A drop in disposable income and escalating competition depressed demand for products from the Juice and Smoothie Bar industry in the past five years. IBISWorld industry analyst Agata Kaczanowska says competition increased from fast-food chains and frozen yogurt shops, in particular, many of which recently added smoothies and juices to their menus. In response, small juice and smoothie bars are franchising in order to consolidate marketing costs. Likewise, large franchise operations are selling their locations to franchisees as a way of earning capital and cutting operating expenses.
The Juice and Smoothie Bars industry revenue is estimated to decline 0.4% annually on average since 2007 to $1.8 billion by 2012. According to Kaczanowska, though, the industry is expected to rebound in 2012 because consumers will have more money to buy industry products and less time to make their own juices or smoothies, as disposable income and employment grow.
Large industry operators are looking to expand internationally in order to capture faster disposable income growth abroad. For example, Jamba Juice has announced that it will expand significantly in South Korea over the next decade. Other major companies like Smoothie King and Robeks have sights set abroad too. At the same time, companies are expected to downsize their stores, in order to cut down operating expenses and bolster profit. Smaller stores require fewer employees, which is particularly important because the minimum wage is forecast to continue increasing during the next five years. Downsizing will help profit expand slightly; though it is not forecast to reach prerecession levels because competition from other food retailers forces the industry to keep prices low. Additionally, a shift to more environmentally friendly cups could eat into industry profit in the next five years.