From Pinkberry to Crackberry: A success story
Food blogger Rosie O'Neill: "I would get Pinkberry IV'ed into my veins if I could"
Leslie Grossman, actress: "The first time you try it, you're like — 'Eh,' and then you're like, 'Did I eat that whole thing?' And then the next day you are like, 'I could really go for a Pinkberry right now.' "
Neighbors (from friendly to not so friendly): "Goodluck lovely lady"; (first month), "keep your customers off our lawns"(second month)
Pinkberry: The story of great frozen yogurt and angry neighbors
Pinkberry opened in Los Angeles in 2005 as a tart frozen yogurt brand. It was started by a 32-year-old Korean woman as a small frozen yogurt shop between a natural Viagra store and a private home. After only 2 months of its opening, Pinkberry came to be known as “Crackberry”, eliciting some irrational behaviors on behalf of the customers. The small frozen yogurt shop was once a medical marijuana distribution center. Does this explain the very long lines of 20-30 minutes in front of the shop, the thousands of parking tickets that amounted to 175,000 USD in one month, and the empty cups thrown in the neighbors’ lawn causing significant outrage?
Business Model
I personally would like to attribute this success to the business and operating model of Pinkberry. This concept started in California by offering the right product to the right market. In a very “conscious” community, be it health, trend or weight, Pinkberry managed to offer a product made of real milk and fresh fruit toppings. It was healthy without the overbearing sweetness that one would attribute to artificial flavoring, and had low calories (20 calories per ounce).
Because of the benefits and innovation that the product bring to the market, the frozen yogurt offered in 4 different sizes was priced at a premium of at least 5$.
The layout of the store also played an important role in the experience; the owner wanted to make the store special, so the design of the interior was targeting the ‘iPod generation’ with green, and pink colors, reflecting glass surfaces and Philippe Starck tables.
Operating Model
Offering the right product, at the right place with the right design is often not enough. Hwang, Pinkberry’s owner, made sure that Pinkberry also have a strong operating model. When it first started, Pinkberry was extremely streamlined. They only offered two flavors in the shop: Plain and green tea yogurt with a set of different toppings. This model was successful as it significantly decreased the need for inventory. Furthermore, very few machineries were needed. The recipe that was Hwang’s was also simple and standardized. Being a very quick perishable product, launching with only very few items on the menu (they didn’t even serve water when they first started) was the right move. This guaranteed minimal to no waste in the store.
The simple operating model also allowed for a very easy training for the employees, as there were few machineries to operate; after all, how hard could it be to pull down a handle of a yogurt machine? – This saved them a lot of money on personnel and training as high turnover in this business doesn’t jeopardize the quality of the experience much.
Pinkberry currently owns >100 stores and have expanded internationally as well. A store on average receives more than 1,500 customers a day for a daily revenue of ~ 250,000 USD. With this expansion, they also grew their menu, but not that extensively. Any customer in the perfectly laid out Pinkberry store can see that they offer 7-8 flavors (Plain, green tea, watermelon, pomegranate, peanut butter, mango and chocolate), as well as one seasonal flavor that vary by location and by occasion (Pumpkin flavor in fall season). They also kept a very limited number of toppings available for their customers. With the main focus being frozen yogurt, Pinkberry also added smoothies to their menu. This limited assortment allowed them to keep the true identity of the brand, keep the brand focused, avoid derailment and most importantly remained faithful to their customers by offering a great experience: an amazing product and a quick service (due to the very short cycle time I have to say). Unlike Starbucks, Pinkberry kept the variation from the final product minimal which allows for standardization of quality and consistency of experience.
As seen, the two models complement each other, the concept of the store, the product, pricing, promotion and the space needed and machineries, and labor were the right recipe for success. Being the first mover gave them a competitive edge and allowed them to stay ahead of the competition by allowing them to have a simple and pleasant experience offered to customers.
With this offering, Pinkberry managed to maintain a “groupie-like” following. Well, why not? This place is pure happiness, except for the complete disappointment of when they discontinued chocolate hazelnut…
Sources:
1- https://signalvnoise.com/posts/2007-how-chipotle-pinkberry-and-others-win-big-by-doing-just-a-few-things-well
2- http://articles.latimes.com/2006/aug/04/entertainment/et-pinkberry
3- http://scholarsarchive.jwu.edu/ac_symposium/20/
4- http://money.usnews.com/money/blogs/small-biz-scene/2007/05/10/pinkberrys-success-story
5- http://www.pinkberry.com/menu/
That was quite a thrilling read Ranime! As somebody who loves frozen yogurt, I’m generally disappointed by the lack of variety offered by Pinkberry. Do you think there is a way that Pinkberry could maintain their low selection but also increase variety, through new flavor roll out every so often? I think this could help increase their growth and based on your write up I do not think there would be much more costs associated with doing this. Maybe we can discuss over some crackberry? :))))))
Awesome post, Ranime! I am a huge Frozen Yogurt fan and Pinkberry is by far one of my favorite go-to brands. Myself and other Pinkberry loyalists often joke that we are willing to pay the premium price merely because its “tart” flavor tastes best among competitors. Do you think loyalists will be enough to carry the brand forward? As new competitors emerge and as the Frozen Yogurt infatuation slows down, how do you think Pinkberry is positioned for long-term survival?
Good stuff, Ranime! Like Ching-Ching, I’m left wondering about Pinkberry’s long-term potential. While you noted Pinkberry had the advantage of being a first mover, are you worried that Pinkberry will be forced to expand its menu as competition floods the market with a wider variety of innovative flavors for its customers? Do you see Pinkberry ever expanding into grocery stores or would that take away from the brand’s streamlined experience that its users have grown to love in its stores?
Ranime, Rob here. I also love Pinkberry and enjoyed thinking about the drivers behind the Company’s success. I am slightly more bullish than David and Ching-Ching on their long-term viability. I think that the Company’s simplified menu and premium posting have allowed them to create a very strong brand behind a consistent customer experience. Unlike Cupcake stores, ice cream stores have been a staple of many an American town for decades. I believe that Pinkberry has repackaged this guilty pleasure into a hip, healthy indulgence and the stores ubiquity and operating elegance will give them staying power.
Rob
Ranime, nice read. I think they’ve create a really neat experience, and as Robert said, created something hip out of a tried and true experience in America. My concern is that others have taken advantage of the “sugar rush” in the market and offer a superior experience by allowing consumers to DIY and greater selection a la 16 Handles. Although 16 Handles in only in New York, there are copy cats in other geographies. You could argue these are better business models because the DIY allows for greater throughput and up sell because people always load up with more than they expect (by definition, every consumer is violating the golden rule of not grocery shopping when you’re hungry). I’m really interested to see how the two companies compete when both storefronts are present.
Pinkberry is great, thanks for a fun and informative read! I’ve always been curious about the gender breakdown among consumers. Heck, the title even has the word “pink” in it, yet you’ll find people of both genders frequenting this store!