The treats segment may be getting more crowded, but Orange Leaf Frozen Yogurt has discovered a formula that allows it to grow rapidly in the face of fierce competition.
Founded in 2008, the Oklahoma City-based company in September opened its 200th store in Canton, Mass., and has nearly 100 more in the pipeline.
One-time customer Reese Travis, who first became a franchisee and later part of the brand’s ownership group, said: “The most attractive thing about Orange Leaf is the product. We felt like it is the best-tasting product on the market. We were customers first.
“As we got to understand the model and do our research, we liked the business model and the opportunity,” said Travis, who became a franchisee in 2009. “We saw the growing industry and the opportunity, so we became the franchisor.”
MARKET SEGMENT: self-serve frozen yogurt
AVERAGE TRANSACTION: $7.50
NO. OF UNITS: 200
SYSTEMWIDE SALES: $100 million projected for 2012
AVERAGE SEATING: 25-30
FUNDING FOR GROWTH: franchising
LEADERSHIP: Reese Travis, chief executive; Shelby Norman, director of corporate development; Chad Berry, vice president of accounting; Karley Hofer, director of brand development
YEAR FOUNDED: 2008
COMPETITION: Pinkberry, Red Mango
TARGET MARKETS: Northeast U.S., international
The current ownership bought the concept in April 2010 when it had 15 locations. Its chief target for growth, according to Travis, is the Northeast region of the United States.
But, in general, he sees plenty of opportunity for the brand across the United States, where the chain already has branches in 35 states.
“It’s about finding the great franchisee partner for new markets,” he said. “We’re also working on international opportunities.”
Orange Leaf opened a franchised store in Australia in 2011.
Chicago-based consultancy Technomic Inc. ranked Orange Leaf as its top limited-service chain in a 2012 report, pegging 2010-2011 sales growth at 210 percent. The company said it expects to reach annual systemwide sales of $100 million this year.
Travis said typical stores are 1,600 square feet to 1,800 square feet and seat between 25 and 30 in neighborhood-based locations. The average transaction, which could include multiple self-serve cups, is $7.50.
“We’re just your modern-day version of your neighborhood ice cream parlor,” he said. “At the end of the day, we like to have 50,000 people within a two- to five-mile radius with a healthy median income.”
Travis called Orange Leaf a franchise-friendly concept. The company has a franchising fee of $15,000, advertising fee of 1 percent and royalties of 4 percent. The company said the average turnkey investment is less than $400,000.
Other distinguishing traits, Travis said, are the frozen yogurt itself and the store atmosphere.
“We don’t want to single out one part of the demographic [as the customer base],” he said. “We want a concept that appeals to the masses. No matter what age you are, we want you to be able to come, get a great cup of frozen yogurt and enjoy the experience with your friends and family.”
The company also has a loyalty program, using what it calls the Ounce Back card, and features seasonal and promotional flavors. Most recently, Orange Leaf teamed with Nabisco to produce an Oreo-based flavor to celebrate the cookie’s 100th anniversary.
Travis said that Oreo flavor, based on Orange Leaf’s Birthday Cake and Cookies & Cream flavors, has been a popular seller.
Flavors are dispensed from eight frozen yogurt machines with two flavors each.
“Our machines are on stage when you walk into the store,” Travis said of the decor. “We have a very beautiful light- orange tile that surrounds them. There is a dark-orange border around the machine wall. When people walk in, we want them to be wowed by a bright, energetic atmosphere.”
Orange Leaf even has a frozen yogurt machine at the front desk of its new corporate headquarters in Oklahoma City, where it recently moved in anticipation of further growth.
“We’re looking to be at around 300 stores by next summer,” Travis said.
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