Pay Dirt Investment Club
A Jamba Juice Visit

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By CREWatcher
September 11, 2009

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Thanks Kevin for brining this idea up in the Pay Dirt Investment Club. Anybody who didn't read his post, it's a short hop back here

Did a little homework. I was happy to find that Jamba has separate positions for CEO and Chairman, and that the Chairman provides some continuity. I was also happy to see that he owns about a million shares.

I thought the 1.5 million options given to White, the new CEO, was a little silly. With a strike of $0.60 they may as well have just given him shares. The company is either going up or to zero, and either way shares, perhaps restricted shares, would have had the same effect on regular shareholders as $0.60 strike options, and then they would have had a CEO with a large block of shares. But that isn't much more than a semantic complaint.

Anyway, while the company looks appropriately dirty for Pay Dirt consideration, it also looks better than some of the value traps I've fallen in. So, I went out to kick their tires, or squeeze their fruit. (It is also a heck of a lot easier to test out a consumer discretionary company than a student loan securitizer or a subprime auto loan securitizer.)

I live in Orange County, California, and I picked the Jamba Juice that is just a few blocks away from the airport. It is on a major, 6 lane boulevard (not counting turn lanes) near the county's biggest concentration of office buildings, but not next to a signal and crosswalk, which would have made it more convenient to the office workers. Ah, it's Southern California. Everybody drives anyway. Point is I picked a location that should get decent business at noon on a weekday.

I drove into the parking lot at 11:57. The parking lot was pretty full, but by 11:59 I had parked and walked into the store. The store is in a strip mall with a La Salsa, a Quizno's, and a couple other fast food joints. The parking lot is shared with a Staples.

When I entered the store there were 6 other customers. There were 2 when I left 10 minutes later. The ordering line was never more than 2 people long.

I spent the first couple minutes just perusing the menu. It seems a tad simplified from what I remember from my last visit, several years past. A store clerk cheerily offered to answer any menu questions I had, but I chose to just peruse the menu on my own.

I had no wait when I was ready to place my order. Pleased to see they had 16oz drinks, which were smaller than I remembered, I carefully started ordering by saying that I was going to have 2, 16oz drinks. I then went on to specify which drinks and added on an oatmeal with bananas. When my order was ready, I found one of my drinks was 16oz and one was larger. As I stood around looking a bit flummoxed, another store clerk asked if she could help me. I explained my predicament, she quickly checked their computer and saw that I had been charged for the larger size, poured what would fit in a 16oz cup for me, and gave me back 80 cents. She was very fast and polite.

One of the drinks I got was matcha green tea, a premium flavor. I was skeptical that they would pull this off well, but I've lived a couple years in Japan and I have a soft spot for that country's flavors, so I gave it a try. They nailed the flavor. It was great, everything but the bitterness, and I think the bitter part is best left out of a smoothie anyway.

I cringed a bit at the $2.50 price for the oatmeal with bananas. I like to occasionally make Quaker instant oatmeal for myself, and this was going to be a lot more expensive. But Jamba's oatmeal turned out to be very good. That and a smoothie made a satisfying lunch for me. Though, I think the average American's appetite would find that meal too light.

There was a cooler with other food items. These included wraps, salads, and sandwiches. None of them looked appetizing to me, but I'm not a wrap, salad, or sandwich guy (unless it's a good Caesar with real anchovies), so I'm a poor judge of that stuff. But, I can say the cooler was in an absolutely lousy location. I walked the length of the store to place my order, and took my time about it, and I didn't see the cooler until after I had ordered. This may be an artifact of the funky store footprint. The store is an unusual shape that really stands out well from the street, but they would need to do some serious interior rearranging to get that cooler into a good position. But, if cooler positioning is tricky at most Jamba locations, that could be a real drag on the new effort to sell food, and correcting it could required cash-eating store makeovers.

I was concerned to see several signs up saying that they were temporarily unable to accept Jamba cards. I asked what the deal was with that, and was told that the machine was broken. I pressed a little and was told the machine should be fixed tomorrow. If that's all it is, no biggie. But, that part of my brain that is always looking for problems with a company suggested another possibility. Maybe this is a franchised location and they are worried about being properly reimbursed from corporate for Jamba card charges. I have to return after giving them time to fix the machine.

As for seating, there was rather little, and it was all outside. It's been a bit hot of late, and I found the outside seating not at all appealing. Beyond the heat, you also had the traffic noise of that 6 lane boulevard. I missed the comfort of a Starbucks, but I appreciated the savings in rent and maintenance from not providing it. Both smoothies and oatmeal maintained good temperatures while I spent 20 minutes getting myself somewhere comfortable to enjoy them.

Anyway, both drinks were good, and the oatmeal was good, and I liked the 16oz sizes and the friendly staff. I was concerned that the customer traffic was light for noon on a Thursday in the office district, and the Jamba card and cooler positioning issues seemed worth more of a look as well.

Oh yeah, I also asked where the next closest Jamba stores are. The answer was Triangle Square, Metro Point, and Irvine Spectrum. The first of those locations is downright scary. I have seen more businesses fail in Triangle Square than any other mall I shop at. They should call it the Bermuda Triangle Square. On the other hand, Irvine Spectrum is one of the busiest malls in the county - so that's good.