Annual Report 2008
Letter from the President Dear Shareholders, Tropical Smoothie Café’s focus on quality—from ingredients to company operations—is what gives the brand an edge in the highly competitive smoothie segment, according to company leaders. With 250 stores open in 28 states and 200 under development, the company is on target to meet an ambitious goal of having 1,300 operating units by 2012. It’s not just the company leaders touting the brand’s promise. Tropical Smoothie has been inching its way up Entrepreneur magazine’s Franchise 500 list since 2004, hitting the No. 127 mark this year. It’s No. 78 on Entrepreneur’s Fastest Growing Franchise list, behind only Smoothie King among juice bars. Eric and Delora Jenrich opened their first store in Tallahassee, Florida, in 1997 as a smoothies-only concept, but quickly decided a full café would help them better compete, explains Barbara Valentino, director of marketing and communications. The company formed strategic partnerships with vendors—including Boar’s Head meats and cheeses, Ghirardelli chocolate, and Splenda—to give a recognizable premium quality to the menu.“The consumers vote with their disposable income,” Valentino says. “It’s been our goal to create an unparalleled customer experience. There is not anyone on a national scale using the highest quality ingredients as we do. Our smoothies are made with real fruit and turbinado sugar—the purest form of sugar—or Splenda. There are no syrups or
processed ingredients.â€? Tropical Smoothieâ€™s Splenda-sweetened Splendid Smoothies have less than 200 calories per 24 ounces. Other smoothie categories are low fat, power, and dessert (made with Ghirardelli chocolate). Tropical Smoothie standardized its food menu last year as part of its vision to become a large-scale national chain. The vast selection of sandwiches, salads, and soups, and sophisticated flavors make it clear that food is not an afterthought. Wraps and bagel sandwiches make up the breakfast menu. The top-selling lunch/dinner items are the wraps. The selection of 12 includes the King Caesar (chicken and Caesar salad ingredients), the Jamaican Jerk Chicken (chicken, southwestern rice, corn, black beans, asparagus, onions, low-fat mozzarella, and Jamaican jerk sauce), and the Totally Turkey (turkey, romaine lettuce, diced tomatoes, Swiss cheese, and light ranch dressing). There also are 10 sandwiches, five salads, and a soup of the day
Eric Jenerich, President
Expanding Paradise The battle over beef in Hampton Roads has wrapped up, with the manufacturer of Boar's Head meats settling the lawsuit against its former local distributor. Coastal Atlantic Inc., which sold and delivered the Boar's Head brand throughout the region for 23 years, has agreed to pay $423,462 for the final products it received, according to a court order approving the settlement last week. The distributor, based on Taylor Farm Road in Virginia Beach, also waived its right to appeal and agreed to stop using the Boar's Head trademark, which had remained on Coastal's trucks after the companies ended their relationship in summer 2007. Other settlement details were not disclosed. The legal dispute initially left many local delicatessen owners and grocers scrambling to replenish their supplies of cold cuts, cheeses and condiments. Coastal switched to the Thumann's brand, and Boar's Head has since set up a new distributor, Virginia Deli Provisions of Chesapeake.
Many of Coastal's former customers decided to stick with Boar's Head. "I just found that Boar's Head was a better product," said Elayne Thymides, owner of City Deli in Chesapeake. She and her staff conducted a taste test of various brands and favored the flavor and quality of Boar's Head. "It's a very consistent product." Both Ukrop's Super Markets Inc. and Farm Fresh, the two major grocery chains among Coastal's former customers, also
Fresh Franchises Continue to carry Boar's Head. Susan Mayo, a spokeswoman for Farm Fresh, described it as a "signature brand" for the retailer, based in Virginia Beach."Ukrop's has enjoyed serving Boar's Head products in our stores for over 20 years," wrote Susan Rowe, spokeswoman for the Richmond-based supermarket chain, in an e-mail. "Our customers value the quality that the brand brings to our deli selections, and we are pleased with their products and their service."
