“People are a lot more concerned about what they eat than they have been before,” said Ken Thicke, the franchisee and area developer for Pinkberry in Western Canada. “Children are growing up with those habits, and that’s why it’s a trend that’s going to continue.”
Yogurt has become a growing staple of people’s diets in general. Yogurt is the fastest growing product in the consumer packaged goods segment in Canada, according to marketing research firm NPD Group. And in the past two years, there have been roughly 12 million servings of frozen yogurt in Canada.
“It is absolutely a growth category,” said Robert Carter, executive director of food service at NPD.
That shift in consumer palates has helped: Mr. Serruya remembers some American consumers in the early Yogen Fruz days thinking that the product was spoiled because it had a strong yogurt taste. With the craze for probiotic and Greek yogurts now, that’s rare.
How healthy a frozen yogurt is – even if it is low-fat – depends on how much a customer chooses to eat. Toppings offered in these stores include fresh fruit and granola, but also cheesecake pieces, crushed candy bars, and marshmallows, all of which can make the treat much less guilt-free. But the simple presence of low-fat flavours and fruit is a marketing tool. “We call it the halo effect. If you’ve got salads on your menu … people are going to go, ‘Ooh, wow great,’ and then they’ll go and order a hamburger. But there’s a halo effect, just having healthy items there,” Mr. Carter said.
Another halo comes from the celebrities who endorse these brands for free. The walls of Menchie’s locations are covered in snapshots of stars such as Taylor Swift and Selena Gomez buying cups of yogurt. Last year, Menchie’s opened a pop-up shop at the Toronto International Film Festival to market the celebrity connection. When Pinkberry opened its first location in Vancouver, it invited Glee star Cory Monteith to perform with his band, and attracted more than 4,000 visitors. Canadians who have spotted the brand in pop culture have posted on Pinkberry’s Facebook page asking when it will expand further, Mr. Thicke said. In its first year of operation in Canada, Pinkberry exceeded its sales targets by nearly 20 per cent.
There are some big names investing in the trend: Starbucks chief executive officer Howard Schultz has invested nearly $28-million in the Pinkberry chain (along with partner Dan Levitan through venture fund Maveron) and sits on its board. (The brand benefits from that connection, since reliable Starbucks franchisees have frequently been chosen to expand Pinkberry globally, Mr. Thicke said.)
But as the category grows, fuelled by some of the lowest franchise costs in the fast food industry, it will have to fight to keep that premium image. “We have not seen McDonald’s or Burger King go in with this style of frozen yogurt. When it does, then the bubble bursts,” Technomic’s Mr. Tristano said. “Remember Krispy Kreme? Everyone wanted those donuts. But when you could get Krispy Kreme everywhere, nobody wanted it anywhere.”
A GROWING TREND
If last summer was the year that California-style frozen yogurt joints began to appear in Canada, this was the year the trend began to grow. In many urban centres, shops opened on the same block vying for the dollars of the crowd seeking out the low-fat soft serve and its constellation of customizable topping options. Here’s a look at some of the big brands in Canada:
Headquarters: Markham, Ont.
First store opened in Canada: June, 2011.
Current number of stores: 27 (17 franchisees and 10 corporate-run) in Ontario.
Estimated sales in Canada this year: $18.8-million*
Expansion: Company plans to have 60 locations open by the end of next summer. Its next province is Quebec, and it is currently negotiating a partnership for a master franchisee for Western Canada.
Headquarters: Los Angeles
First store opened in Canada: Late 2010
Current number of stores: 23 coast to coast.
Estimated sales in Canada this year: $11.2-million*
Expansion: It will open seven more by year’s end. In 2013, growth will be exponential: 117 locations are in development for Canada, with plans to eventually reach 200 stores nationwide.
Headquarters: Los Angeles
First store opened in Canada: July, 2011
Current number of stores: Three in Western Canada.
Estimated sales in Canada this year: $3-million*
Expansion: A minimum of 17 more stores are planned for B.C. and Alberta in the next three years. The company is exploring expansion in Ontario, likely before next summer.
*Estimates from Technomic Inc., a food-service industry research and consulting firm.
Editor's note: Michael Shneer's last name was spelled incorrectly in an earlier version of this article. Also, the number of Yogurty's stores that are currently open in Ontario has been corrected.Report Typo/Error