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Today, Sept. 25, the Motley Fool is celebrating Worldwide Invest Better Day. The idea is to "educate, inspire, and motivate" investors of all experience levels to, well, invest better. With that in mind, let's take a look at the basics of Jamba (Nasdaq: JMBA ) , the small-cap smoothie maker.
The company's basics
Jamba Juice is the wholly owned and only owned subsidiary of Jamba, Inc., and the two are basically interchangeable. According to the latest quarterly report, Jamba has 783 stores worldwide, with 305 company-owned stores, 448 franchises, and 30 international stores. But keep an eye on the company press releases as well, as those numbers are growing.
Jamba also sells consumer products in grocery and convenience stores, such as make-at-home smoothie kits and an energy drink developed with Nestle, pitting it against heavyweights like Monster (Nasdaq: MNST ) . It's hard to say exactly how well these products are doing, because they are grouped together with franchise royalties, which are also growing, but for the recently ended 26-week period, combined franchise and other revenue jumped from 4.7% of sales to 5.5%. The company's growth strategy is to continue growing that number, thus taking more pressure off the costly company-owned stores.
Company-owned stores, ironically, have always been Jamba's Achilles' heel. They tend to do poorly during the winter months, when people aren't as thirsty for frozen treats, giving the company a notoriously lumpy earnings blend throughout the year. To that end, Jamba has focused on building up an assortment of hot drinks and food. To further contain costs, Jamba also sold nearly 200 of its company-owned stores to franchisees, essentially giving the company a constant profit margin on those stores regardless of season.
The main threats
Jamba's main threat is itself, as it risks overexpanding as its rival Starbucks (NYSE: SBUX ) once did, or its consumer products plan could fail to bring fruit. Jamba has made significant progress from a few years ago, however, when most of its stores were company-owned and runaway costs nearly sent the company into bankruptcy. It's been frustrating to be a Jamba investor lately, as the progress has been steady but slow and the stock has mostly moved sideways.
As progress picks up, the company will increasingly be under threat from Starbucks and McDonald's (NYSE: MCD ) , which have both used their size to try to take over the smoothie market, particularly Starbucks, with its new Evolution Fresh juice stores.
Now that you know the basics of Jamba Juice, stay tuned to The Fool and check out all of our special coverage today during Worldwide Invest Better Day!