Pinkberry in the Press

12 2007 | Fast Company
Berry, Berry Ambitious
By Alissa Walker

With help from celeb friends and fancy chairs, the fro-yo chain Pinkberry has whipped up plenty of hype, but can it--and should it--become the Starbucks of soft-serve?

Like any Hollywood starlet, Pinkberry knew it had arrived when it made the pages of two of America's most popular publications: Us Weekly and People. Since the frozen-yogurt chain first opened in West Hollywood, California, in 2005, Paris Hilton, Lindsay Lohan, and even Mike Tyson have been seen spooning Pinkberry. It's been written into Saturday Night Live and Ugly Betty. Fans hold vigil online--lots of exclamation points, not candles--for new store openings, and have appropriated the term "crackberry" from BlackBerry addicts. Forget the country's best yogurt--this is its most famous.

And perhaps its most ambitious. Pinkberry, founded by businesswoman Shelly Hwang and architect Young Lee, now has 34 stores in L.A. and New York City, with plans to hit London and Las Vegas in 2008. Copycats have sprouted across the country, complete with similar names (Kiwiberri, Snowberry) and short menus (Pinkberry offers two flavors: plain and green tea). In October, Pinkberry got a lucrative vote of confidence: $27.5 million from Maveron, the VC firm launched by Starbucks chairman Howard Schultz and Dan Levitan, an ex-managing director of the investment bank Schroders & Co. (now part of Citigroup ). "Maveron looks for consumer brands with passionate customers. Pinkberry definitely fits our model," says Levitan, who likes his Pinkberry plain, with almonds and blueberries. "We're excited about their growth and loyal customers."

But Pinkberry isn't about the yogurt. In fact, it's debatable whether "swirly goodness," as Pinkberry often calls it, is even yogurt. In May, California food regulators said it wasn't, because it did not meet yogurt-pasteurization standards. (Pinkberry says it now does.) And a California man filed a lawsuit alleging that swirly goodness lacked enough active bacteria to be yogurt. (Pinkberry says the suit has been settled.)

The story of Pinkberry's success is really about the chain's image as a design brand. "In my stores, I serve you a $5 dessert, and I let you sit in $500 chairs," says Lee of the Philippe Starck Victoria Ghost chairs in every Pinkberry outlet. "People can tell the difference." They're eating it up right now, but will they still if Pinkberry becomes as ubiquitous as, say, Starbucks?

Pinkberry's origins, like those of so many Hollywood figures, are murky. Red Mango, a five-year-old Korean chain that came to the United States in 2007, has claimed that Pinkberry copied its concept. Cofounder Hwang is even rumored to have briefly worked at a Red Mango shop. (A Pinkberry rep says it's "absolutely not true.")

Lee downplays Pinkberry's Asian roots. He names eclectic influences, from Hermès to Target. And he cites the mom-and-pop yogurterias of Italy, the source of the dairy-based powder from which Pinkberry's maybe-yogurt is made. "That [concept] has been around for 20 years," he says. "We deliver it with design."

In addition to the $500 chairs, that design includes $300 Le Klint lamps and $60 kitchen gadgets by Alessi, which serve no purpose except to look good on Pinkberry's shelves. Lee, a former club bouncer, says these elements--plus the celeb halo, an often painfully long wait, and one off-menu item, mochi, available only to cognoscenti--make people feel as if they're behind the velvet rope for 15 minutes. He hopes they'll repeat the experience several times a week. (The firm won't release financials, but busier stores draw 1,500 customers a day.)

"When a person buys Pinkberry, of course they're paying for the yogurt. But they're also paying for the experience of waiting in line--I'm trendy!--and for a seat in a Philippe Starck chair--I'm so sophisticated!" says Orli Sharaby, a fashion editor at the trend-spotting firm PSFK. "It ties into the larger consumer trend of wanting to pay a premium for experiences as opposed to products."

Pinkberry has expanded cautiously, rejecting more than 3,000 would-be franchisees and accepting only 12. Maveron's infusion suggests growth will quicken, but Eli Portnoy, chief strategist at the Portnoy Group, a brand consultancy, thinks that expansion will only damage Pinkberry's cool factor. "You can't take a Hollywood nightclub concept and drop it in the suburbs of Kansas City," he says. "When it gets to the general populace, it wears thin." And food-industry analyst Harry Balzer of the research firm NPD Group is skeptical that consumers will pay upwards of $5 for Pinkberry, repeatedly and over the long term, especially since fro-yo isn't a staple like coffee.

