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Kahala Brands buys Pinkberry

Acquisition gives Kahala 18 quick-service chains

Kahala Brands continued its shopping spree on Monday when it announced the acquisition of Pinkberry, the Santa Monica, Calif.-based frozen yogurt chain.

Terms of the deal were not disclosed, but the purchase gives Scottsdale, Ariz.-based Kahala its fourth new concept this year, following acquisitions of Planet Smoothie, Tasti D-Lite and Maui Wowi.

The 260-unit Pinkberry, founded a decade ago, is widely credited for kicking off the most recent frozen yogurt trend.

“The Pinkberry brand is known worldwide for its super-premium frozen yogurt and truly is the concept that reignited the frozen yogurt category a decade ago,” Michael Serruya, chairman and CEO of Kahala Brands, said in a statement. “Pinkberry has a history of exceptional growth in just 10 years because of the product quality, flavor profile and personality of the concept.”

Pinkberry opened its first location in West Hollywood, Calif., serving tart frozen yogurt topped with fruit, granola and other toppings. The location drew numerous famous customers, and the brand became one of the most talked about concepts in the country.

The company attracted millions in investments, including $27.5 million from Maveron, the venture capital firm co-founded by Starbucks founder Howard Schultz.

But Pinkberry also spawned dozens of competitors and some copycats around the country.

The competition hurt the chain’s traffic. According to the company’s most recent franchise disclosure document, average unit volumes fell 16.2 percent in 2014, on top of a 5.7-percent decrease the year before, to $559,517. The company said in the document that it opened more units in lower-density markets, but also said traffic declined that year due to an increase in competition in the frozen treat market.

The acquisition of Pinkberry continues a period of intense activity for Kahala that kicked off in 2013, when the Serruya family, owners of the Canadian frozen yogurt chain Yogen Früz, bought controlling interest in the franchisor.

Kahala already owned numerous brands, notably Blimpie and Cold Stone Creamery. But under Michael Serruya, the company has only added to that collection. The company’s 18 quick-service brands have about 3,000 locations in 34 countries.

Kahala will consolidate Pinkberry’s California-based corporate operations in its Scottsdale headquarters. The advisory firm Levy Capital Partners advised Kahala on the deal.

“We very much look forward to bringing the support services and best practices we have from within Kahala Brands and aligning with the Pinkberry franchisees to help maximize the brand’s potential for continued evolution and success,” Serruya said. “It’s an excellent strategic fit for our company and presents an exciting opportunity for future development.”

Contact Jonathan Maze at [email protected]
Follow him on Twitter: @jonathanmaze

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