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					       Tropical Smoothie Café
              Team One

           Project Consultants:
 Brenna O’Regan, boregan@radford.edu
Amanda Newsome, anewsome@radford.edu
  Kemper Jones, ekjones@radford.edu
  Chris Nguyen, cnguyen@radford.edu
   Jeffrey Joyce, jajoyce@radford.edu




                                        1
                               Table of Contents

Executive Summary                                  3

Franchisor Background Information                  4

Product/ Service Description                       5

Situation Analysis                                 6

Target Market                                      9

Site Location                                      11

Marketing Strategy                                 14

Recommendation                                     16

References                                         17




                                                        2
                                    Executive Summary

       Tropical Smoothie Café is a casual restaurant offering a variety of smoothies, as

well as food items, such as wraps, sandwiches and salads. It attracts health- conscious

people and this consultant team is considering whether or not is has potential in the

New River Valley.

       Among thorough research into Tropical Smoothie Café’s history, a collection of

information has been researched as to how well this restaurant would fit in with not only

the New River Valley’s consumers, but with the existing restaurants. It has been found

that Tropical Smoothie’s clientele and target market is healthy, younger people, who are

focused on healthy living. It has also been found that Tropical Smoothie holds many

strengths and opportunities, such as its differentiation as being both fast food, and

healthy food. It also has a lot of growth potential and could possibly do well in an area

like the New River Valley. There is not much competition from existing restaurants

because the types of food and smoothie items are unlike many other menu items of

restaurants in this area. Information was gathered on the characteristics of the

populations of the towns in the New River Valley to better pick a potentially successful

site in which Tropical Smoothie Café would do well. The trade areas and the habits of

the existing populations of the towns were also taken into account. In all, the

consultant team concluded that Tropical Smoothie Café would do well in the New River

Valley, and more specifically, in the town of Christiansburg. This decision was reached

after careful consideration and research. The team believes that Tropical Smoothie will

not only be a good fit for the New River Valley, but that the New River Valley will also be

a good fit for Tropical Smoothie.




                                                                                            3
                          Franchisor Background Information

       Tropical Smoothie Café is an upscale smoothie and deli café. It offers an

assortment of smoothie options as well as gourmet wraps, sandwiches, and salads. All

food items are made with only Boar’s Head brand meat and cheeses. There are

currently 195 franchise outlets in the United States and 4 foreign franchises. Tropical

Smoothie originated in Tallahassee, Florida in October 1997. In 1998, they started

serving gourmet wraps with coffee, in addition to smoothies. It was renamed from

Tropical Smoothie to Tropical Smoothie Café in 2000 to accommodate the full menu.1

       Individual franchises as well as multi-unit franchises are available. It typically

takes about 60-90 days between the time the site is identified and the lease is signed

before the store is opened. Tropical Smoothie, Inc. trains franchisees in operations as

well as the marketing and management of the business. Location requirements include

highly dense areas with high traffic count, good visibility, and easy accessibility. 1

       Each location is approximately 1,400 to 2,400 square feet in size. The

requirements for opening a Tropical Smoothie Café franchise is typically $75,000 in

liquid assets and your total investment will be between $200,000 and $300,000. There

is a continuing fee of 6% of gross receipts, excluding sales tax. 1 The cost breakdown

for starting the franchise is shown below:

                                   LOW                MEDIUM                HIGH
Franchise Fee                    $20,000               $20,000             $20,000
Equipment                        $80,000               $90,000            $100,000
Signage                           $7,500               $10,000             $12,500
Leasehold Improvements           $80,000              $110,000            $140,000
Initial Inventory                 $5,000               $7,000              $8,000
Architectural Plans               $2,500               $4,000              $7,500
Initial Deposits                  $3,000               $7,000              $10,000
Grand Opening Promo               $2,000               $2,000              $2,000
TOTAL                            $200,000             $250,000            $300,000




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                                  Product/ Service Description

       Tropical Smoothie Café provides a health-conscious mix of food in a family-style

environment. Tropical Smoothie Café promotes healthy eating and nutrition. It is a

convenient alternative to the unhealthy fast food options that are prevalent. The

products Tropical Smoothie Café offers are smoothies, sandwiches, wraps, soups, and

salads. A major way in which it promotes its healthy eating is by incorporating made to

order smoothies that help customers live healthy lifestyles. Such smoothies include

low-fat smoothies, power smoothies for those trying to gain muscle and energy, and

splendid smoothies, which reduces caloric intake with a Splenda substitute. Many of

these smoothies include fat metabolizers, vitamins, whey or soy proteins, energizers

and non-fat yogurt, along with fresh fruit.1

       Consumer usage is increasing as the company itself is branching out and as

Tropical Smoothie Café is gaining recognition as a healthy and respected company.

