Thirsty for a Thousand
Aiming to reach 1,000 franchise locations by 2018, Smoothie King CEO Wan Kim and brand-new CDO Kevin King are aiming for world domination.
Differentiating themselves from fast food smoothie purveyors like McDonald’s and Dunkin Donuts, Smoothie King’s focus has always been less on taste and more on performance — advocating their “Smoothies with a purpose.”
By the end of 2017, the Smoothie King franchise is set to open its 1,000th location. It’s a goal owner and CEO Wan Kim had in his head when he first purchased the Covington-headquartered company from founder Steve Kuhnau in July of 2012.
“People thought I was crazy,” he laughs. “The company had grown to 600 stores after 40 years in business and here was this crazy guy coming along saying he was going to add another 400 stores in only five years. I guess it wasn’t easy to believe, and I guess it still isn’t.”
Ambitious as the undertaking is, Smoothie King is on track to meet its goal — Kim says the company is on target to open its 850th store by the end of this year, leaving 150 for 2017.
In order to assure the deadline is met, Kim recruited a heavy hitter to the Smoothie King team in June, bringing in Ohio native Kevin King as chief development officer.
King’s career has included an 11-year stint working at Papa Murphy’s. The Vancouver-based take-n-bake pizza chain was the fifth largest pizza company in the nation in 2015, with over 1,400 locations. During King’s time with the company, he helped Papa Murphy’s more than double its unit numbers.
Included in Smoothie King’s 1,000 franchise locations will be 110 international units. This year that will include the company’s first location in Dubai – opening this month — and units in Trinidad and Tobago.
Kim has first-hand experience in what it takes to run an international Smoothie King franchise. He opened and ran the first such undertaking in the company’s history in 2003, during its 30th year in business — a Smoothie King in Seoul, South Korea.
“Like many college students, I wasn’t eating very well. smoothies were a great way for me to get nutrition in a very convenient way.” - Wan Kim, owner and CEO
A native of South Korea, Kim was first introduced to smoothies while attending school at Boston University.
“Like many college students, I wasn’t eating very well,” he says. “Smoothies were a great way for me to get nutrition in a very convenient way.” His first introduction to Smoothie King was while getting his MBA at the University of Irvine in Southern California.
In 1998, Kim returned to Korea where his father ran a $200 million business that manufactured electronics for companies like Sony and Samsung.
“I am the oldest son, so the understanding was that I would eventually run the family business,” he says. “But after three years working for my father I was finding it was a lot harder than I had expected. My father had lost his father in the Korean War when he was only eight and, understandably, he was a person who didn’t want to take risks. I, however, was a passionate young man. It just wasn’t a good fit.”
So, along with some friends, Kim started making investments into small technology companies.
“In three years I had failed,” he says. “The investment was gone. The company was gone.”
While he says his father expected him to return to the family business, Kim says he was determined to find his own way.
“I learned that making investments and waiting is not my thing,” he says. “The management side was more what I was looking for.”
When someone advised him to “do what you like,” Kim says he thought back to smoothies.
“I was drinking them every day in school, so I thought maybe Koreans would also appreciate them.”
So Kim approached Smoothie King founder Steve Kuhnau and pitched his idea.
TOP- Kim says the purchase of the 10-year naming rights to the New Orleans Arena in 2012 elevated the brand both locally and nationally and demonstrated his commitment to “be different.” BOTTOM - The company has a strong presence in Texas and Florida (seen here is a store in Arlington, Texas), and growth efforts are currently being focused on the East Coast. Photos Courtesy of Smoothie King
“It was a big risk — for them and for me,” Kim says. It also turned out to be more work than he could have imagined.
“We had to do a lot of educating,” he says. “Fortunately, we were able to secure a prime location in a very high traffic area of Seoul kind of like Times Square. So we did a lot of sampling. Along with the samples we’d hand out this card that explained what a smoothie is and why it’s better than just drinking juice and what nutrition it has. They would drink and read at the same time and they would get it.”
The sizes of the products, and even the products themselves were altered thanks to information from focus groups.
“We’re just used to smaller sizes in Korea,” Kim says. “So instead of 20, 32 and 40-ounce sizes, we offered 12, 16 and 20. The taste profile is also different. Things are less sweet in Korea so we altered the smoothies to fit that.”
From 2003 to 2007 Kim says his team was relentless, and so were the hours.
“It was a lot of long days in those early years,” he says. “If somebody went home at 10 or 11 p.m. they’d be apologizing for leaving early. I was sometimes meeting with vendors — I’m not kidding — at 1 or 2 a.m.”
While typical franchisees don’t have to worry about things like research and development, purchasing and distribution, Kim did. “Even the store design, we didn’t have the same materials available so we just did our best to mimic it.”
By 2010, Kim’s tireless efforts had paid off. The Smoothie King brand had a 94 percent recognition in Korea.
“Once we had that kind of recognition, expansion was easy,” he says.
“Every smoothie is made with a purpose... Our smoothies help people achieve a goal, whether that’s to increase wellness, lose weight or serve as a meal replacement.”
- Wan Kim, owner and CEO
As the profits rolled in, however, other companies took notice.
“McDonald’s, Starbucks, Dunkin Donuts — everyone started offering smoothies, so then the challenge became how to differentiate ourselves in the marketplace,” he says.
The answer, Kim says, lay in something Kuhnau had told him when he first started working with the company.
“Steve told me that he never thought about taste first,” he says. “Every smoothie is made with a purpose. For instance “The Hulk” smoothie has 1,000 calories. Steve created it for a friend of his that was going through chemotherapy and needed to gain weight. Our smoothies help people achieve a goal, whether that’s to increase wellness, lose weight or serve as a meal replacement.”
