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Thinking about starting a self-funded juice or smoothie business in 2020 or beyond? According to industry reports this industry can expect steady growth in the natural juice space globally for the next half decade. Here are a few statistics about the encouraging trajectory of the industry in coming years:
- The fruit and vegetable juice market is expected to hit $257 billion by 2025. This market was estimated at $158 billion in 2016. This is phenomenal global growth. (Source: Grand View Research)
- Total revenue for juice and smoothie bars in the United States is estimated at $3 billion with an anticipated annual growth rate of 1.8%. (Source: IBIS World)
- The cold pressed juice market in the United States is expected to reach $8.1 billion by 2024. (Source: Reuters)
In short, the growth of the juice and smoothie market is a bye product of the larger mega trend of a change in consumer tastes. Consumers globally are replacing sugary “junk food” with organic snacks and beverages that offer more nutritional value.
In spite of all this promising data, the decision of whether or not starting a cold press juice or smoothie business is the right opportunity for you depends on you! Your current situation, skill set, and interest the the business model. Based on all the research this is a growing business opportunity, but that doesn’t mean it’s the right choice for you.
The goal of this post is to help you figure out if this is the right business opportunity for you. In today’s interview, we dive into what it’s really like to operate a juice or smoothie bar in addition to giving you the basics on how to start the business.
Today’s guest Andrew McFarlane has operated a juice food truck, multiple juice bars over the past 15 years, and is the founder of Start A Juice Bar agency. Learn more at TheJuiceConsultant.com where Andrew helps entrepreneurs start profitable juice bars through business planning, menu development, branding and more.
We cover the financials of operating a juice bar, cost to get started, equipment you’ll need to invest in, whether or not you should join a franchise, the pros and cons of operating a smoothie truck and most importantly… Is this business right for you? Click play on the video interview below to find out.
Table of Contents:
- Business Overview
- Inspiration for Getting Started
- Food Truck Versus Store
- Pros / Cons of a Juice Truck
- Are Smoothie Shops Profitable?
- What’s a Typical Day Like?
- How Much Does it Cost?
- Equipment Checklist
- Franchise VS Independent
- Next Steps
Business Overview: What’s a Smoothie / Juice Shop?
A smoothie or juice shop is a retail store with a menu offering a wide-range of fruit and vegetable based beverages like cold-press juice, smoothies, and . These shops attract health conscious consumers looking for nutritious beverages and snacks.
Popular examples of these juice and smoothie bars include Juice It Up!, Orange Julius, and Smoothie King.
The Inspiration for Getting Started
Andrew was introduced to juicing while working as an actor. Andrew observed one of the cast mates was in insanely good shape. Not only did was the actor extraordinarily fit, but was a lighting rod of energy to boot.
Andrew had to know what this guy was doing. So he asked. The actor informed Andrew that he was a raw vegan. Being a vegan or having another specialty diet is not uncommon today, but in the early 2000s these diets were not well known.
This conversation led Andrew down a path to understanding more about his own diet and overall health. Shortly thereafter, Andrew discovered juicing and transformed his eating habits. Andrew was hooked.
Ultimately, Andrew decided to turn his passion for this healthy diet and lifestyle into a full-time business. We dig into Andrew’s back story and tips for getting started in this interview.
Starting a Juice Food Truck Versus a Store
When Andrew decided to take the leap and open a juice bar at a retail location, he came to the same realization so many other entrepreneurs face. It was going to cost a lot of money to start a juice business in a commercial space.
Fortunately Andrew did have some savings. But not enough to pay out of pocket to rent a space, convert the retail space into a juice / smoothie shop, purchase equipment, pay for licenses in California, and other typical upfront expenses.
After some attempts to raise money to start the company with investors fell through, Andrew got the idea to start a juice truck instead.
The advantages of starting a truck versus instead of a retail store are significant. First off, you don’t have a monthly rent payment to make which is often your first or second biggest expense. Second, you don’t have to risk it all with a location. If a certain vending location doesn’t work you, you move on to the next more profitable spot.
For these reasons, Andrew decided to start a juice / smoothie truck instead of a juice bar.