Tropical Smoothie Cafe, a Florida chain with 32 local restaurants, has remained with Boar's Head as well. The corporate parent requires its franchisees to carry that brand, even though it did look at alternative suppliers, said Dean Gonsior, Tropical Smoothie's area developer in Hampton Roads. "But right now, we have a really good relationship with Boar's Head," Gonsior said. "We want to associate ourselves with the high-quality meats and cheeses. And the Boar's Head name is that." Top officials for Coastal, including owners Geri and Richard Meyers, declined to return repeated telephone calls to discuss their current business. At one point, they referred questions to their Richmond attorney, Mark Krudys, who said he had no comment.
Faster Food Ukrop's and Farm Fresh accounted for about two-thirds of the $270,000 in sales each week that Coastal made with Boar's Head products, the distributor disclosed in court papers. Farm Fresh alone ordered about $100,000 to $115,000 worth of deli stock weekly, Coastal said in a filing related to the lawsuit.
Since the end of its arrangement with Boar's Head, Coastal said in the documents, its sales had dropped to about $10,000 to $15,000 per week. At one point, the Meyerses had a verbal agreement to deliver Boar's Head products from northeastern North Carolina to Charlottesville and Fredericksburg, according to documents. The reason that Boar's Head cut off Coastal remains unclear, though the distributor indicated in its filing that Richard Meyers had "sparred" with the meat company over excessive paperwork and other issues.
Boar's Head Provisions Co. Inc. and its parent company, Frank Brunckhorst Co. LLC, sued Coastal in July in U.S. District Court in Norfolk, seeking to stop the distributor from using its trademark on delivery trucks and to collect payment for shipments in May and June. Coastal filed a counterclaim in August, charging that Boar's Head breached its contract and obtained its customer information under false pretenses.
Coastal's countersuit sought more than $20 million. Coastal claimed that it was owed fair payment by Boar's Head for the distribution territory that the meat company conspired to take over and "outright stole," and to compensate for the cost of a 58,000-square-foot warehouse that the Meyerses began building in 2005. A federal judge dismissed the counterclaim in late January. The companies had no written contract but an "at will" arrangement that held Boar's Head under no obligation to Coastal, wrote U.S. District Court Judge Jerome B. Friedman. "We're glad that there was a resolution," said RuthAnn LaMore, a spokeswoman for Boar's Head, based in Sarasota, Fla. "sorry it came to that."
Thymides, who opened City Deli almost 18 years ago, said it was a tough decision to stop dealing with Coastal. "They're very loyal and nice guys," she said. "But ultimately, I had to do what was right for my business and my customers."
Maui Wowi Hawaiian Coffees and Smoothies opened its doors to the public on Saturday. This franchise is the first location in our city and it offers a variety of delicious drinks. This new smoothie spot comes in at perfect timing now that our temperatures started to rise.
I had the opportunity to attend the grand opening. The entertainment, not typical for every franchise opening, started at 10 a.m. with a traditional Hawaiian ritual and the Lionand Dragon dance performed by the Lohan School of Shoalin. These two
Ranked #78 in Entrepreneur Magazineâ€™s Fastest Growing Brands
particular events were to bring luck and prosperity to the new business. Other performances included a comedian, the Filipino Dance Troup of Las Vegas, Fire Eaters with the crew of the Arsenal of Fire, and of course Hawaiian music. New coffee shop Maui Wowi wins with tropical fruit smoothies, deluxe Kona coffee drinks.
Maui Wowi has an extensive menu that offers attractive fruit combinations for smoothies and coffee blends. However, you won't find food here, only pastries. The coffee shop is a small "quick stop" kind of place. It has a tropical yet modern feel to it with couch-like seats and bamboo decoration that surrounds the pick-up side of the counter.
