Frozen yogurt store revenue at $1.6 billion

by Staff
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LOS ANGELES — Revenue from frozen yogurt stores reached $1.6 billion in 2011, according to a new report from IBISWorld, an independent publisher of U.S. industry data.

“Intense competition will continue to define the industry,” said Nima Samadi, senior industry analyst. “This will be reflected in price-based competition and an increased emphasis on the regular introduction of new products. Most chains will introduce new healthy food alternatives and expand their current product lines. Moreover, over the next five years, industry profitability will remain strong because of higher sales volumes and resumed domestic expansion. Operators that experience stagnant profit margins domestically will likely double down on international expansion to grow bottom-line returns. Key areas include Asia and the Middle East.”

Demand is expected to increase in 2012 and remain robust as the economy improves, IBISWorld said.

Frozen yogurt stores are a part of the larger coffee and snack shops segment. The segment has profit of $1.6 billion and revenue of $26.5 billion. In the segment, coffee shops have 25% share, donut shops have 18% share, ice cream shops have 16% share, bagel shops have 15% and frozen yogurt shops have 6% share.

Overall, Starbucks has the largest market share in the segment, at 33%, while Dunkin’ Brands has a 16% share.

“During the recession, consumers spent less on luxuries like eating out, and when they did, they purchased lower-priced items,” IBISWorld said in its coffee and snack shops report. “So high-priced coffee drinks and other nonessential snacks lost the battle over people’s shrinking budgets.

“Consumers have also become increasingly health-conscious over the five years to 2011. Many retailers have responded by expanding the number of healthy options on their menus, and retailers like Jamba Juice have experienced growth due to the health benefits of their products. Still, the general trend toward healthy eating has hurt the industry’s unhealthier segments, such as donut and ice cream shops.”

To deal with declining sales, Jamba Juice, Starbucks and Dunkin’ Donuts have begun offering non-traditional, high-margin menu items like iced coffee drinks, new breakfast items and healthy wraps. Many of these companies also are looking to international markets for growth, IBISWorld said.

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