The Jamba Juice Opportunity

Jamba Juice has gone on a strange route to trade their stock on Wall Street. Instead of a direct IPO, they announced a merger with Services Acquisition Corp. Normally, I don’t like mergers, and this was no exception. It has taken some time for Jamba Juice to readjust and regain efficiency. In response to this, the stock has been beaten down since they began trading about a year ago. Several additional things have contributed to the stock being punished:

1. Expansion – Jamba Juice is building more stores in more locations.
2. Gas Prices – Jamba Juice profit margins have diminished with rising oil prices.
3. E. Coli – Jamba Juice was stung by a few bad batches of fruit.

While store expansions will pay off in the long-run, there are additional things that Jamba Juice can do, in the meantime, to bolster profit-margins and increase the volume of products sold.

Location, Location, Location

Jamba Juice has strategically placed many of their stores in close proximity to Starbucks coffee shops. Thus, making their stores easy to locate. Often, you can see parents in line for a latte’ while their children are across the street getting a Jamba Juice smoothie. To further capitalize on their location and increasing throughput, Jamba Juice should install drive-thrus, which will entice people on-the-go to purchase smoothies. In fact, if there is a long line at the Starbucks drive-thru, some customers may end up switching to the Jamba Juice one.

Distribution is King

Jamba Juice can greatly increase their revenue by making distribution king. By taking a page from Starbucks playbook, they can capitalize on their branding by placing drinks in Safeway and Kroger grocery stories. Perhaps, instead of only smoothies, they can also provide a juice product-line.

Delivery

Jamba Juice can further extend their reach by delivering products to corporations and schools during business hours. Think of it as pizza delivery for smoothies. To make this profitable, there should be a minimum-sized order. This should make Jamba Juice a convenient snack or power-up in the middle of the day.

Conclusion

In addition to the strategies above, Jamba Juice recently announced that they are launching their line of breakfast foods to go along with their smoothies. Together, these strategic moves will extend Jamba Juice’s reach. While not quite as addictive as caffeine, smoothies can become a life-long habit. Thus, giving Jamba Juice a golden opportunity for future growth.