According to the “Best of Hampton Roads,” Tropical Smoothie Café received the 2006

Silver award in Chesapeake, Bronze in Norfolk, Gold in the Outer Banks, Bronze in

Suffolk, and Silver in Virginia Beach.2 This type of recognition will definitely increase

usage because these honors were given out by a well-known source.

       The trend of healthy eating has become more and more popular among young

people. According to Marian Salzman, chief strategy officer of Euro RSCG Worldwide,

in the article, “10 Trends in 30 Minutes,” more than 60% of women and teens in the U.S.

wear plus-size apparel.3 This type of obesity has led to the trend of nutritional eating

and healthy lifestyles.




                                                                                            5
                                    Situation Analysis


       The Situation Analysis includes a thorough SWOT Analysis, as well as a

description of Tropical Smoothie Café’s competition and a description of what factors

may impact the success of the company. SWOT Analysis will help the marketing

consultants understand what Tropical Smoothie Café’s opportunities in a given market

are by looking at its strengths and what it can take advantage of. It will also help in

avoiding and eliminating threats by understanding its weaknesses. SWOT takes into

account Tropical Smoothie Café as well as its competitors and is important in

distinguishing where Tropical Smoothie stands as an industry competitor. In creating a

SWOT Analysis, it is important to uncover the internal and external factors of a

company. Internal factors include the strengths and weaknesses of a company and the

external factors include the opportunities and threats.

       Tropical Smoothie Café’s internal factors, the strengths and weaknesses, will be

discussed first. A strength of this company is that in the New River Valley there are not

many other companies that offer the similar products and specialize in smoothies. This

fact sets this apart from other businesses in the area. It also has a very wide breadth of

products. They offer smoothies, wraps, salads, sandwiches, and tortizzas. In addition,

Tropical Smoothie Café has a reputation for offering healthy food, which is very different

in compared to some of its competitors in the casual restaurant segment. This

franchise has also won awards based on its performance as a food retailer. One of the

weaknesses are that it takes more time to prepare and deliver food than traditional fast

food retailers and some people are not willing to take the time to buy the food if they

have to wait. Convenience is very important to customers and if they have to get out of



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their vehicle and go inside to order and pick up food, this may deter their decision to

pick Tropical Smoothie Café over competitors. Another weakness is that its price is a bit

more expensive than its competitors in the fast food business.

       The external factors, the opportunities and threats, will now be discussed. The

opportunities of Tropical Smoothie Café are that it has the potential to grab a huge

market because of the fact that it is so unique and really there is nothing like it in the

New River Valley. This opens up an opportunity for them to draw customers from a

larger demographic area. The fact that Tropical Smoothie Café strives to provide

healthy sandwiches and smoothies with the highest quality gives the franchise a great

opportunity to capture the health conscious consumers before another competitor can

come in. The New River Valley is still a developing area but as it grows so does our

potential to increase our customer base and bring in more business. Every company

must look at the external factors involved that may hinder the further prosperity of their

company. Some possible obstacles that Tropical Smoothie Café may encounter would

be the competition already in place that the consumers are used to. Another major

threat is that there is no brand name recognition of this business by consumers in the

New River Valley. This is a serious problem because if consumers are not aware of the

reputation and do not recognize the franchise name then they may not feel comfortable

trying something new. It is obvious that Tropical Smoothie Café’s menu doesn’t just

cover the basic smoothie but also offers many different delicious items that you can eat.

However, you must look at some of the other competing companies and what they are

providing. While our vast selection in smoothies is available, the company may want to




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consider providing more than just wraps, soups and sandwiches. The trend for a healthy

life may alter, in which more than half of our smoothies would have to adapt.

        Competition to Tropical Smoothie Café may include any provider of desserts or

beverages, as well as some small restaurants or fast food type restaurants. Within the

NRV some providers of desserts that we see as direct competition to Tropical Smoothie

Café are Cold Stone Creamery located in Christiansburg, Dairy Queen inside the mall

as well as the one just west of the mall, Empark's Ice Cream & Smoothies in

Christiansburg, The Ice Cream Crank in Blacksburg, Custard Corner in Christiansburg,

Pistachio’s in Radford, and TCBY Treats in Blacksburg. As far as food providers stores

such as Quizno’s Subs or a Subway could be direct competition. Tropical Smoothie

Café offers a healthier type sandwich and has an image of serving food that is good for

you that is why these places could be some competition. Along with these food places,

fast food restaurants could be a competition because some consumers might replace

the quick and healthier choice with a substitute which is closer or more convenient to

them.

