No, Frozen Yogurt Isn't Going Away
Few restaurant sector booms over the years have been as pronounced and dramatic as the frozen yogurt explosion, and perhaps few have been as maligned. Experts, who have seen the sector boom before, seem to believe that frozen yogurt is in for another 90s-style collapse. But that may not be the case, thanks to froyo’s unfrozen sibling.
First, there’s no question that frozen yogurt is booming. Total frozen yogurt production grew by 21 percent in 2011 and another 18 percent in 2012. Almost overnight, chains like Yogurtland, Menchie’s, Red Mango and many others emerged and became big, regional or even national concepts.
The emergence echoes a previous boom that started in the 1980s with chains like TCBY. By the mid-1990s, frozen yogurt was hugely popular. Production topped at 152 million gallons—by comparison, even after the recent boom total production last year was just 74 million gallons. But then consumers grew tired of frozen yogurt, production plunged, brands disappeared and the product vanished.
So why would this time be any different? Just look at regular yogurt.
Demand for yogurt sold in grocery stores has continued to chug along. It had been growing along with frozen yogurt in the 1980s and 1990s, and then frozen yogurt makers just kept finding new ways for consumers to buy their product. They’ve made liquid yogurt, yogurt with fruit mixed in, yogurt with fruit on the bottom, yogurt with granola on top, yogurt with candy, full-fat yogurt, fat-free yogurt, yogurt with stomach-healing stuff in it, baby yogurt, kid yogurt and now Greek yogurt. It’s impossible to miss the yogurt section in the grocery store these days because it’s just so dang huge.
As we wrote in the January issue of Franchise Times, frozen yogurt production fell by two-thirds between 1995 and 2004, while at the same time production of non-frozen yogurt actually grew by two-thirds. And then it kept growing: Between 2003 and 2012, production of regular yogurt grew by 76 percent, according to federal statistics.
And then consider this: According to Forbes, yogurt consumption in the U.S. is half what it is in Europe. So while consumers are demanding more and more yogurt, they still have a ways to go before they catch the European demand. They may not, but the point is that yogurt is still in rapid growth mode.
Frozen yogurt is a different product, but it is much more closely associated with actual yogurt than it had been in the 80s and 90s when frozen yogurt was simply ice cream. Growth in regular yogurt, therefore, means there is a greater appetite among the population for the frozen variety.
Can the proliferation of so many self-serve frozen yogurt brands and franchises continue at their current pace? Of course not. Many brands will go away as interest wanes. Will we see a collapse like we did beginning in 1996, when frozen yogurt consumption fell by 22 percent in one year? No. So you might as well get used to the pastel-colored self-serve shops popping up in every strip mall from Seattle to Saratoga. They’re not going away anytime soon.