I‘m Changing My Forecast for Frozen Yogurt Franchises

Last year I predicted that despite the popularity of frozen yogurt concepts like Red Mango and Pink Berry  this franchise segment would slow down and experience the same contraction that took place in the 90’s. I must admit that I was wrong.

With 30 franchise concepts selling frozen yogurt, some as a core product and others as part of its frozen dessert menu, trends indicate that the growth and popularity of these products will continue. A major reason for this optimism is based upon the health benefits from frozen yogurt and a better educated consumer.  Progressive Grocer reported that overall, sales of ice cream and frozen novelties grew 9 percent from 2008-2013 to $11.2 billion, equating to a loss of 1 percent when adjusted for inflation. While ice cream is the most popular segment by far in the sector -- consumed in 89 percent of U.S. households -- the segment posted minimal sales growth, going from $5.7 billion in 2011 to $5.9 billion in 2013.

In contrast, the frozen yogurt sector grew from $279 million in 2011 to reach $486 million in 2013. According to research from Mintel, although ice cream maintains its leadership in the frozen novelty market with 54 percent of sales in 2013, frozen yogurt is picking up steam. According to Yogurt Nation, an industry publication, the sale of frozen yogurt products will reach 9 billion dollars by 2016. Clearly, the popularity of yogurt, especially frozen yogurt, continues to grow.

A major reason for the increased popularity of frozen yogurt is the health benefits that it provides especially compared to other frozen desserts. According to Dr. Stephen Mooney of Central Internal Medicine in Kentucky certain frozen yogurts do contain fermented bacteria that could possibly have some of the benefits of probiotics. Dr. Mooney commented further that, “Frozen yogurt is generally about half the calories of ice cream.  This is somewhat of a generalization as there are regular and low fat yogurts, which have about the same calories but the low fat has less fat, slightly more carbs and more protein.”Recently, the National Yogurt Association (NYA) granted Red Mango the right to use the Live and Active Culture (LAC) Seal. In order to place the NYA Seal on its products, Red Mango frozen yogurt was identified by the NYA as containing a significant number of live and active cultures. Due largely to new product releases spurred by consumer interest in health and the popularity of yogurt offerings in the foodservice arena, frozen yogurt sales saw a 74 percent increase between 2011-2013 -- a monumental increase compared to the 3.9 percent increase of ice cream. Franchises like Menchie’s , Red Mango and Yogurtland are expanding to other countries.

 It’s clear that the frozen yogurt trend is far from experiencing another decline, but in fact is continuing to grow larger and more popular. This time around it has found its own niche.

Although the frozen yogurt franchise sector will remain vibrant, it doesn’t mean that all frozen yogurt franchisors will be successful. In fact as more frozen yogurt franchises are launched and more independents enter the arena this business sector will become highly competitive. 

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Comments

Frozen yogurt

In 2015 there will be as many frozen yogurt players as there are cupcake companies. One trick ponies, will find other concepts adding on to desert menus. Can't agree in the long term.

The 90's fad is very different than today's Yogurt craze

From the outset of todays frozen yogurt craze, it has had a very different appeal than the 90's yogurt fad.

First of all the 90's fad was based on sweetness, it was a dessert item similar to ice cream. The demise of the 90's franchise fad was when ice cream shops simply installed Taylor Freezers and offered soft serve frozen yogurt as a substitute for ice cream, the reality was that the "frozen yogurt" of the 90's had almost as many calories as ice cream and didn't taste nearly as good. 

Today's Yogurt faze is based on a tangier product with less sugar, tasting more like the Yogurt you get in the supermarkets. Sweetness can be added by the toppings one chooses. The advent of fresh fruit toppings only adds to the perception that today's yogurt is indeed a healthier product.

BTW consumption of yogurt has increased 10 fold since the 90's so more people are aware of its benefits and have a positive perception of yogurt as a heathlier product, not only as a substitue for ice cream.

Today's Yogurt does not appear to be a fad to me, the interesting thing to watch is whether the Yogurt shops of today will be able to build other day parts such as breakfast and lunch. Frozen Yogurt is now a suitable lunch for many people, watch out if Subway installs Taylor Freezers and starts offering frozen yogurt, that could have a devastating effect on "frozen yogurt" only operations.

Frozen yogurt is here to stay. The big question is which QSR's will be the first to make it part of their menu?

Frozen Yogurt

Jim, you're "spot on"