James White, president and chief executive officer of Jamba Inc., says the company's strategic priorities are as follows:
The company plans to eliminate approximately $25 million in store-level costs. Initiatives include reductions in costs of goods sold, store labor savings from operational simplification, better wage and benefit management, the implementation of a labor-planning system, occupancy savings, and improved management of controllable costs, store costs, and marketing expenditures. Over the past year, the company has taken measures to reduce general and administrative costs, before stock-based compensation expenses, from 13.9 percent of total revenue in 2007 to a target of less than 10 percent of total revenue.
“We are continuing to make progress on the initiatives that were discussed on our second and third quarter earnings calls," White says. "As part of those initiatives, we are actively renegotiating service contracts, planning for zero-to-negative overhead expense growth, and driving more efficient marketing spending.”
Build a Customer First “Operationally Focused” Service Culture
Operational changes focus on simplifying operations and improving customer service. Store managers are being relieved from unnecessary administrative reporting to focus on customer-service initiatives. In addition, select stores will be going through a refresh program that will revitalize the ambiance of our older company stores. The Company is also exploring a customer loyalty system and self-service kiosks.
Build a Retail Food Capability Across Day-Parts
Jamba wants to build a complementary, healthy retail food capability across all day-parts. Recently, Jamba launched hot oatmeal nationwide. Jamba has tested the sale of wraps, sandwiches, and salads; it plans to expand this concept to a significant number of stores in 2009.
“Our research indicates a significant number of Jamba customers currently purchase a smoothie from us, but then purchase a food item elsewhere,” White says.
Accelerate the Development of Franchise and Nontraditional Stores
A key part of the Company’s growth strategy looks toward traditional and nontraditional outlets such as college campuses, airports, and travel centers. During 2008, the Company opened 37 franchise locations and plans to open 50 franchise locations in 2009, of which 30-35 will be nontraditional.
The company believes an aggressive franchise strategy will better position Jamba for growth in market share, reduce capital outlay, provide greater overall margins, and increased brand presence. The Company’s current research shows there are potential opportunities for at least 2,700 stores in the US.
Build a Licensing Growth Platform
The Company believes there is untapped potential to extend the brand into the retail market. The re-assessment and evaluation of the Ready-to-Drink smoothies with Nestle will be led by vice president of consumer products/licensing and growth initiatives, Susan Shields, who joined Jamba earlier this month.
The Company continues to have discussions with potential partners regarding fruit teas, fruit yogurt and parfaits, frozen smoothie bars and sorbets, breakfast and energy bars, and packaged boosts. The Company’s goal is to have several additional licensing opportunities completed in 2009.