The employees were very friendly and made sure to check on the customers every so often. Every customer I spoke with was pleased with the place. "I love it. It's a cute little cafe type of style... great friendly people," said one patron. All the products in this shop are Hawaiian. The coffee blends are guaranteed to be made of Kona coffee. Those who were not related or hadn't been invited by the owners were happy with the place and the products they offer.
"The smoothies are very delicious, very flavorful but not overpowering and very fresh," another patron said.
My choice was a "Hawaiian Dreamsicle." A combination of mango, orange and pina colada with whipped cream. Not too sweet and not too plain, it was just right. When I talked to a person who lives close by the area she said, "It's nice to know that there is a place for coffee that's not Starbucks. It is very well placed, there is nothing like it nearby. "
Unfortunately, this coffee shop is not close to UNLV at all. However, if you happen to be in the area, definitely check it out. The environment and the options are great. There is also a 25 percent discount for students with RebelCards.
Maui Wowi is located at 4950 S. Rainbow Blvd. on the southwest corner of Rainbow Boulevard and Tropicana Avenue. Pick-up orders and catering are available. For more information
Fresh Franchises Territory recently broke ground on the final phase of its $92 million, 350,000-square-foot Centennial Gateway development at U.S. Highway 95 and Ann Road in northwest Las Vegas. The project is a joint venture with Schwartz Development and Olympia Development. Centennial Gateway premiered in fall 2006 with Walgreen's, Lay-Z-Boy and Barbecues Galore, among others.
The $55.7 million second phase consists of 179,000 square feet of retail space. The project is already 70 percent pre-leased, with anchor tenants Sportsman's Warehouse, 24 Hour Fitness and Fresh & Easy Neighborhood Market occupying 114,378 square feet. The three tenants all have multiyear leases valued at a combined $32 million.
"Centennial Gateway will serve more than 280,000 residents who call this area their home," said Nick Hannon, Territory's senior vice president. "This rapidly growing area is expected to grow by 25 percent over the next five years with an average household income at more than $77,000."
Phase II will have four single-level buildings with rentable retail space available from 1,200 square feet to 12,000 square feet. R&O Construction is the general contractor and Nadel Architects is the project architect. The project will finish in the fourth quarter, giving Centennial Gateway 25 shops, restaurants and stores. The completion of the second phase, along
Ranked 29th in INC 5000â€™s Fastest Growing Business Report
with its sister development Centennial Center, will encompass almost 1.5 million square feet of office and retail space. "The Las Vegas Valley's anchored retail market continues to see relatively tight balance between supply and demand," said John Restrepo, principal of Restrepo Consulting Group, a local real estate research firm. "Despite significant additions of new space, we are still seeing low vacancies."
Juliet Cos. is nearing completion on the first phase of its 725,000-square-foot retail complex, Lake Mead Crossing, located at the northwest corner of Lake Mead Parkway and Water Street in Henderson. The 73.5-acre, $130 million project is scheduled to debut in May. The 51-building project will host as many as 110 stores upon completion, including PetSmart, Staples, Marshalls, Ross and Sportsman's Warehouse. Lake Mead Crossing is scheduled to finish in October 2009.
Dapper Development is building a $15 million, 105,236-square-foot office and industrial complex at 3330 Sunset Way in Las Vegas. The 5.59-acre development consists of two buildings with 48 units divisible from 1,533 square feet to 3,192 square feet. Sales prices begin at $200 per square foot. Nevada Building and Development is the general contractor and Inline Construction Services is the architect. "3330 Sunset" is scheduled to open in the third quarter. CB Richard Ellis' Ed Aragon and Leo Biedermann are the project's listing agents.
The Korte Co. completed the $3.2 million, 12,000-square-foot Steinberg Diagnostic Imaging Center at Sunset and Post roads in Las Vegas. Crisci Builders completed an $800,000 retail-tenant improvement for Christian Louboutin inside the Shoppes at Palazzo at 3325 Las Vegas Blvd. South. The 1,500-square-foot womenâ€™s shoe store was designed by Creative Design Architecture.
