Red Mango Revolution
A look at how one young frozen-yogurt brand plans to make it to the top. 
“I’ve learned more about yogurt in the last six months than I’ve ever known in my life,” laughs James Franks, vice president of franchising for Red Mango.
Franks is fresh off a franchising event in Washington, D.C., and every now and then stops the interview to wave at one of the 182 potential franchisees that attended the meeting who are also at our restaurant. “Out of respect to our brand and to the franchisees we bring on board, we won’t bring them on board unless we know that we can support them and give them the attention that they need,” he says.
And lately that’s a lot of attention. The two-year-old frozen-yogurt brand finalized a round of development deals this spring with new and existing franchisees that will result in 128 new stores from California to Tennessee. To date the brand has about 50 locations open. Less than a week after the development deal was made public, the company also took a recession-defying step and announced its Store Buy Back Program. To date, no franchisees have tapped it, but the program allows partners to sell their store back to corporate for up to $275,000 if they’re not satisfied within the first six months.
“A lot of franchisees admit that that got them interested,” Franks says. “But they said that that’s not the reason they became a franchisee.” According to Franks, it’s franchising events like the one before our interview that really impresses potential store owners. Most valuable during these types of meetings is the end-of-day question-and-answer time when those interested in becoming partners can speak frankly and directly with the company’s CEO, Dan Kim. One visitor at the D.C. meeting used his moment in the stoplight to ask how Pinkberry, a competitor of Red Mango, was chosen over the Red Mango brand to star in a new American Express commercial.
Red Mango’s expansion plans, however, are nothing to laugh at. Despite the lack of available capital for most would-be restaurateurs, Red Mango is seeking out franchisees with their own funding, bypassing bailed-out banks and the bureaucracy of the Small Business Administration. And it’s finding them.
The company’s expansion strategy isn’t to work east to west or north from their hometown of Dallas like many companies plan growth. Instead, it’s building regional offices in places like New York and Seattle and working out from there, developing entire regions. Next on the company’s list is the Southeast, with Atlanta and Florida as front-runners.
“I would say in the next four years we’ll have about 500 stores open in the U.S.,” Franks says. “We’re not an every-corner business, so we’re not going to try to come in and just put them everywhere.”
But 500 stores is a lot for a company that hasn’t even been in the country 1,000 days yet. Before that, founder Kim launched the brand in South Korea in 2002, stacking the c-suite full of restaurant and retail veterans with experience from 7-Eleven, Jamba Juice, and the Dwyer Group.
“You take the experience we have, you take the capital, take Dan’s vision and you put the right people in place, and the reason we’re able to grow to this level is we surround ourselves with good people,” Franks says.
Red Mango isn’t the only brand with star power in the $175-million frozen-yogurt market, though. Pinkberry, the celebrity treat du jour, is a force to be reckoned with in the segment and recently expanded into Red Mango’s home turf of Texas.