Given Pinkberry's design focus, it will also need to freshen its stores when those Ghost chairs are scratched up--or worse, passé. Pinkberry creative director Yolanda Santosa, who used to design opening credits for TV shows such as Desperate Housewives, says she's trying to give the stores "seasonality." At Halloween, for example, a Hitchcockian scene was silhouetted onto the store walls.

Santosa has sought to cultivate the chain's fan base with "groupie" events and a MySpace page for Pinkberry (female, 20 years old, Capricorn, mood: amused). But what she can't control are the fickle celebs who, from the start, have been Pinkberry's best advertisers. Not too long ago, Paris Hilton was spotted getting some fro-yo--at a place called Cantaloop.

10 16 07 | The New York Times
“Pinkberry has become a bicoastal urban phenomenon.”
- Michael J. De La Merced

09 27 07 | ABC News
Fruity Frozen Yogurt Wars Heat Up
By Scott Mayerowitz

On Both Coasts, a Slew of New Dessert Shops Fight for America's Stomach

Dessert has always been about choice — lots of choice.

Baskin Robbins built an ice-cream empire on the motto of 31 flavors. Ben and Jerry's rose to fame with wacky flavors, such as Chunky Monkey and Cherry Garcia.

But now, a new trend is taking over the frozen dessert industry: simplicity.

A number of frozen yogurt stores are popping up that offer only a few flavors, and they allow customers to personalize their snack with fresh fruit, granola and cereal.

So, instead of getting that raspberry-flavored snack, customers get vanilla and add their own fresh raspberries, mangos and pineapples.

Leading the charge in Los Angeles and New York is Pinkberry, a chain of tiny shops with funky colors and loud music that aim to make eating dessert more fun — even if its product is low in calories.

Pinkberry and a number of knockoffs — some call Pinkberry the knockoff — are appearing on street corners everywhere in the two cities, with ambitious plans to expand.

The companies offer a frozen treat that tastes less like ice cream and more like actual yogurt. They offer just a few flavors, and then give customers a bevy of toppings.

Pinkberry has only vanilla and green tea but offers nearly 20 toppings, ranging from kiwi to almonds to blackberries and mangos.

The stores have drawn large crowds willing to wait in long lines to buy the frozen treats.

Pinkberry has done very little marketing, relying almost entirely on word of mouth.

"One customer came and tried it, they liked it, they brought their friends," Pinkberry co-founder Young Lee said. "All of a sudden, we were starting to make money."

Peter Golder, a marketing professor at New York University's Stern School of Business, said such word of mouth is incredibly important for new businesses.

Not only is it inexpensive, but it's more credible to people.

"We're sort of programmed to discount advertising we hear," Golder said. But we tend to trust those we know.

People love to sample and try new things, especially food, and word of mouth and the company's long line help. Golder said that if a customer sees others waiting for the food, they think it must be good.

"Who wants to walk into an empty restaurant at dinner time?" he said.

But once a company gets some buzz, Golder said, "the challenge for the company is to make sure that it's more than a fad."

They need to get a sense of how many customers are first-time customers and how many of them are repeat customers. Over time, they should be getting a larger percentage of your business from repeat customers.

"Eventually," Golder said, "you'll run out of first-time customers."

Nancy Zenna lives in New York's Chelsea neighborhood and walks down the block to her local Pinkberry three to four times a week.

"It tastes so good. It's very healthy. It's very refreshing and low in calories," she said the other day.

Joining Zenna was Aliza Weston on her first-ever Pinkberry outing.

"It's amazing," Weston said. "You don't feel like you have to run the marathon afterward."


Berry Wars
Its first store opened in January 2005, and it has expanded to 30 stores in Los Angles and New York. Pinkberry now has plans to open a store in London and is looking at Arizona, Texas and Northern California, according to Lee.

Lee said that only 10 of those stores are franchises right now, but that more than 3,000 people have applied for a franchise. He plans to expand, but carefully.

