Is a Smoothie War Breaking Out?
Sep 4th 2012 9:35AM
Updated Sep 4th 2012 9:42AM
Burger King Worldwide (NYS: BKW) may be late to the smoothie game, but it's hoping to make up for lost time.
The burger-flaming giant spent the entire Labor Day Weekend promoting the line of blended fruit drinks that it introduced earlier this year. Charging patrons $1 for a small serving is less than half the price that McDonald's (NYS: MCD) charges for its McCafe smoothies. Jamba (NAS: JMBA) and Starbucks (NAS: SBUX) charge even more than that.
The BK Real Fruit Smoothies promotion ended today. Don't expect to grab a chilly fruit drink for a buck at your neighborhood Burger King now.
However, it's a safe bet that the fast-food chain sold plenty of smoothies during the hot summer holiday weekend.
Is Jamba breaking a sweat right now?
Probably not. Keep in mind that Jamba's actually been benefiting from the arrival of competitors using drive-thru convenience to serve as ambassadors of the fresh fruit beverages.
Same-store sales climbed 6.4% at Jamba's franchised stores in its latest quarter, and that's no fluke. Comps have been running positive for eight consecutive quarters at franchised-owned locations.
As fruit-thirsty patrons seek broader variety than the two to three smoothies available at McDonald's, BK, and Starbucks, demand is intensifying for the stand-alone purist. There are now 31 more Jamba Juice locations than there were a year ago.
Obviously this is a trend that will bear watching. If Burger King or McDonald's ever begin slashing prices on their smoothies as loss leaders -- or if Starbucks takes an aggressive pricing stance to win over more parents looking for non-java alternatives for their kids -- it may eat into how much Jamba can charge.
However, for now, consumers don't have a problem paying for Jamba's blended treats and growing menu of active-lifestyle food products.
There's a reason why Jamba shares are trading 89% higher this year, but the company can't get cocky now.
Blended just right
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The article Is a Smoothie War Breaking Out? originally appeared on Fool.com.The Motley Fool owns shares of McDonald's and Starbucks. Motley Fool newsletter services have recommended buying shares of McDonald's and Starbucks. Motley Fool newsletter services have recommended writing covered calls on Starbucks. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does own shares in Jamba. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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