2015 Second 100: Beverage-Snack chains on the rise2015 Second 100: Beverage-Snack chains on the rise

Like their larger counterparts in the Top 100, the Beverage-Snack chains in this year’s Second 100 continue to enjoy strong growth.

U.S. systemwide sales for the five-chain segment totaled $1.3 billion in the Latest Year, a year-over-year increase of 7.6 percent, on top of 6.3 percent growth a year earlier.

Unlike the Top 100 Beverage-Snack group, in which two multibillion dollar chains, Starbucks and Dunkin’ Donuts, dwarfed their competitors, the Second 100 Beverage-Snack chains are more evenly matched. They range from sales leader Cold Stone Creamery, with $364.7 million in U.S. system sales, to Tropical Smoothie Café, with $209.1 million in sales.

Sales rankings within the segment remained unchanged in the Latest Year, but several Beverage-Snack chains showed strong upward momentum. Three chains posted double-digit year-over-year sales growth rates, and two of them  — Tropical Smoothie Café and Peet’s Coffee & Tea — were also among the 10 fastest-growing chains in the entire Second 100.

Tropical Smoothie Café, the smallest in terms of sales, was the fastest-growing chain in the segment, boosting its U.S. systemwide sales by 23.2 percent in the Latest Year to take the top spot from Peet’s Coffee & Tea. That growth also made Tropical Smoothie Café the seventh fastest-growing chain overall in the Second 100.

Despite being edged out by Tropical Smoothie Café, Peet’s Coffee & Tea had another strong year, increasing its sales by more than 20.1 percent in the Latest Year, on top of 15.6 percent growth in the Preceding Year. The coffee-and-tea chain also made the list of the Second 100’s 10 fastest growing chains, coming in at tenth place.

Smoothie King also performed well, posting 17.7 percent sales growth. However, the two largest chains in the segment, Cold Stone Creamery and Caribou Coffee, saw their Latest-Year sales decline.

While aggressive unit expansion can be credited for some of the Beverage-Snack chains’ sales growth — especially at Tropical Smoothie Café and Smoothie King, which grew units by 14.2 percent and 10.5 percent, respectively — the players in this segment have also figured out how to grow unit volumes. Estimated sales per unit, or ESPU, grew an average 8.8 percent in Latest Year compared with 6.6 in the Preceding Year.

Unit volumes can be impacted by a number of factors, but for several leading brands in this segment product innovation was  key. At Smoothie King, for example, officials credit the chain’s success in part to the recent rollout of several new product lines.

“[Smoothie King] wasn’t as aggressive as it needed to be in terms of innovation,” said Tom O’Keefe, Smoothie King president and chief operating officer.  “[When I came on board in 2013] we hadn’t launched a new smoothie in a year and a half.”

Last year alone the chain launched a line of vegetarian smoothies, vegan smoothies and Chobani Greek Yogurt smoothies.

“Consumers are rewarding us for listening to their needs, desires and wants around the product,” O’Keefe said. “[Product innovation] is generating trial. Our growth is coming from traffic.”

The chain posted ESPU growth of 11.7 percent in the Latest Year, up from 4.9 percent in the Preceding Year.

The new product lines are part of a systematic reinvention of the 42-year-old brand that began two years ago and also included a retooled logo and a refreshed store design. O’Keefe also credits Smoothie King’s “Smoothies with a purpose” marketing campaign and partnerships with name brands such as Chobani and Ghirardelli.

Tropical Smoothie Café chief executive Mike Rotondo has also attributed the chain’s top performance largely to menu innovation.

“When we introduce new products, the customers seem to respond,” he told Nation’s Restaurant News last year.

Estimated sales per unit grew 10.1 percent in the Latest Year at the chain, compared with 4.4 percent growth a year earlier.  

Among the most successful recent innovations are the chain’s tacos, which were a  top-selling item when the chain promoted them last year, and the Island Green Smoothie, another product that quickly became a best-seller and continues to sell well. The chain continues to work on new products, including smoothies made with beets, kale and cucumber.