        Factors that could influence Tropical Smoothie Café include any changes in the

economy’s status, such as any negative fluctuations in the market. If the economy is

not doing well, then consumers are less willing to spend as much money at these types

of food retailers. If its competitors decide to broaden their menus and include items that

Tropical Smoothie Café carry, for example is Starbucks were to add smoothies to their

list of drinks then competition would be added to that market and may cause Tropical

Smoothie Café to not perform as well and lose market share. Also, temperature

changes because of seasons may have an impact on how well Tropical Smoothie Café




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does during the year. In the cold weather, customers may be less likely to buy

smoothies as opposed to warmer weather when they are more appealing. They may

lose customers during the winter to places that serve warmer beverages.

                                     Target Market

      In order to correctly identify where Tropical Smoothie Café will be most

successful in the New River Valley, an analysis of its target market must be conducted.

The demographic profile of potential consumers as well as the psychographic trends

and behavioral characteristics have been delved into so that the type of consumer can

be better identified. There are some basic factors that must be understood for the target

audience. These include the ability for the consumer to have easy access to the

product, the ability of the product to be distinguished because consumers are not

inundated with similar products, and the willingness of the consumer to pay the price for

the product to create a reasonable profit margin for Tropical Smoothie. 4

      These factors are among the many that will distinguish Tropical Smoothie’s

market from other companies as well as determining where the site should be located

and who marketing efforts should be aimed.

      The demographic profile of Tropical Smoothie will help to determine

characteristics of who its potential consumers are. The consumers of Tropical Smoothie

are predominantly female. The age is ranged from 16 to 30. The ethnicity is mostly

White/ Caucasian. The income level ranges from middle class to upper class. The

geographic location is in urban areas. The marital status is mostly single. The education

level ranges from high school degree to Bachelor’s degree.




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        After doing research for the target area it was found that the total population of

the NRV, mainly the Christiansburg, Blacksburg, and Radford area, is around 72,806.

Of the population around 34,873 are females which is 48% of the population, 63,167 are

White/Caucasian which is 87% of the population, and 42,220 are between the ages of

15-34 which is 58% of the population. These statistics show that Tropical Smoothie

Café has a large enough target market to be successful in this target area if Tropical

Smoothie Café is able to draw enough of a percentage of this market as its customer

base.

        The psychographic trends help to understand the consumers better and to find

out their attitudes, beliefs and emotions towards Tropical Smoothie. Target consumers

are health- conscious. They are concerned with the condition of their bodies, through

exercising regularly, eating right, and advancing their knowledge by furthering their

education. They are young, intelligent, single and trendy. They live fast lives and rely on

fast food restaurants to provide meals on the go, but refuse to sacrifice their health for

the convenience. They share common interests in music, outdoor activities, exercises

such as Pilates and yoga, and the current fashion trends.

        The behavioral characteristics help to identify the factors that target consumers

value the most. Some factors that are viewed as important include the price, quality,

and convenience in the location. These are important because the consumer is looking

for quality food with health benefits, but is at the same time still concerned with location

and price. Consumers will make purchase decisions based on convenience but will

want to make sure the food that they are getting on the go is not going to slow them




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down later. Purchases will most likely become habits that are grown from their routine,

and will be made anywhere from two to three times a week.

       There is high growth potential of the target market because the image of Tropical

Smoothie Café and the products they offer are popular within a younger demographic

because it is new and trendy. Once the edge lightens and the products become more

main-stream, the market will widen and will grow to include more consumers. The

current target market is narrow and focused on a certain segment of the population, but

will later grow to include people with different demographics, as well as those with

different psychographic attitudes, beliefs and emotions and varied behavioral

characteristics.

                                      Site Location

       The site location for Tropical Smoothie Café is important because it needs to be

in a place that is easily accessible to its target markets. Many factors were considered

when deciding where in the New River Valley to place the franchise. These included its

trade area, the size of the franchise, possible locations, and cost. After conducting

demographic research on the New River Valley, it was concluded that Christiansburg

would be a location that would be most successful for Tropical Smoothie Café. This was

concluded because it has a very large trade area, including not only its own residents,

but those from neighboring cities, most notably Blacksburg and Radford. There are

many different retail types located in Christiansburg as well, including a shopping mall

and a power center.

