'Smoothie King' in Crisis, Can It Rise Again? [Hidden Business Story]

'Smoothie' Developed to Cure Chronic Diseases Like Allergies and Hypoglycemia
Loved Worldwide for Over 40 Years Since Business Launch
Achieved No.1 Sales Among Global Stores Just 3 Years After Entering Korea
Diverse Beverage Shops, Intensified Competition...Facing Performance Slump Crisis
Smoothie King Korea Seeking Solutions to Overcome Challenges

Photo by Smoothie King Korea official website capture

[Asia Economy Reporter Suwan Kim] There was once a brand operating 733 stores across three countries: 620 in the United States, 105 in Korea, and 8 in Singapore, with a global annual revenue of 300 billion KRW and Korean sales reaching 28.8 billion KRW. This is the story of Smoothie King, which originated in the U.S. and was later acquired by a Korean company. Smoothie King gained immense popularity worldwide as a single drink provided various nutrients such as protein, minerals, and vitamins. In particular, after landing in Korea, it even achieved the remarkable feat of ranking first in global sales. However, last year, it faced difficulties with a net loss of 1.6 billion KRW, a double-digit increase in losses compared to the previous year. Why is Smoothie King facing a crisis?

◆ The Beginning of Smoothie History... Developed to Cure a Chronic Illness

Founder Steve Kuno. Photo by Smoothie King Korea official website capture

The history of Smoothie King began with its founder Steve Kuhnau, who was working as a soda shop clerk and created a drink by adding minerals, protein, and vitamins to fruit to cure his hypoglycemia.

At the time, Steve Kuhnau struggled to choose foods due to allergies and hypoglycemia. To address his chronic illness, he researched low-calorie, nutritionally balanced foods and eventually developed the smoothie.

Steve Kuhnau opened the first Smoothie King store in Louisiana in 1973 and started franchising in 1989.

In Korea, the first store opened in Myeongdong in 2003. At that time, the company succeeded in targeting the market with a localization strategy by selecting and developing smoothie menus from the diverse U.S. offerings that suited Korean tastes.

As popularity soared, Smoothie King Korea acquired the U.S. headquarters in 2012. Subsequently, Shinsegae Group signed a share acquisition contract for Korean and Vietnamese business rights, securing domestic sales rights.

Following the acquisition of the U.S. headquarters, Smoothie King Korea actively expanded its market presence in the U.S. and entered Asian markets such as China and Singapore. As a result, it achieved significant success operating over 700 stores worldwide.

◆ Smoothie King Korea’s Growth... From No. 1 in Sales to a Fall

Photo by Smoothie King Korea official website capture

After Smoothie King landed in Korea, its growth continued annually. The Myeongdong first store ranked first in sales for three consecutive years from 2005 to 2007, to the extent that the U.S. headquarters benchmarked it.

Notably, just three years after entering Korea, in 2006, it achieved the record of ranking first in sales among over 600 stores worldwide.

However, success did not last long. Due to the seasonal nature of smoothie sales and fierce competition as coffee shops introduced similar products like smoothies and health drinks, the market became tough. Efforts to expand the target demographic also failed to yield results. Smoothie King launched products using mulberry and Hallabong for middle-aged and older customers and added meal replacement menus. They also released retail products such as health supplements and cosmetics, but struggled to captivate consumers.

In December 2015, Shinsegae Food, which acquired domestic sales rights for Smoothie King, ambitiously started with dreams of creating a 'second Starbucks,' but from the first year of acquisition, it recorded sales of 20.1 billion KRW and a net loss of 500 million KRW, falling short of expectations.

Recent performance has also been poor. According to the Financial Supervisory Service’s electronic disclosure system in March, Smoothie King’s net loss last year was 1.6 billion KRW, a double-digit increase from the previous year’s 300 million KRW loss, signaling a crisis. During the same period, sales also decreased from 16.9 billion KRW to 15.1 billion KRW.

◆ Smoothie King Korea Takes Countermeasures... 'Shop-in-Shop' and 'Vegan' Strategies

Selling Smoothie King beverages at Emart24 Jongno Daeho Branch. Photo by Emart24

As poor performance continued, Smoothie King began taking countermeasures. Recently, Smoothie King started reducing underperforming directly operated stores and increasing small franchise stores to reduce the risk of deficits.

They are also striving to escape losses by expanding 'shop-in-shop' stores linked with their parent company’s convenience store, Emart24. Shop-in-shop is a new store format where another store is created inside an existing store to sell products.

The Emart24 shop-in-shop model involves convenience store owners signing franchise contracts with Smoothie King separately from their Emart24 franchise agreements. Franchisees only pay equipment usage fees to Emart24, with no separate facility investment costs, reducing the burden of store closure.

Initial facility investments are prepaid by Emart24 headquarters, and franchisees pay equipment usage fees, minimizing initial burdens. Also, since the scale is smaller, franchise fees are about one-third of those for standalone Smoothie King stores, and the ability to operate both convenience stores and beverage specialty stores simultaneously during the summer peak season is considered an advantage.

Smoothie King’s efforts to regain its reputation do not stop there. Considering the culture that values health, environment, and ethical consumption, they have focused on the growing interest in vegan foods (vegetarians who do not consume any animal products).

Recently, they have introduced two types of 'vegan bakery' products that do not use eggs, milk, or butter, among various measures to overcome the crisis.

This content was produced with the assistance of AI translation services.