Fro-yo chains diversify to stay hot during winter

Rather than go into hibernation when demand for their core product dips as temperatures drop, frozen-yogurt chains have worked to maintain business during cold winter months by diversifying their menus.

Mandy Calera, founder and chief executive of Chicago-based Forever Yogurt, has operated through two winters in the short lifespan of his seven-unit chain, which was long enough to know that the brand needed some warm products that would give guests a reason to visit in cold weather.

Last December, the chain started its Froth beverage bar, which makes flavored hot chocolate by melting the chocolate toppings available as options for frozen-yogurt customers. Popular varieties include the P.B. Confidential, made from melted Reese’s peanut butter cups and steamed milk, or the Cliffhanger, made from melted Andes chocolate mints.

“We thought it would be a good idea to infuse something into the store that is still on the dessert side but has some warmth as well,” Calera said. “It’s about using all these nostalgic chocolates we’ve all grown up with, and it’s a fun mix.”

Cool (sometimes hot) ideas

This year Forever Yogurt extended its Froth line by offering espresso, which could turn any of the flavored hot chocolates into a latte. Other flavor offerings include Hershey’s milk chocolate and dark chocolate, Nutella, and Nestle Abuelita.

Incremental food costs were not onerous since Forever Yogurt is repurposing toppings it already offers for frozen-yogurt orders, Calera said, though each location did have to invest in frothing machines to steam the milk and to buy some new dairy options.

Ritter’s Frozen Custard, a 25-unit chain in New York-based Trufoods’ portfolio, has brought in new holiday- and winter-theme flavors to its lineup to maintain its traffic, according to Trufoods chief operating officer Fred Kirvan. Those offerings feature the tastes of pumpkin, apple, cherry, mint and dark chocolate, which Kirvan said tend to be on consumers' minds during the holidays. The brand’s cones and bowls, as well as limited-time special pies and cakes, tend to promote pumpkin and apple from September to November and switch to mint for the December holidays.

Kirvan added that Ritter’s benefits from competitors' aggressive advertising of those same flavors, such as pumpkin-flavored drinks from Dunkin’ Donuts or Starbucks.

“We’ve found success with focusing on seasonal flavors, and we often end up piggy-backing on a lot of advertising elsewhere where people are focused on pumpkin and apple,” Kirvan explained. “We’re creating more occasions for people to use us. … You have to fish while people are biting. If people are thinking about peppermint, then that’s what you promote.”

Orange Leaf Yogurt, the Oklahoma City-based chain of 210 yogurt shops, also turns to holiday flavors to entice its customers to brave the cold. This year it is offering eggnog, English toffee, chocolate mint, gingerbread, hazelnut and peppermint flavors.

The brand also is testing yogurt-infused beverages, FroJoe and FroCocoa, in about 30 percent of its stores, added chief executive Reese Travis. The drinks offer either coffee or hot chocolate for a set price and then allow guests to add their favorite flavor of frozen yogurt and pay by the ounce.

Another 20 percent of stores are also testing new sundaes where frozen yogurt is poured on top of baked goods that are at the bottom of a bowl, according to Travis. “Whenever we look at the fourth quarter, we talk about doing a campaign or product offering to stay relevant,” he said.

In addition to those offerings, Orange Leaf is running a philanthropic promotion that rewards customers with three free ounces of yogurt for every new pair of pajamas they bring in to donate to families in need. A pajama drive stands out from other promotions because it is not a common clothing item like coats that businesses ask for, but nonetheless would be appreciated by needy families, Travis said. He added that the cause-marketing angle is very important to each Orange Leaf store’s goal of becoming entwined in the local community.

The gift of favorable margins

Travis added that Orange Leaf’s efforts to diversify the menu help the chain avoid having to discount any of its products to maintain sales or traffic in winter, something the brand and its franchisees do not want to do unless it is absolutely necessary.

“But we have to be competitive,” he said. “We try to come in at a fair-market price, and we can do incentives with it, but for the most part we can have a solid price point on those beverage opportunities.”

Forever Yogurt has not discounted its frozen yogurt, either, but its sales of hot chocolate have favorable margins, Calera said. The chocolate ingredients and different milk options produce a food cost between $1.50 and $2 per cup, and the brand sells the drink for $3.89.

In the winter months, Ritter’s slightly discounts quarts and pints of ice cream in order to motivate its customers to take their products home, “but most franchisees are not receptive to discounting any other products,” Kirvan said.

The brand also reallocates its marketing spending toward social media and opt-in email alerts, as customers typically are more likely to be inside at their computers from November to March and thus are most reachable by digital communication.

“We’re doing lots of radio and coupon drops in the summer,” Kirvan said, “but in cold winter months, they’re not at the beach, so this method is more effective for us.”

Contact Mark Brandau at [email protected].
Follow him on Twitter: @Mark_from_NRN