Jamba Has Plenty to Prove Tomorrow
Apr 29th 2013 6:00PM
Updated Apr 29th 2013 7:30PM
We may be eyeing a seasonally insignificant quarter when Jamba reports tomorrow, but that doesn't mean that the Jamba Juice chain doesn't have something to prove.
After stringing together nearly two years of positive comps, Jamba's company-owned stores posted a dip of 1.2% in its previous quarter. A strong showing at its franchised locations helped keep comps positive at 0.6% -- keeping that streak alive for at least another period -- but will Jamba prove mortal on Tuesday?
When you think about it, two years of positive comps at a time when competition was intensifying from unlikely blender wielders is pretty impressive.
Starbucks turned heads a few years ago when it began offering smoothies, and McDonald's followed suit in 2010 by adding the frosty fruit beverages to its McCafe line. Burger King Worldwide became the latest player to throw marketing muscle behind its smoothie offerings.
It's easy to chart the evolution of Jamba's competition. Burger King has been aggressively pushing its smoothies because larger rival McDonald's jumped in three summers ago. Why did McDonald's go this route? Well, McCafe was a clear attack on your friendly neighborhood Starbucks barista. So if the premium coffeehouse chain introduced smoothies to appeal to non-java drinkers, then Mickey D's had to follow suit.
For now, all of these moves have actually only helped Jamba's brand awareness. The chain has grown to 809 locations through the end of last year. However, if Jamba comes through with another quarter of negative comps at company-owned locations, it would be just to question the theory that new entrants have only helped educate future Jamba customers.
The market's holding out for a narrowing deficit on a slight uptick in revenue. This isn't smoothie-sipping season. Jamba's profitable quarters will come now as the weather starts to warm up. However, it will be Jamba's viability as a concept that will be under the heat lamp when it reports tomorrow.
Jamba survived the arrival of Starbucks and McDonald's on its turf. It would be embarrassing if BK's entry was what tripped the chain up.
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The article Jamba Has Plenty to Prove Tomorrow originally appeared on Fool.com.Longtime Fool contributor Rick Munarriz owns shares of Jamba. The Motley Fool recommends Burger King Worldwide. It recommends and owns shares of McDonald's and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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