       These draw in many people to the area and it would be beneficial to Tropical

Smoothie to have its location take advantage of this type of trade area. For the most




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business it was decided that it would be best if Tropical Smoothie was a free- standing

store. This was decided upon because as long as it is in an area with high traffic and

high visibility, it will do very well. It is a casual restaurant that is unlike most of its

competitors and will therefore create its own market share and will become the primary

destination. With a free- standing store tropical smoothie can use its bright colors and

building design to draw customers in. It will also have easy parking, convenience, and

flexibility with hours of operation. Because there is nothing really like Tropical Smoothie

in this area a free standing store will draw buzz from consumers wondering what it is

and what the franchise has to offer. Some disadvantages, though are that it will have no

cost sharing, since it will not be within a center and will have to endure high advertising

expenses. There is also the initial cost of building a free standing building. The prior

thought of how Tropical Smoothie is so different than other retailers could be a

disadvantage because consumers like things that they already know and feel

comfortable about. This means that Tropical Smoothie needs to create its own buzz and

convince customers that it is worth trying. The New River Valley Mall is still under

reconstruction and there are opportunities surrounding the shopping mall. The Mall’s

property owner, Pennsylvania Real Estate Investment Trust, is going to be opening a

power center adjacent to the mall, as well as adding additional stores around the Mall to

draw in more crowds.5 Tropical Smoothie could gain from either becoming a

freestanding location within the upcoming power center or it could immediately be built

at a location in the already existing area around the Mall.

       It was decided that the franchise should not wait for the power center and to

open up a location within the existing New River Valley Mall area and become an out-




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parcel upon its region. Previous out-parcels were sold for an average of $24.64 per

square foot,5 and because the range of franchise locations is 1,400- 2,400 square feet,

we decided that the location should be 1,900 square feet and rent would therefore be

approximately $46,816 per year. Also with a 1,900 square foot store Tropical Smoothie

Café can accommodate a good amount of sit-in customers around lunch time adding to

the customer convenience. Other locations looked at and researched, included a retail

location within a shopping center in Christiansburg. Foothills Plaza shopping center

doesn’t have the number of anchor stores that can bring in as many customers as a

location by the mall because the surrounding stores in Foothills Plaza don’t have the

same target markets. Foothills Plaza shopping center had a 3,000 square foot retail

location that was being sold for $33,000,6 so the price for the location near the New

River Valley Mall is comparable, although The mall location is more expensive and has

fewer square feet of floor space, it has much better visibility and is much more

convenient to the customer making it a better location for Tropical Smoothie based on

our customer base. Also as we said with our franchise being located close to a mall

whose target market is similar to that of Tropical Smoothie Café means that they will

gain customers that may not have planned Tropical Smoothie Café as their destination

or even know what it is but decide to try it out leading to more loyal customers that know

Tropical Smoothie Café is the healthy alternative to food options in the mall. The free

standing structure separate from the mall draws customers in that are driving by with no

intent of going to the mall but decide to give Tropical Smoothie Café a try based on

what the see from the highway. The large percentage of consumers that shop in

Christiansburg are from Blacksburg and Radford and so a location set in Christiansburg




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would not be catering to this town alone but would be sharing the area with consumers

from the other two towns, and these people that travel to Christiansburg are going to be

the main consumers of Tropical Smoothie. Tropical Smoothie will have consumers that

are going to be traveling from either Blacksburg or Radford primarily for its restaurant

because of its uniqueness, but will also capitalize on the consumers that are going to be

in Christiansburg fulfilling other retail needs such as in the mall or elsewhere. Many will

happen to stop by because of the convenience, visibility, curiosity and healthy

advantages Tropical Smoothie Cafe offers its consumers.

