Serving Up Stores

TCBY is eyeing 100 new locations in 2011.

TCBY, The Country’s Best Yogurt, found its sweet spot in the chain’s infancy. The Salt Lake City-based frozen yogurt concept rocketed out of the chute — from a single Little Rock, Ark., store in 1981 to several hundred units in five years — based on a platform that Americans wanted a healthy alternative to ice cream.

The chain charged forward with purpose, reaching 3,000 units worldwide and $1.6 billion in revenue before the challenges that come with rapid expansion began to unravel the yogurt giant. A nine-year string of flat earnings during the 1990s culminated in swirling sale rumors and an acquisition by Mrs. Fields Famous Brands in 2000. 

Ownership change, mounting losses and store closures, and a groundswell around super-premium ice cream negatively impacted the company and saw what once was a 3,000-unit chain dwindle into the hundreds. TCBY currently operates 406 units in the United States and 188 internationally; all but two stores are franchises.

But, in 2010, the company developed a prototype that operated under a different business model. Instead of customers ordering and being served in a traditional fashion, they serve themselves using any combination of available yogurt flavors, add their own mix of toppings and pay by the ounce. The innovative self-service concept, coupled with a frozen yogurt comeback, has breathed new life into a struggling chain. 

Since the opening of the first TCBY self-serve model in Charlotte, N.C., another 15 or so have opened, and 20 are in the pipeline for the first quarter of 2011. 

“Almost all new stores to open will be under the self-serve model going forward,” said Rob Streett, VP franchise development for TCBY. “We will still do traditional stores when the venue or the real estate calls for it, but most will be self-serve.”

The typical footprint for a self-serve store is 1,300 sq. ft. to 1,400 sq. ft., larger than the average 1,000- sq.-ft. to 1,200-sq.-ft. full-service unit. The increased footage accommodates the topping bar, added equipment and amenities such as soft seating and flat-panel televisions. “The new prototype is intended, like a Starbucks, to promote socialization,” Streett said. 

Site criteria haven’t changed much with the self-serve model. The TCBY demographic is a $70,000+ average income and a population base of 50,000 or more. Desirable anchors or co-tenants are casual-dining restaurants, booksellers or other concepts that provide a significant nighttime draw. “It is critical that we have those evening draws, or we are challenged to have a successful store,” Streett said.

TCBY has partnered with Fort Worth, Texas-based Buxton to evaluate the existing portfolio and prep the chain for an expansion plan that calls for 100 new self-service locations worldwide in 2011 and another 100 per year over the next three years, depending on the availability and cost of real estate. The Buxton solution is allowing TCBY to map out and benchmark its competition, and provides a tool to help franchisees with site selection and market identification. With information gained from the solution rollout, slated for the first quarter of 2011, TCBY will identify what leases should be re-upped and what stores need to be closed, relocated or converted to the self-serve model.

The main avenue for growth will be via franchising, although the company is exploring a limited number of corporate stores from which it can conduct menu and concept testing. 

“We have an aggressive expansion plan,” Streett said, “but we can be thoughtful and selective in our growth, thanks to the excitement in our brand and our category. There is a lot of breadth to where we can go.”

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