Smoothie King currently has 60 different offerings, with more constantly in development in the company’s lab near Clearview Mall in New Orleans where a four person staff is entirely dedicated to product development. Recent additions have included vegan smoothies, a coffee high-protein offering and even a King Cake smoothie that was introduced this past January.
Should We Stay or Should We Go
After opening 110 stores in Korea, Kim was approached by Kuhnau in 2012 who was ready to sell the business. With backing from Standard Chartered Private Equity and the National Pension Service of the Republic of Korea, Kim purchased Smoothie King for $58 million.
Kim originally looked at moving the company’s headquarters out of state.
“I wasn’t from the southern region, so I had no connection here and I was originally looking at Dallas,” he says. “It’s very business friendly and has good transportation, good tax rates and a big airport. It’s also No. 1 in the food and beverage industry, so it would be easy for recruitment. When I moved here, though, I saw the importance of being local, of making that commitment. My family and I (Kim has a wife and three children) really love it here.”
TOP - Smoothie King currently features 60 different smoothies, with recent additions including a line featuring Chobani® Greek Yogurt (right) designed as meal replacement options, and Vegan Smoothies (left), along with a new Immune Builder line and Coffee High-Protein smoothies. BOTTOM - After helping Papa Murphy’s double its units during his 11-year tenure with the company, CDO Kevin King is tasked with making sure Smoothie King hits its 1,000 franchise goal. Photo Courtesy of Smoothie King and Greg Miles
Not long after moving the headquarters from Covington to Metairie (where Kim lives), Kim decided to really demonstrate his commitment to the area in a big way— 571,000 square feet to be exact.
On Feb. 6, 2014, the New Orleans Arena (the home court for New Orleans’ NBA Franchise, the Pelicans) was officially renamed the Smoothie King Arena.
“The agreement to purchase the 10-year naming rights was actually made really quickly and easily,” Kim says. “The deal, however, took about a year in total because of the eight months the NBA took to go through every one of our ingredients and make sure they were athletically friendly.”
He says the purchase has had a lot of intangible benefits for the company. “I think it definitely lifted our branding, not just locally, but nationally, and guests just see us differently,” he says. “I had said when I bought the company that we will be different. I think after that, people really knew I meant it.”
To really make the impact he’s reaching for, Kim knows he can’t go it alone. He says that in less than three years he’s personally conducted more than 200 interviews to fill various C-level positions. King is his most recent hire.
“We’re a 43 year-old brand now so of course there’s things that we do just because that’s how we’ve always done it,” he says. “We’re trying to go to IPO in two years, so Kevin is here to help in making sure that everything is in place.”
A native of Columbus Ohio, King’s career has been dominated by a less health-focused consumable: pizza. After five years at Dominos, 13 years at a pizza chain called Donatos (headquartered in Ohio) and a stint in retail branch development at Chase bank, King moved outside of Portland, Oregon to work with Papa Murphy’s.
“As chief development officer there, I did a lot of franchise development and sales, as well as real estate and construction, so when I got the call from the recruiter for this position it sounded like a good fit,” he says.
Unlike with pizza, King says the company’s offering fits in well with the healthy, active lifestyle that the younger generation, especially, is embracing. The company currently has a presence in 33 states, the Caymans and the Republic of Korea. King’s job is to continue to expand the Smoothie King brand worldwide.
“Jamba Juice is No. 1 right now, but we hope to catch them in the next 12 months,” he says. “Their footprint is really stronger in the southwest, so we don’t overlap very much.”
King says the natural focus for growth is in areas with proximity to New Orleans.
“Good sites of course are going to have high traffic, a population that is middle to upper level income-wise and has a lot of young singles and families,” - Kevin KING, CDO
“Baton Rouge is a huge market for us,” he says. “Texas is also great because it’s close so the brand recognition is higher. We also have a big presence in Florida.”
King says St. Louis, Nashville and Atlanta have also worked well and the company’s footprint is growing in the Carolinas and Virginia. He says ideal franchisees for Smoothie King have a solid business background, but not necessarily in retail, are involved in their community and ideally practice a healthy and active lifestyle. The company also offers veterans a 20 percent discount off the initial franchise fee.
“Good sites of course are going to have high traffic, a population that is middle to upper level income-wise and has a lot of young singles and families,” he says.
With the first stores opening in Dubai and Trinidad this fall, King says it helps that Kim has walked the same road.
“He knows the challenges that are involved with franchising internationally and he can empathize with them,” he says. “But he challenges them, too.”
Further Down the Road
“We’re doing market planning now, looking at what is possible in terms of growth,” Kim says. “We think about 2,500 to 3,000 franchises in the U.S., which will include more of an intense focus on the East Coast in places like D.C., Maryland and Virginia.”
In 2015, Smoothie King was again ranked No. 1 in the juice bar category by Entrepreneur magazine — the 23rd year in a row. From Jan. 1 to June 30, the company reported a 12.4 percent increase in same-store sales.
Kim says he’s happy to see that the market for healthy products and offerings is just getting bigger and bigger.
“The younger generation now are telling us how important it is,” he says. “And we’re listening.”
Smoothie King Timeline
1973 - Steve Kuhnau founds the first Smoothie King store in Kenner
1989 - Company begins to franchise – first company of its kind to franchise
2003 - First international franchise opens in South Korea.
2012 - Wan Kim purchases Smoothie King for $58 million. Headquarters moved from Covington to Metairie
2014 - Company secures 10-year naming rights to New Orleans Arena
2015 - Smoothie King ranked No. 1 by Entrepreneur magazine in the juice bar category for the 23rd year in a row
2016 - First franchise opens in Dubai