                                    Marketing Strategy

       One main way that Tropical Smoothie hopes to attract customers is to use the

advantage of being a free standing building with visibility from the road. The team also

looked at putting an ad out in the Christiansburg News-Messenger which has a

circulation of 4,273 and will cost Tropical Smoothie $500 for 23 newsletters. Tropical

Smoothie will send out these newsletters three weeks prior to the grand opening. After

the company has allowed its target market to acknowledge the franchise, Tropical

Smoothie will then have a newsletter placed three times throughout the month, attached

with coupons and specials during that time frame. Being close to a mall, managers can

send an employee around to pass out flyers there at a wage of $7.00 an hour and $199

for 5,000 color flyers from axisflyers.com. Through this the franchise will further its

advertising within the mall area for those possibly from out of town or not familiar with

the site location. Another strategy is to have a frequent customer card where you can

earn free smoothies and sandwiches after purchasing a certain amount. The total cost

for these customer cards is based upon the price of the card and is pending on how




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many customers sign up and use their frequent customer cards. Tropical Smoothie will

also offer a daily smoothie special, in which they will take half off that particular

smoothie that is designated to that particular day. With these promotions Tropical

Smoothie will attempt to sway customers to the location through either frequent visits or

specific days in which they can enjoy their discounted smoothies. The hours of

operation will be from 7 A.M. to 7 P.M. allowing the customers to get a smoothie in the

morning to jumpstart their day or eat a healthy lunch while on break. Being open tell 7

P.M. allows customers to grab something quick and healthy after a long day of work or

shopping. These hours will be Monday through Saturday with Sunday’s hours being

from 7 A.M. to 5 P.M. To ensure that the customers are happy the company will have

comment cards out as well as a phone number on the receipt that they can call if they

aren’t 100% satisfied. The franchise wants its customers to come back, therefore if

there are specific changes that have been noticed through the customers, it needs to

know about them and at best change them to the best of the company’s ability. As part

of the marketing strategy it will make sure to advertise that it is a healthy, good, high

quality alternative to fast food and will strive to make every customer feel like they are

its most valuable customer, as opposed to the competition which primarily provides

unhealthy food with little customer service. Tropical Smoothie largely promotes a

variety of healthy products for the customers to select from. Along with health being a

factor in the company’s presentation the product will be presented in a quick and

prestigious fashion. The company will propose tests for its employees to produce a well

established product at the fastest time. This will help with the promptness of the product




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as well as the quality. This test will be held every three months in order to maintain the

efficiency of the employees.

                                    Recommendation

       Based on the research conducted of this franchise and whether or not it would do

well in the New River Valley, the consultant team has decided that it will be successful

and recommends that Tropical Smoothie Café be built. This decision has been reached

after research was complete and all factors weighed. The team feels confident that the

franchise will do well in the New River Valley, and that there are no other restaurants

that have a combination of Tropical Smoothie’s healthy menu items and variety of

smoothies, wraps, salads, and sandwiches. The company’s target market could best be

reached in Christiansburg and the team believes that its free-standing location by the

New River Valley mall will attract health-conscious, young crowds from not only its own

population, but also from the college aged population that can be found in the

surrounding areas of Radford and Blacksburg. Overall, the New River Valley would

benefit from the placement of a Tropical Smoothie Café franchise and the team

recommends that one be established.




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                                        References

1. Tropical Smoothie Café. 2006. Retrieved October 2006 from

http://www.tropicalsmoothie.com/

2. The Best of Hampton Roads.2006. Food and Dining. Retrieved October 2006 from

http://home.hamptonroads.com/best/winners/Index.cfm?meta=6&cat=344&postback=1&

group=year)

3. Retail Traffic. 2006. Retrieved October 2006 from

http://retailtrafficmag.com/news/even

4. Bank of America. 2006. Targeting Your Market. Retrieved October 31, 2006 from

http://www.bankofamerica.com/smallbusiness/resourcecenter/index.cfm?template=rc_st

artingyourbusiness&context=rc_targetmarket

5. PREIT. October 31, 2005. Company Release. Retrieved November 5, 2006 from

http://www.snl.com/irweblinkx/file.aspx?IID=102991&FID=1971938&printable=1

6. Loopnet. (n.d). Foothills Plaza. Retrieved November 4, 2006 from

http://www.loopnet.com/xNet/MainSite/Listing/Profile/ProfileSE.aspx?LID=1346724

9&linkcode=10850&sourcecode=1lww2t006a00001

7. Wikipedia. October 17, 2006. Christiansburg, Virginia. Retrieved October 29,

2006 from http://en.wikipedia.org/wiki/Christiansburg%2C_Virginia

8. Wikipedia. September 16, 2006. Blacksburg, Virginia. Retrieved October 29, 2006

from http://en.wikipedia.org/wiki/Blacksburg%2C_Virginia

9. Wikipedia. October 1, 2006. Radford, Virginia. Retrieved October 29, 2006 from

http://en.wikipedia.org/wiki/Radford%2C_Virginia




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