Jamba Juice Case Study
The General Environment of the Industry
Jamba Juice and its immediate competitors operate under the industry entitled “snack and nonalcoholic beverage bars” [ (U.S. Census Bureau) ]. According to the U.S. Census Bureau the official description of the snack and nonalcoholic beverage bars is as follows: “This U.S. industry comprises establishments primarily engaged in (1) preparing and/or serving a specialty snack, such as ice cream, frozen yogurt, cookies, or popcorn or (2) serving nonalcoholic beverages, such as coffee, juices, or sodas for consumption on or near the premises. These establishments may carry and sell a combination of snack, nonalcoholic beverage, and other related products (e.g., coffee beans,
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Some potential disadvantages of Jamba’s reluctance to license include; increased growth of the competition, increased consumer awareness of the competition, and increased market share of the competition. For example, Jamba Juice requires its franchisee’s to have a minimum net worth of $1,000,000 in order to become a Jamba franchisee [ (Jamba Juice) ]. On the other hand, Smoothie King offers franchising opportunities to those with a minimum net worth of just $75,000 [ (Smoothie King) ]. Smoothie King only owns one of its 615 stores [ (Entrepreneur) ]. While Jamba Juice now owns only 42% of their 746 locations in the United States, this wasn’t the case back in August of 2008 [ (Jamba, inc.) ]. In their quarterly SEC filings, Jamba noted that as of July 15, 2008 they owned 518 of their 736 locations [ (Jamba, inc) ]. Profitability has increased since December of 2008. The profit margin as of the December 30, 2008 income statement was -$0.46, and has increased to -$0.06 at the end of the fiscal year of 2010 [ (Jamba, Inc. ) ]. The trend toward higher profitability will increase franchisee’s desire to buy a license and further increases the bargaining power of Jamba with its franchise buyers.
The Bargaining Power of Suppliers
In an effort to deliver high quality, fresh, and healthy products to its customers, Jamba Juice is heavily dependent on suppliers for fresh fruits and vegetables. Jamba’s suppliers have an increased amount of bargaining