"Some of the good ideas can be expanded too quickly, and a good idea gets wasted," he said.

Lee and his partner, Shelly Hwang, own the company now but are in talks for something larger. Lee would not elaborate.

But they need to act quickly. In the last two years, a number of competitors have sprung up.

There's Berri Good, Red Mango, Blue Mango, Diet Berry and the list goes on and on.

"It's like time is our enemy, not our friend," Lee said. "There are lots of fake berries. The fake berries are out there trying to copy us."

But at least one of those copycats says that Pinkberry stole their formula.

Red Mango has about 130 stores in South Korea, where it first opened in 2002.

But it did not open up a store until this July in the United States. It now has two stores: the original Los Angeles one and another in Las Vegas.

"Pinkberry basically copied our design and had brought it before us. But we had the intentions of bringing our design to the U.S," said spokeswoman a Red Mango spokeswoman.

Red Mango plans to open 10 to 20 stores by the end of the year in cities including New York, Miami, Chicago and San Diego and wants another 10 to 20 stores in the following year.

The battle of the berries has also led to a fight over who can or cannot call their product yogurt.

"Our product is actually authentic frozen yogurt," the spokeswoman said. "We have live and active cultures in our product. We have actually over 500 million cultures per gram."

Pinkberry does not, forcing the company to back away from selling "frozen yogurt."

Instead, Pinkberry sells "swirly goodness."


Almost a Tea House
If it weren't for some zoning and liquor license issues, Pinkberry might never have been born.

Lee owns a small architectural firm doing mostly interior design work. One day Hwang came in looking to have a tiny, 650-square-foot space in West Hollywood designed as an English tea house.

"I discouraged her from getting that location," Lee said. "I told her she would be making a mistake to do high tea there because she would need all 650-square-feet or more just for kitchen space. But she'd already rented the space, paying a year's rent ahead of it."

So the pair moved forward trying to get permission to allow outdoor seating and serve liquor. At a public hearing the plan got strong opposition.

"The whole entire neighborhood treated us like we were Frankenstein," Lee recalled.

So a new business plan had to be created.

Lee said he was working on the side to set up a frozen yogurt business at a mall and simply adapted the idea for Hwang's location.

Where Did That Name Come From?

Lee said he draws his inspiration for running a business from several other companies that he admires. The first is Apple, which he said somehow brought together generations. Then there is In-N-Out Burgers, a hamburger chain that keeps its menu very simple. Lee admires Hermes and its high standards of quality and tries to emulate that. For instance, Raspberries are very expensive in winter, but Pinkberry still carries them. Rounding out the list is Starbucks and Target.

So what about that name?

"We wanted to create a name that had something to do with berries but couldn't go with a single berry," Lee said.

So they made up a name that tried to incorporate that concept.

"Pinkberry is a refreshing kind of name," Lee said. He also likes it that as the company prepares to enter England, the name sounds a bit like the British clothing company, Burberry.

The stores are also designed with memories of an ice-cream truck in mind.

"You hear the sound of an ice-cream truck first and then you go run and find it," Lee said.

The same is true of the stores, which play loud music, and there is even a Pinkberry theme song.

Ice-cream trucks are also often found at the beach or at playgrounds, so the store floors are designed with pebbles to replicate the sounds of the beach or playground.

The stores also use colors like French vanilla yellow and pistachio green to resemble the ice-cream flavors.

Then there is the bright orange. Well, Lee simply likes Hermes.

08 28 07 | KROQ
Pinkberry on the Kevin & Bean Show

08 18 07 | Chicago Tribune
Cold War, With Twist, Coming To Chicago
By Sandra M. Jones

Frozen yogurt is hot again, but with a more gourmet tone. Chains, including Pinkberry and Red Mango, are battling in L.A. and looking to expand.

Break out the shoulder pads and leg warmers. The frozen yogurt shop is making a comeback. And it’s on the way to Chicago.

Not since the heyday of TCBY and I Can’t Believe It’s Yogurt in the 1980s has the frosty treat caused such a stir.

