Frozen yogurt is cool again

Pinkberry now operates 59 locations in California and New York, and plans to have 75 open by the end of 2008. Red Mango operates 30 shops in seven states, with plans to open dozens more in the coming year.

"The question is, are you going to just be a niche player or will you be a national chain," said Harry Balzer, vice president of NPD Group, a consumer marketing research firm that tracks how Americans eat. "They clearly are getting a nice buzz within the population. But we often mistake our willingness to try new things as a trend."

Some believe the new kind of frozen yogurt, because of its tartness, might have a hard time catching on with Americans who prefer very sweet desserts. Pinkberry, Red Mango and others make their products using active cultures, which increases the healthy attributes of yogurt but also increases its tartness.

Executives from both chains believe they can make it nationally; they say they are inundated with requests from potential franchisees. Kim, a former Wall Street investment banker, said his stores attract between 400 and 1,500 customers a day, and each location brings in about $1 million in annualized sales.

Those kind of numbers have caught the attention of investors.

Pinkberry has grown in part with cash from a venture capital firm co-founded by Starbucks Corp.'s chairman and CEO, Howard Schultz. Red Mango last week announced that former Blockbuster Inc. CEO John Antioco invested $12 million into the concept, and will serve as chairman of the company's board of directors. Other advisers include movie producer John Davis, the son of billionaire Marvin Davis, movie producer Roy Lee, and Stone Canyon Venture Partners.

Pinkberry CEO Ron Graves said the company has certainly benefited from its pop culture fame — and doesn't plan to run from that image. However, he feels Pinkberry has the product to back up all the hype.

"We're not out there trying to get people to endorse Pinkberry," he said. "It has been a natural phenomenon. We're focused on building the right infrastructure, growing in other regions, and building a fantastic company."

Still, this could be a fad that comes and goes like the last, something that Heidi Miller knows about. In 1981, the former bodybuilder opened Heidi's Frogen Yozurt in a cramped storefront tucked into a shopping center in Irvine, Calif. She built the company to 120 locations before cashing out by selling an 86 percent stake in the company in 1989. The chain is no longer in operation.

She's not entirely convinced the new generation has staying power: "There's always a window of opportunity, they are hot for a couple years and die down — everything is cyclical." She points out that getting "celebrities hooked" on the product doesn't automatically bring success, and senses that the market might become too crowded.

"Just like with Heidi's, there will be a shakeout," she said. "Only the strong will survive."

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