While hindsight is 20/20, Andrew would not start a truck first if he had to do it all over again. Instead, Andrew would have found a way to open a retail location.
As an entrepreneur, it’s your job to solve problems and make it happen. If that means opening a juice truck first this path can work as well. But in an ideal scenario, starting a store first and adding a truck to supplement those sales is the preferred approach.
Advantages and Disadvantages of Operating a Juice / Smoothie Truck:
One big reason entrepreneurs start out with a food truck is due to the lower upfront startup cost compared to a retail location. But as Andrew explains the overhead in greater detail within the interview. After looking at the economics, Andrew realized the juice truck business was spending $4,000 a month for rent at the commissary, fuel, parking tickets, and payments on the truck. In many parts of the United States, you could lease a retail space for that kind of overhead.
This realization led Andrew to the conclusion that a retail space is often the right choice for startups even if the one-time startup costs are higher. There are advantages and disadvantages to either approach you decide to take:
- Lower barrier to entry and upfront cost. Expect to pay between $50,000 – $100,000 to be all in with a juice food truck.
- You aren’t stuck in a permanent location. You can move to more profitable locations at anytime.
- Labor expenses can be lower on a truck, especially if you plan to operate the truck yourself. You may only need to hire 1 – 2 part-time employees to assist in the operations.
- This can serve as a lower cost way to create a proof of concept for your business.
- A retail location is simpler to operate in many ways than a food truck. You don’t need to find a new location to vend each day. You don’t need to commute to different locations.
- Space is a major limitation on a truck. When you operate a juice bar, you need a lot of space for inventory. It’s not uncommon for you to use 100 pounds of apples per day. It’s easier to store fruits and vegetables with ample refrigeration and freezer space in a commercial kitchen versus a truck.
- Smaller menu. This is related to the space limitations of a truck.
- File this one under mechanical issues. If your truck breaks down, you won’t be able to generate sales until it’s fixed.
- Many cities require you to park your truck at a commercial kitchen or commissary overnight to be cleaned. The monthly cost of storing the vehicle at these locations can range from $500 – $2000 per month. This is a big chunk of the rent you would be investing in a store instead.
- You’ll need to regularly fuel, maintain (regular oil changes, washing), and repair the food truck.
The barrier to entry is low, but the cost of operating is high.Andrew McFarlane on the advantages / disadvantages of starting a juice truck.
Establish a First Draft Route Right Away
One of the big takeaways that Andrew has for those considering a juice truck is to establish a tentative route or list of places you plan to vend before you buy the truck. This is a mistake that Andrew admits making early on in the business.
Decide in advance specific ideas for locations to generate sales on a smoothie truck. Some locations that can be profitable include yoga studios, farmer’s markets, fitness centers, and business parks. Special events like marathons, fundraisers, or mud runs can also be lucrative.
You should enter this list of prospective locations in a spreadsheet. After you create the list, reach out to the business by phone or email to see if they are open you to vending there. This will help you understand specifically where to setup shop after you open.
As Andrew points out, you should complete this research before you get a food truck. This will help you be more prepared and reach profitability faster after opening.
Related Reading: 6 Profitable Locations to Park a Food Truck
Are Juice and Smoothie Shops Profitable?
Smoothie shops can expect to generate between $250,000 (low-end) and $800,000 (high-end) in gross revenue per location. As an example, in 2015 the top 25% Smoothie King franchisee’s generated $681,724 in gross sales per unit.
The location, quality of product, staff, brand, marketing knowledge, ownership, and many other factors will determine your actual revenue numbers.
How to Estimate Juice / Smoothie Shop Profitability
One thing to keep in mind is top-line revenue numbers do not represent how profitable a location is. Expenses for all smoothie shops incur include labor, lease payments, taxes, and the cost of goods sold or COGS (apples, bananas, carrots, almond milk, kale, and other ingredients).
You can start to building projections for sales volume profit margin of your juices with this downloadable juice profit spreadsheet. Juice businesses should have between 50% – 70% gross margin on the products they serve before overhead like rent, taxes, and labor. If your estimated gross margins don’t fit into this range, consider increasing prices for find ways to cut costs.
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