The latest incarnation began (where else?) in Los Angeles two years ago, complete with the requisite celebrity following—Salma Hayek was spotted toting a frozen yogurt cup and Leonardo DiCaprio had a frozen yogurt machines installed at his home and office. Shops have sprouted so quickly and long lines have caused such commotion that the Los Angeles Times declared the town to be in a full-blown “fro-yo wars.”

Even Starbucks Corp. founder Howard Schultz has taken notice and is exploring investing in the trend.

Now, the two biggest chains in Southern California, Pinkberry and Red Mango, are en route to Chicago. And homegrown Lifeway Foods Inc. is preparing to head them off with stores of its own.

“Haven’t we been down this path before?” asks Harry Balzer, vice president of NPD Group, a Port Washington, N.Y.-based consumer product market research firm. He watched the frozen yogurt fad surge and flame out more than a decade ago.

Ask fro-yo fans and they will say it’s different this time. The frozen yogurt of the 1980s tapped into the fitness craze, a low-fat yet still sweet substitue for ice cream. The latest fro-yo is tart, like plain yogurt, and is dressed in toppings such as fresh fruit and nuts.

The fro-yo shops position themselves  as coffeehouses, a place to experience frozen yogurt in an inviting atmosphere and linger a while.

“It’s part of the experience,” said Dan Kim, president and CEO of Fred Mango’s U.S. operations in Culver City, Calif. “We’re creating a gourmet yogurt experience, which really hasn’t happened before. We want to do what Starbucks did for coffee. They charged a premium for it and added quality and service, and we want to do same thing with yogurt.”

Red Mango Inc., a South Korean firm that opened its first U.S. store in Los Angeles in July, plans to set up shop in Evanston, Naperville and Lincolnshire this year and open more stores in the city and suburbs in 2008. It’s also expanding in Las Vegas, Seattle, New York and Miami.

Pinkberry, which debuted in L.A. two years ago, is looking for sites in Chicago and expects to arrive as soon as next year. It has two dozen stores in California, four in New York and expects to add stores in Texas, Arizona and Las Vegas, brinigin the total to as many as 50 by the end of this year.

“I’m 43 and I remember the ‘80s very, very clearly,” said Young Lee, co-founder of Pinkberry Inc. and the man who created the stores’ light, airy interiors. “That frozen yogurt was misrepresented. They said it was frozen yogurt, but there was nothing yogurt about it. It was a second choice for ice cream.”

This latest version of frozen yogurt has its detractors as well, with some questions surrounding whether this is a healthy treat because of its yogurt cultures or just a tasty indulgence. Pinkberry’s recipe has been the subjhect of controversy, in part because the company has not revealed exactly what’s in it. The chain has said its product contains yogurt, and a lab test paid for by the Los Angeles Times confirmed that. But the chain’s Web site no longer describes its product as yogurt, calling it “dessert reinvented.”

The debate shows how competitive the market is becoming.

Julie Smolyansky, president and CEO of Morton Grove-based Lifeway, has no intention of letting Hollywood’s fro-yo contingent set up shop in her back yard unchallenged. Lifeway, the largest maker of kefir, a food similar to yogurt, began construction on its first Starfruit store, slated to open at 1745 W. Divison St. next month.

The Starfruit shop will offer regular kefir with fruit and granola toppings, frozen kefir and frozen yogurt. Kefir is a cultured, enzyme-rich food filled with micro-organisms that help digestion. It is touted as more nutritious than yogurt. Smolyansky is hoping the health benefit gives her stores an edge. “It’s a big trend happening across the country,” she said. “Now seems like a good time to open.”

The old frozen yogurt fad peaked in 1992 with 8.2 percent of Americans eating it regularly, or at least once in a two-week period, a dramatic spike from 4.3 percent in 1990, according to NPD Group. Today, 1.5 percent of Americans eat frozen yogurt regularly.

More telling, Balzer said, is how popular regular yogurt has become in America. About one in four Americans eats it regularly, double the 1990 figure.

Combine Americans’ changing taste buds with their penchant for spending on such “affordable luxuries” as $2 chocolate truffles and $4 lattes, and the time could be ripe for a $9 frozen yogurt concoction.

Pinkberry’s Lee declined to comment. Schultz said only, “I’ve been intrigued by Pinkberry. They have established a unique relationship with the customer through the physical design of the store and the product.”