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Power to the juice
Sunday, September 14, 2008 By Ian Kehoe
As his Zumo smoothie bar chain gets set to open its 100th outlet, Cathal Power is determined to see off his rivals and maintain the brand’s momentum.

Cathal Power spent his New Year holiday climbing volcanoes in Costa Rica and El Salvador, while his Easter getaway took him to South America, where he trekked through Amazonian rainforests and slept under the stars.

Given his choice of holiday destinations, it is hardly surprising that Power has charted an adventurous course for Zumo Smoothie Bars, his expanding juice and smoothie franchise. In the space of seven years, Power has turned Zumo from a standalone Dublin juice bar into a pan-European business with outlets in ten countries and 720 employees.

At some point over the next four days, Zumo will open its 100th outlet. Power would love to be there to see the ribbon being cut on the landmark juice bar, but there is a big hitch - he is not exactly sure when or where it will open. At any one time, more than a dozen sites are being transformed into Zumo outlets, so predicting the 100th is pure guesswork.

‘‘The 100th outlet could be in South Africa, it could be Russia, it could be France or Britain or even Ireland,” said Power, a Kilkenny-born former civil servant and qualified environmental scientist. ‘‘We are scheduled to open outlets in all those places in the coming days, so we will have to wait and see which one gets there first.”

Zumo is adding a new outlet to its chain every six days, and Power expects to be opening two outlets a week by the end of next year. While the Irish market is close to saturation, Power believes there is plenty of room for expansion overseas.

By the end of next year, Zumo should have 210 stores in 18 countries. By 2010, Power expects that figure to rise to 300 stores, with annual sales of €120 million.

At that point, Zumo should be the number one juice bar brand across the continent of Europe, with operations in Russia, Slovakia, Denmark, the Czech Republic and Austria. No country is being ruled out, according to Power.

‘‘We will be more than happy to enter any territory if we can get a suitable franchise partner and if we think the brand will work there. We will do our due diligence and we will analyse the market,” he said.

‘‘Thankfully, we have never really had to go out there looking for franchisees. They have tended to come to us.”

Zumo is also poised to enter the American market. The firm recently established an office in the US, and Power is assessing his options, with the first US Zumo outlet likely to open next year.

‘‘We are targeting the US because we think we can fill a niche there. There are a number of juice bars over there, but they don’t do what we do. They use sorbets and concentrates, while we use fresh fruit and vegetables,” he said.

The company’s foray into the US comes as the major US coffee chains are running for cover. After years of heady growth, chains such as Starbucks and Nero are reviewing their targets, and Power believes that juice chains such as Zumo can eat into their market share.

‘‘It is the same all over the world,” he said. ‘‘People are looking for a healthy option; they are becoming increasingly aware of their personal health and their eating habits. Our product is [made from] fresh fruit and vegetables, it does not get much healthier than that.”

The company’s franchise model has been key to its aggressive expansion. Zumo selects a master franchisee for each new country it enters, who is charged with developing and maintaining the Zumo brand in that jurisdiction.

In return for a royalty payment, the Dublin headquarters provides all the franchisees with product listings, branding and specific business processes. It develops new products and sources fruit and vegetables directly from international suppliers on behalf of its franchisees.

Given the spike in food prices globally, Power said this last point was one of the major advantages of being affiliated with the Zumo network. ‘‘Because of our size, we are in a good position to leverage the best deals for fruit and vegetables,” he said.

‘‘We get the benefit of scale, and that is passed down to all our franchisees. A single juice bar dealing with suppliers would find it very hard to survive at the moment; you need the size and the scale to negotiate the best deals.”

Ironically, Zumo was never supposed to be a franchise business at all. Power opened his first outlet in Dublin in 2001 with the ambition of possibly building a chain of three or four outlets.

He had toured the US and South America, jotting down notes on what their juice bars did well and what they did badly. The US firms had great marketing but poor products, while juice bars in Brazil were little more than beach shacks, but with great products.

Power decided to combine the best of both. During his first year in business, he rejected repeated requests from potential franchisees all over the world. Eventually though, he backed down and conceived a plan to franchise his business idea.

His main concern was to ensure that a customer would obtain the same level of service and the same quality of product from any Zumo outlet, regardless of its location. Having established the business himself, Power was loath to see his brand diluted.

To that end, franchisees are now obliged to follow uncompromisingly rigid protocols and procedures about everything from making a smoothie to washing the smoothie maker.

‘‘Everything has to be the same - from the training systems to the cleaning schedules. You have to control everything if you want to retain quality. You can’t have different cultures within the one organisation,” said Power.

Power owns about 30 of the 45 Zumo outlets in Ireland, which he said was important, as it allowed him to assess the performance of new flavours and drinks in the market. The company has a dedicated kitchen team, which works on new recipes, using various exotic fruits.

Research shows that Zumo is operating in a high-growth industry. Recent figures from Mintel show that the juice and smoothie market has grown by 60 per cent in five years, and is now the fastest-growing sector in the drinks market after bottled water.

In addition to other rival chains, the group is also vying with big off-the-shelf brands such as Innocent and PJ Smoothies, which was bought by Pepsi for stg£20 million (€25 million) in 2005. However, Power insisted that Zumo had something different to offer.

‘‘The philosophy of Zumo is that everything must be fresh. If you buy a Zumo smoothie, you will see the fruit and vegetables being juiced in front of you. That is the basis of our success. You can smell the citrus before you can see it,” he said.

‘‘Compare that with a smoothie you buy off-the-shelf in a shop. Most of those are made from concentrate, which means that the apple juice or the orange juice can be up to three years old and comes from a carton. On top of that, how many days have they been on the shelf ? This is damaging the whole industry.”

As the industry matures and becomes more sophisticated, Power acknowledged that he would face tougher opposition than low-quality competitors and orange juice concentrate. However, the businessman said he was up for the fight.

‘‘We have the product and we have the brand. I never, ever expected us to reach this size,” he said. ‘‘It has been a roller coaster of a ride - but we are not at the end of it yet.”

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