Smoothie Chain Booster Juice Finds Expanding Globally Is Not Always Smooth

Smoothie chain Booster Juice finds expanding globally is not always smooth

Laura Bogomolny

It's mid-morning in the maze of underground tunnels connecting Toronto's financial-district skyscrapers. Since the breakfast crowd has already passed through, and the lunchtime rush has yet to appear, most of the fast-food outlets in the Exchange Tower's basement food court are quiet, their workers getting a well-deserved break. Behind the counter at Booster Juice, however, there's plenty of activity. At this juice and smoothie bar, employees are busy mixing up fresh drinks for a continuous flow of customers. Booster Juice co-founder, president and CEO Dale Wishewan (left) watches with pride as a 16-ounce cup of Açai Brazilian Power Berry smoothie, one of the latest exotic additions to his menu, is served.

It's been just over six years since Wishewan and business partner Jonathan Amack opened their first Booster Juice outlet in suburban Edmonton. Since then, the company, privately financed from the outset, has grown by leaps and bounds. The bulk of its stores are still in the West, but Booster Juice outlets now operate all across the country, from Victoria to St. John's. Some sell muffins and sandwiches, but, by and large, customers flock to the brightly designed stores for frozen, blended-fruit- and-yogurt or non-dairy-sorbet beverages. By responding to a thirst for healthier fast- food options, Booster Juice has tapped the market for freshly squeezed refreshment.

The company's rapid expansion was no accident. With several smoothie companies opening in Canada in the late 1990s, Wishewan saw the need to expand as fast as he could in order to entrench the Booster Juice brand. From Day 1, everything, from the store's decor to its menu was created with an eye toward franchising. "Our intention Dale Wishewan, co- founder of Booster Juice was to stamp these stores across the country," says Wishewan. In 2000, in order to decrease competition, Booster Juice bought out two smaller smoothie chains.

Today, Booster Juice has more than twice as many stores as its biggest competitor, another Alberta-based smoothie company, Jugo Juice. Not that Booster Juice's ascent has been flawless. An average smoothie costs about $5, similar to a fancy coffee drink, but is made from expensive produce and dairy, not cheap coffee beans. "If you're doing everything right," warns Wishewan, "it is only a 20% margin. And it is not easy to do everything right."

In 2002, with nearly 75 stores open, Wishewan decided to drastically slow Booster Juice's growth. "We could have opened 40 stores that year," he says, "but we said to ourselves that this whole thing is going to implode on us if we don't put the brakes on." Wishewan and his management team spent about a year ironing out various kinks in the business plan. He secured better deals with food distributors and improved quality control by hiring permanent staff to visit each franchise about four times a year to ensure it is performing adequately. "If the staff aren't very focused on portion control," says Wishewan, "you'll have overage all the time. Or, if an employee's friend comes in, there is potential for product not to be rung in. Next thing you know, your food costs are 36% or 37%, as opposed to the average 29% to 31%."

The strategic, yet temporary, slowdown paid off for Booster Juice. Today, its 130 Canadian stores, most in traditional retail locations like shopping malls, are doing well. (Booster Juice has closed or relocated just under 10% of the shops it has opened.) Outlets in hospitals, universities and airports are coming on stream, too. Booster Juice is also venturing into supermarkets. After a two-week trial in early January, Sobeys agreed to stock Booster Juice's new ready-to-drink bottled smoothies, which come in individual 350-millilitre servings and sell for $2.99 each. Wishewan says he is negotiating with three other major grocery chains as well.

Encouraged by their success at home, Wishewan and Amack want to expand internationally. What they are learning, however, is that taking the Booster Juice concept abroad isn't simple. Or cheap.

One of the biggest hurdles is finding suitable overseas partners. "It is challenging to qualify an individual franchisee in Canada," says Wishewan, "but it is 10 times as important to choose the right master franchisor" for an entire country, or major city. Breaking into the U.K. market is high on Booster Juice's list of priorities, but, after months of negotiations, Wishewan is still going back and forth with a possible partner there. The same situation is playing out with Booster Juice's attempts to get into Shanghai, China.