JVC Architects is designing a new 40,000-square-foot multipurpose facility for the South Hills Church Community at the southwest corner of St. Rose Parkway and Interstate 215 in Henderson. Construction is scheduled to start in spring. Forest City Enterprises refinanced the 1 million-square-foot Galleria at Sunset in Henderson with a 10-year, $160 million loan from the New York State Teachers Retirement System. The 12-year-old mall is anchored.
Faster Food Marshall graduates Brad and Christina Roush first opened the small cafe two years ago to help encourage nutrition in the community. "We're trying to bring awareness to healthy eating habits in West Virginia," Christina Roush said. "We appreciate the business people coming in every day, but what's important is that people know how good healthy eating can taste. As long as we do that we're happy with what's going on here." Raw Times takes its name from the raw fruits and vegetables which are prominent in each dish.
"There are other places in town that have fresh fruits and vegetables, but we actually go to the market every day. We purchase nothing in bulk," Roush said. Customers can choose between 13 different fruit smoothies including the popular "Quatro Fusion" (made with raspberries, strawberries, blueberries and blackberries) to the Gladiator (cherries, bananas and almonds.) The cool drinks range in price from $4.25 to $5.25. For an extra dollar, customers also can add a supplement to their drink such as wheat germ, flax seed or Korean ginseng. "When we started, there was no place to really get a healthy smoothie in town," Roush said. “Other places were just using ice and syrup. All of our smoothies are made with real fresh fruit that we freeze ourselves. So when you’re having a smoothie here, you’re having a cup of fiber and anti-oxidants but it tastes great.”
While Raw Times started out as a simple smoothie shop, the menu was soon expanded to include salads and sandwiches. The menu changes seasonally, and a new spring menu was
recently introduced. Currently, there are four different salads customers can choose from for $6.95 -- Grecian salad, fiesta salad, costal salad and spring salad. For $6.50, customers can make a customized salad, choosing from 30 different ingredients and eight different types of dressing. For an extra $2, grilled chicken can be added to any salad.
"We go for kind of a California flair, a west coast style in our sandwiches," Roush said. "A good example of that is our veggie delight sandwich which includes sprouts, avocado and red pepper hummus. You can't really find anything else like it in town. We also just added some turkey and chicken sandwiches to our menu due to the demand. We have a lot of meat eaters in town."
UPS Delivers Sandwiches are served on sprout bread, hemp bread, flax seed ciabatta or whole grain bagels. Raw Times is open from 10 a.m. to 3 p.m. Monday through Friday. Next week, the cafe will return to its regular spring hours and will be open from 10 a.m. to 5 p.m. on week days. Cash, check and all major credit cards are accepted Gift cards also can be purchased. Orders over $15 can be delivered in the downtown Huntington area. As some menu items can take up to 15 minutes to prepare, customers are invited to place orders ahead of time.
“There are other places in town that have fresh fruits and vegetables, but we actually go to the market every day. We purchase nothing in bulk,” Roush said. Customers can choose between 13 different fruit smoothies including the popular “Quatro Fusion” (made with raspberries, strawberries, blueberries and blackberries) to the Gladiator (cherries, bananas and almonds.) The cool drinks range in price from $4.25 to $5.25. For an extra dollar, customers also can add a supplement to their drink such as wheat germ, flax seed or Korean ginseng. “When we started, there was no place to really get a healthy smoothie in town,” Roush said. “Other places were just using ice and syrup. All of our smoothies are made with real fresh fruit that we freeze ourselves. So when you’re having a smoothie here, you’re having a cup of fiber and anti-oxidants but it tastes great.”
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smoothies 2007 soups
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2008 .78 Sales and Operating Revenue (in billions) Operating Income (in billions)
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Stockholders Equity & Ratio 160
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