CHICAGO (AdAge.com) -- The recession was bad enough, but now Jamba Juice, the leader in smoothies, is staring down formidable adversary: McDonald's. The Golden Arches, roughly 20 times Jamba's size in terms of U.S. locations alone, is launching its own smoothie platform this summer.
CMOs You Should Know: Susan Shields, Jamba Juice
While Jamba Juice CMO Susan Shields said the company isn't taking anything for granted, she described Jamba's McDonald's strategy as "sticking to what we do best." That means focusing on quality ingredients, customizable products and tools for active lifestyles.
Though many would argue that Jamba, known for smoothies, is doing anything but focusing -- with forays into various food items, toy blenders and clothing -- Ms. Shields said that Jamba is determined to maintain its smoothie leadership. This summer, the chain is offering $1 smoothies made from so-called superfruits acai, pomegranate and "yumberry." Jamba is also rolling out coffee smoothies.
"We're constantly looking at what the competition is doing, but, more importantly, we do a lot more research into our heaviest users, who are advocates of Jamba," Ms. Shields said. "We start there to make sure we have a superior product and a real point of difference." Jamba has made an effort to keep quality and health as differentiating factors. The oatmeal, for instance, is slow-cooked and made from steel-cut oats. The chain's smoothies are made from whole fruit, either fresh or flash frozen.
The chain has also made community involvement a big priority. Ms. Shields said local store managers receive a marketing tool kit for reaching out to groups including parent-teacher associations and soccer teams. Jamba offers these groups swipe cards so their organization can earn a percentage of the tab.
The additional threat of McDonald's is a real one. McDonald's has about 14,000 U.S. locations to Jamba's 700, and the larger chain has managed to keep same-store sales positive while the rest of fast food was slipping. Smoothies are just the latest addition to McDonald's beverage portfolio. Lattes, launched last year, have been a boost to sales, and frappes, McDonald's take on Starbucks' Frappuccino, have outperformed expectations without national advertising. Smoothies at McDonald's pose several problems for Jamba: The products will be cheaper, they're tasty, and McDonald's locations are everywhere.
Of course, while McDonald's has made a highly successful run at premium-coffee products, Starbucks also turned its U.S. business around. In short, there may be enough business for everyone.
In addition to oatmeal, launched in December 2008, Jamba followed up with salads, wraps, flatbreads and chai-tea beverages. "Essentially what we're trying to do is listen to our customers and meet their needs for different usage occasions," Ms. Shields said. Jamba is also building a presence in consumer package goods, selling a toy blender for kids, energy bars and clothing. Ms. Shields said there are more products in the pipeline.
It's all part of transitioning the brand from smoothie chain to a full-fledged lifestyle brand. Jamba CEO James White, who took the helm in late 2008, has championed this effort and pushed up the launch dates for the chain's food products. Jamba has also started catering.
While Ms. Shields said the response has been overwhelmingly positive, the chain's numbers have yet to prove it. While 2009 was the restaurant industry's worst in a generation, Jamba juice was harder-hit than the industry as a whole. Same-store sales fell 10% at company-run stores, although declines moderated to 5% during the second half of the year. Sales also fell 12% for the full year. The company has projected that same-store sales will swing positive in 2010.
A mother of three who runs at lunchtime and grabs a smoothie before heading back to her desk, Ms. Shields describes herself as Jamba's core consumer. She noted that Jamba defines its target as "the well being," those who are very focused on a healthy, active lifestyle for themselves and their families. And that state of mind, she said, cuts across generational lines.
Ms. Shields is a veteran marketer who previously served at Quaker, Del Monte and Safeway. But her focus at Jamba has been in social media. While the 20-year-old chain hasn't had the budget for big-time mass-marketing tactics, Ms. Shields said social media has taken on much greater import, having gone from a few thousand to half-a-million Facebook fans over the last year.
Jamba works with the Neighbor Agency for its PR, marketing and advertising efforts.