Full Circle for Smoothie King CEO, who Sells Korean Units
Wan Kim was Smoothie King’s biggest franchisee by far, building 105 stores in South Korea before buying the brand, moving to New Orleans and becoming CEO, in 2012. Now he’s sold those Korean stores to Shinsegae Group for $16.5 million, as the dominant department store retailer plans to add stores in South Korea and push into Vietnam.
Kim is friends with the head of Shinsegae, billionaire Chung Yong-Jim, who is a grandson of the founder of Samsung. About six months ago they got together and began talking about a deal, but it was a hard decision for Kim.
“When I left Korea in 2012, I thought our Korean operation would be in automatic pilot mode, but I was wrong. It was too difficult to focus on both” the Korean business and the U.S., he says. “I decided to focus on the U.S.”
But it wasn’t easy. “I have three kids, and it seemed like I had to let one of my kids go,” when he sold the Korean operation. “It was really hard to make the decision of handing them to someone else.”
Shinsegae operates some 250 retail stores throughout Korea, and there are Smoothie King stores in only three of them; Kim expects many more in the years to come.
Shinsegae has a few retail stores in Vietnam, as well, and wants to use the Smoothie King brand to differentiate itself as it expands in that country. Shinsegae’s deal is for Korea and Vietnam only, but Kim sees advantages in other Asian markets as well.
“Shinsegae is well known in Asia. I believe we can have more opportunities in Japan and China,” he says, because possible partners there know and respect Smoothie King’s new partner.
Smoothie King has 761 total stores, with plans to open 87 to 88 new stores in the U.S. this year and 120 to 125 next year. “Our growth is coming,” Kim says, although it started more slowly than he had hoped. “We had some delays, but I do believe we have momentum.”
Same-store sales increased 8.7 percent in 2014 from 2013, he says, and that figure should hit 9.8 percent this year.
The marketing strategy to serve “smoothies with a purpose,” introduced at the end of 2013, is a differentiator, he says. Last year, for example, Smoothie King launched vegan smoothies and attracted a new clientele. This winter they’ll again offer Ghirardelli dark chocolate smoothies as a limited time offer—delicious, he says, and with only two grams of fat because it’s made with 100 percent cocoa. That’s a very expensive ingredient, he says, but worth it to attract “decadent dieters” during the holidays.