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Frozen Yogurt Industry Analysis 2016 - Cost & Trends

Frozen Yogurt Industry Analysis 2016 - Cost & Trends

Frozen Yogurt Industry in 2016 at a Glance

Americans may be more aware of their diets these days, but they certainly have no less of a sweet tooth. Frozen yogurt, a hybrid between the traditional ice cream dessert and the healthier (and hipper) yogurt based products, is an innovative way for customers to “have their cake, and eat it too.”  Although the popularity of the frozen yogurt franchise industry suffered a decline in the late 1990’s, the category has been making a colossal comeback in the last decade, with a new generation of flavors, toppings, and store settings leading the charge. With this new wave of frozen yogurt franchises blossoming, new franchisees will find that this industry is nowhere near its freezing point.

Back n’ Better than Before!

1980 marked the beginning of the first wave of success in the frozen yogurt franchise industry. For the next decade, frozen yogurt franchises sprung up in every street corner and mall plaza, dominating America’s industry for frozen desserts. However, after 10 years of froyo franchise madness, the most popular frozen yogurt franchises like TCBY and I Can’t Believe It’s Yogurt began to lose ground to competing ice cream shops and coffee houses. According to the Agricultural Marketing Resource Center, retail sales of frozen yogurt fell between 1998 and 2003, while ice cream sales grew by 24%.

However, with new frozen yogurt franchises like MY Culture16 HandlesFarr's FreshThe Fuzzy PeachYogurtiniPinkberry, and Yogurtland blending innovative varieties of flavors and toppings, the frozen yogurt industry is now back on track and more popular than ever before. Focusing on providing delicious yet diet-friendly treats to its health-conscious consumers, this new hybrid of frozen yogurt is tangier, more tart and lighter than original frozen yogurt products. Unlike older franchises whose frozen yogurt was intended to mimic ice cream products, these new franchises go beyond the typical ice creams flavors, offering creative inventions like cran-raspberry and green tea yogurts. Even ice cream franchises such as Cold Stone Creamery and Baskin-Robbins are beginning to incorporate the frozen yogurt concept into their businesses. Oh, how the tables have turned.

Nowadays, customers aren’t just coming in for the frozen yogurt, but also for these franchises’ "chill" store settings. Trending away from the outdated ice-cream parlor environment, modern froyo stores include high-end furniture, Wi-Fi, flat-screen televisions, and live musical performances. “We’re trying to create the coffeehouse environment,” says chief executive of Red Mango, Daniel Kim. “We’re creating an ambiance, a point of relaxation, a meeting place.” In addition, this trendy setting is a hot spot for not only teenagers and college students, but also business professionals who desire a more casual atmosphere to chat with their clients. Best of all, with this refreshed decor, franchise owners can bump up their prices to $5 for a large serving of frozen yogurt or even $7 with additional toppings without taking a hit on their rate of customer return.

Millions of Combinations, Millions of Opportunities!
There's a large variety of treats for consumers and franchisees to consider when opening up their frozen yogurt franchise. While some franchises specialize in soft-serve yogurt, other franchises offer a little bit of everything. Here are some of the different flavors of frozen yogurt franchises to consider before determining which choice is most suitable for you.

Soft-ServeSoft-serve yogurt is a favorite in this reincarnation of froyo products. These treats are typically tarter and plainer than hand-scooped flavors, letting customers experiment with toppings without being overwhelmed by the sweetness of the yogurt. Soft-serve yogurt can either be charged by number of servings or by weight.
Hand-ScoopedHand-scooped frozen yogurt, a healthier twist to the original ice cream parlor concept, presents an opportunity for franchises to get fully creative with their froyo flavors (Anyone up for a sample of strawberry colada cheesecake?).
Cakes and PiesCan’t decide between cake and frozen yogurt? Save yourself from this impossible decision, and opt for a franchise that serves frozen yogurt filled cakes and pies. These delectable desserts are a favorite during birthdays and holiday celebrations.
SmoothiesIn response to the current health foods trend, some frozen yogurt franchises have decided to sell vitamin or protein enriched smoothies. These smoothies are typically made with the same soft-serve yogurt that is already sold in the store - simply blend in fresh fruit and juice.

Arguably the greatest advantages that the frozen yogurt franchises have in the frozen dessert market are its versatility and room for innovation. The major benefit of this is that each time a customer comes to a frozen yogurt franchise, they can have a totally unique experience. For example, one fro-yo fanatic participated in the “Yogurtland Experiment” and tasted 100 of the 100 million possible combinations of Yogurtland yogurt flavors and toppings. The other major advantage that froyo franchises provide is that many of them are self-serve, which results in significantly lower labor costs when compared to most food franchises.

Fro-Yo Forever?
Despite downward trends in the past, the success of big-name frozen yogurt franchises indicate long term expansion in the future. For instance, froyo big shot Red Mango recently raised $12 million and plans on adding 550 locations within the next five years. Additionally, Canadian franchise Yogen Fruz has diversified to several international locations, including Brazil, Vietnam, and Switzerland.  Nation’s Restaurant News food editor Bret Thorn says, “Yogurt will likely be a longer-lasting trend, and I see no reason why the frozen variety should fade out.” NRN also reported that the last two years demonstrated a “steady increase in interest in probiotics,” microorganisms in yogurt cultures that have been proven to improve immune system and digestive health.

In 2009, the International Franchise Association (the "IFA") reported that the overall number of franchise establishments was expected to drop by 10,000 that year. The frozen yogurt industry, however, was expected to grow by a few percentage points, a notable statistic for any market in the midst of the economic recession.

Even though frozen yogurt franchises may be highly saturated in warm regions such as Los Angeles (250 individual shops in L.A. Country in early 2009 according to the Los Angeles Business Journal), there are still many opportunities to expand beyond these froyo condensed locations. In fact, there a number of areas, both internationally and in the United States, that have yet to discover the latest froyo concepts. Although weather and location may indeed be concerns when opening up these summer-friendly franchises, being one of the first franchisees in the area is an opportunity in itself. In addition, frozen yogurt franchises are especially popular on college campuses and communities with more health focused residents.

Frozen yogurt franchises are expanding in your local area, including some that require as little as $30,000 to start. Click here to choose from 100s of franchise opportunities.

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