Wishewan and Amack aren't accustomed to the struggles involved with finding a master franchisor. They lucked out with their first international foray, wading into Saudi Arabia in 2004 with the highly experienced Fawaz Al Hokair Group, which had sought out Booster Juice. Fawaz Al Hokair, which owns a number of shopping malls in Saudi Arabia and has brought Cinnabon, Seattle's Best Coffee and La Senza to Riyadh, was able to leverage its substantial infrastructure and local connections to open Booster Juice's first overseas outlet. Now, 10 Booster Juice outlets operate in Saudi Arabia, and another five are under construction.

But even with Fawaz Al Hokair's help, Booster Juice still spent more than 10 times as much to open its first Middle East location as it spends on a new location in Canada. Developing new menus, translating material into Arabic, flying back and forth--costs piled up. What's more, Booster Juice initially shipped most product ingredients-- everything from frozen blueberries and bananas to its secret-recipe sorbets--to Saudi Arabia from Edmonton, at great expense. Fresh produce is sourced locally, but Wishewan says finding appropriate local networks is time- consuming and tedious. He has just secured a dairy manufacturer to prepare Booster Juice's sorbets overseas.

One thing Booster Juice didn't have to worry about when it set up shop in Saudi Arabia was competition from established chains. While freshly squeezed juice is a popular part of the Middle Eastern diet, there wasn't a dominant brand. Closer to home, however, it's another story. Jamba Juice, established in 1990, dominates the U.S. west coast, with more than 525 outlets, while Smoothie King, headquartered near New Orleans, has more than 380 shops covering the East. Other popular U.S. chains include Freshëns and Planet Smoothie. With four Booster Juice stores opening in Arizona in the next three months, as well as one in Manhattan's financial district and three in southern California, Wishewan and Amack have good reason to be nervous.

"This is our first time going into a market where there are more recognizable brands than us," Wishewan says. "We're coming in as the new kids on the block. How are we going to position ourselves to try to win over some customers?" He expects Booster Juice's all-natural ingredients will be a selling point. He's also hoping locations in new retail developments, alongside popular stores like Old Navy and Pier 1 Imports, will give him an edge. But he's not sure what else to do. "This may be our biggest challenge," Wishewan says.

Outside North America, teaching possible customers what a smoothie is--and why they might want one--will be key to Booster Juice's success. In the United States, triumph will come by convincing regular smoothie drinkers to switch brands. In both cases, finding reliable franchisees, good real estate, and high-quality food suppliers is essential.

Wishewan and Amack are confident about Booster Juice's prospects in Canada, suggesting the number of outlets could rise as high as 350 before the market is saturated. But going global is a whole different ball game, and Booster Juice is leery of stretching itself too thin. "International expansion is a real focus for our company at this point," says Wishewan. "But, overall, the logistics of shipping and sourcing distributors has always been a tedious, challenging process for us." See lemons? Make juice

The company: Dale Wishewan and Jonathan Amack opened their first smoothie outlet in November 1999 in Sherwood Park, a wealthy Edmonton suburb. Capitalizing on the trend toward healthier options, Booster Juice, profitable in its first year, now has 130 across Canada.

The success: Initially, Booster Juice had several competitors. But, early on, Wishewan and Amack bought out a few smaller operations. They then focused on building their brand. Now, the company, which offers free herbal nutritional "boosters" in every smoothie, has more than twice as many stores as its next-biggest competitor, Alberta-based Jugo Juice.

The challenge: Booster Juice dominates the Canadian smoothie market, but it is now attempting to expand internationally. Jamba Juice and Smoothie King have already cornered the U.S. market, while, overseas, potential customers don't even know what smoothies are. What's more, finding the right person to champion the chain in a foreign country can be difficult. Booster Juice must determine how to franchise on a global scale.