand awareness with generations to come.”
Lyon said in an interview that the key for the growing company will be ensuring “each customer has a quality and consistent product.”
A recent taste test at USC revealed the self-served smoothie had an added crunch due to poorly crushed ice. Jamba Juice spokeswoman Janice Duis said she would have USC officials check on the machine.
“Sounds like a machine that’s getting too cold,” she said. “If people are not happy, we’ll refund them their money. Nothing changes because its JambaGo.”