Tuesday, July 10, 2012

Smoothies Korea buys parent company Smoothie King, soon coming to PA.


Pop-up on the Smoothie Korea website today, leading to this press release.

American reporting on Asia tends to extremes and hyperbole. The Wall Street Journal's Deal Journal blog gets in on it today, writing about "South Korea's next cultural wave", the smoothie:

A South Korean cultural wave is sweeping the world, with interest surging in areas ranging from the country’s pop music to cosmetics to television dramas. Now, smoothies could be next.

At least that is what Standard Chartered’s private-equity unit is banking on with a $45.5 million joint investment with Korea’s National Pension Service for a 48% stake in Smoothies Korea.

The Korean fruit-blended beverage maker is trying to position itself as a healthful Starbucks-like competitor in the world of smoothies. Its 100 company-owned and franchised stores tap into the country’s café craze while offering a healthy alternative to coffee and shunning sugar as a sweetener, said Charles Huh, managing director of Standard Chartered Private Equity’s Korean arm.

The plan is to replicate the café approach in the U.S., where grab-and-go is currently the norm, he said.
The smoothie is hardly a secret, though, and hardly Korean. Moreover, the approach to be a "Starbucks-like competitor" is one McDonald's, of all places, took recently with their McCafe line in 2010.

But the "café approach" may present room for growth. Coffee shops are far more plentiful in South Korea, in spite of coffee's enormous popularity in the US. Coffee and sugary caffeinated beverages are almost exclusively an afternoon snack or post-meal dessert, and not a daily morning ritual. Thus the cafes are relatively spacious, plush, and designed for sitting and talking, and not for standing at the counter and running out the door. They had innovations like couches, TVs, and free wifi long before most American franchises considered them hip investments. The Wall Street Journal wrote about Dunkin Donuts Korea in June 2009, noting some big differences between stores in the US and South Korea, and reporting on the CEO trying to move in the exact opposite direction with his franchises in Korea (via Brian in Jeollanam-do):
"I come to Dunkin' nearly every day after lunch to drink coffee," said Shin Min-hye, 25 years old, an office worker at a Seoul law firm who was sipping an iced coffee and eating cacao honey dip munchkins at a Dunkin' outlet. She was there studying English with a friend. "I like to hang out here because I can stay as long as I want to....I sometimes study here for hours."

Dunkin' stores in Korea encourage that kind of lingering with plush orange and yellow chairs, wi-fi Internet access and plasma-screen televisions. But Dunkin's recently named chief executive, Nigel Travis, said he wants to get Koreans into the habit of picking up doughnuts and bagels on their way to work in the morning. "The trick we need to focus on is how we build a breakfast business," he said.
"That kind of lingering" is a part of fast food culture in South Korea and other places in Asia, documented in the book Golden Arches East: McDonald's in East Asia. An excerpt from a 2003 interview with the author James L. Watson (via BiJ, original link broken):
The book, Golden Arches East, outlines in detail how McDonald’s has been transformed to fit the local cultural systems it has encountered in East Asia. This is a process that I choose to call “localization,” which to my mind is a force as transformative as globalization itself. During the mid–1990s, for instance, high school students were responsible for transforming many of Hong Kong’s McDonald's restaurants into after-school social clubs. Late every afternoon hundreds of kids descended on their local McDonald’s; groups bought packets of fries and cokes. They packed them-selves into booths, poured the fries out on a tray and enjoyed a communal snack while gossiping and, supposedly, doing their homework. They stayed for approximately two hours, effectively closing down the ordinary business of the restaurant. Adults who were silly enough to arrive during this period were made to feel uncomfortable. The message was clear: “This is our place now, and we don’t want to see any adults while we are here.”

At first the local McDonald’s management tried to make the students eat faster and leave sooner, but they just sat there. Soon, however, management decided that this was an excellent development because it created the image of McDonald’s as a safe, and therefore family-friendly, institution: No alcohol, no smoking, no profanity, and most important in a place like Hong Kong, no triad gangsters.
The shift Smoothie King hopes to make---from "grab-and-go" to "café approach"---is as big as the one McDonald's eventually made in Asia, making the hamburger a popular, legitimate meal option. Right now coffee shops and fast food places in the US are grab-and-go for a couple of reasons: the menu dictates it, and other customers don't want to visit a place where kids loiter in the booths all day. When Min-hye Shin says about Dunkin Donuts "I like to hang out here because I can stay as long as I want to" the owners don't mind because she's not carving her name into the table, or selling drugs in the bathroom, or irritating other patrons: a few common things that can make the food service experience an unpleasant one.

Smoothie King doesn't have any locations in Pennsylvania yet---the closest are in Washington D.C. and northern Ohio---though one is currently planned for York, PA.

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