Jamba Juice Case Study Sample

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Introduction

Jamba Juice Company is a famous restaurant seller of specialty beverage and food offerings, which include whole fruit smoothies, nice tasting, fruit juices and juice mixture, hot teas and a diversity of food stuffs comprising of, breakfast wraps snacks, hot oatmeal, sandwiches, artisan flatbreads, energy bowls and baked goods. As of December 31, 2014, there were 860 store locations worldwide. There were 250 Company-owned and operated stores and 540 franchise-operated stores in the United States, and 62 franchise-operated global stores. Jamba Juice Company extended the Jamba trademark by direct selling of consumer wrapped up goods and licensing its brands.

Presented is the financial report for the fiscal period ended December 31, 2014. Jamba Juice Company realized a considerable achievement in many units, shown by an increase in same store sales with gains in quality products. For the year, Jamba registered store sales increases of 6.0%, company-owned stores of 7.0%, and franchise-operated stores of 4.3%. Basing on GAAP , for the period ended December 31 of 2014, net loss attributed to Jamba Juice Company, was about $(1.9) million, which consisted of expenses used for the company’s managerial reorganization, the changeover of certain administrative functions to third party service provider and costs sustained in the move to an asset-light business model. Using non-GAAP criteria, Jamba company’s net loss was roughly $(1.2) million.

Revenue

Within the period that ended December 31, 2015, the revenue increased to $52.5 million since $51.6 million in the previous year. The rise is as a result of the 7.0% increase in company-owned equivalent store sales compensated by the decrease in the amount of company-owned stores prior to the company’s refranchising plan. The rise in number of company-owned equivalent store sales of 7.0% was owed to rise in average check of 585 basis points and an increase in transaction count of 20 basis points. Franchise and other revenue increased by 9.5% as compared to the previous year as a result of increased royalties from the franchise-operated comparable store sales. Jamba revenue was $0.7 million and $0.6 million in the period ended December, 2014 and December, 2013, respectively.

Operating Margin and Loss

The operating margin for Jamba Company was 3 percent for the year 2014 when seen in comparison to 0.4 percent for the year 2013. 1.7 million us dollars loss from business for the year 2014 was a 1.5 million us dollar’s rise from the 0.2 million dollars loss from business in the year 2013, because of the mix change to soft drinks and snacks, of which higher cost of goods were sold and labor costs connected to her changeover to an asset-light business model. When it is a non-GAAP conditions, losses from operations was approximately (1.8) % contrasted with (0.4) % from the previous year. Plans have been made at stores to advance the store level margins by about 300 basis points for 2014, which is believed will boost operating margin.

Retail Growth

For December 31, 2014, there were about 805 Jamba stores in US, of which 550 are franchise stores, while those owned by the company are 259 stores. Franchise stores included 42 smoothie locations. During the period, Jamba launched two new local franchise stores, two global store locations one in Asia and one in South America and two non-ordinary smoothie locations. There is no any new Company-owned stores which are operating in this period. During the period, there were seven stores which were closed internationally. As of December 31, 2014 there were also 62 worldwide store sites, and all are franchise-operated. Development continues at Jamba with elements in operation reaching around 2,000.

Liquidity

During December 31, 2014, Jamba Company had a cash of $8.1 million cash and also equivalence as compared to $17.8 million cash and cash equivalence at December 31, 2013. As of December 31, 2014 and December 31, 2013, the Company did not have any confidential cash. During the period, the Company purchased again 445,414 shares of frequent stock on the open market at a price of about $15.00 per share. Following December 31, 2014, the Company finished transferring two refranchising packages for collective deliberation of $4.9 million.

Expense reduction plan

As the main focus Jamba Company CEO calculated project, and to a certain extent due to the limitation of the customer expenditure at the time, Jamba considered increasing the operating margin by cutting on the store-level costs. This would be achieved after a long time by reducing costs of goods sold, cutting on labour costs, better regulating wages and remuneration, carrying out a labour planning system, raising occupancy savings, and improving managements of marketing expenditures, controllable costs, store and costs. In addition, Jamba took numerous actions to decrease general and managerial costs. They were also looking for ways to better use technology to advance store levels productivities. In as much as expense reduction plan led Jamba to maximize her profit, it also affected the company’s ability to compete. Cutting of the cost of expenses may lead to poor production due to lover regulated resources and unmotivated personnel.

Company-owned versus franchised stores

Jamba’s outcome reveals value-creating achievements on some areas, ranging from rises for comparable store sales to refranchising gains and the growth. Jamba prioritized transforming herself to an asset-light model with her move to refranchise 102 stores California. The arrangements for hasten refranchising of other fronts will decrease company-owned stores to about 11 percent of entire stores by the end of the year from 30 percent she had just a year ago. These progresses included augmented costs for organizational streamlining and subcontract costs plus expenses related transition to the asset-light model, which are reflected in her net loss for the financial year. Moreover, the first share repurchase program is well ongoing with 1.5 million shares purchased since the commencement. The franchised stores bring a breadth of specialist skills and resources to their clients. Jamba’s franchisees come from middle management across the full spectrum of service and supply industries. They are skilled in a broad range of cost-reduction methods and given right of entry to a vast amount of local information, then they link what is very much a mutual system – franchisees are able to implore others with professional skills.

Franchisee with a sales knowledge might approach a prospective consumer and recognize classes for possible cost savings. He or she then contacts the specialist franchisees in each of the acknowledged classes of business cost and they work jointly to realize the result. The payment is shared between the franchisee making the sale and each of the franchisees involved proportionally. That implies that there is as a great possibility of achievement for an individual who knows print management but has no clues about selling as there is for the great sales person with no information about print management. The franchise gives an individual an opportunity to play to his or her strengths. As opposed to company owned stores, I would therefore support the Jamba Company’s transformation to adopt franchise stores.

Conclusion

The continued progress of Jamba Company in her refranchising efforts has accelerated the possibility that by the end of the year 2015, she will have reached her goal of a franchise to company-owned store ratio of 9:1. Jamba Company has what it takes to attain her goal of making seventy million dollars or more of cumulative cash from refranchise-operated stores by the end of the year 2015.