Jamba

Image source: Jamba.

Jamba (NASDAQ:JMBA) now has its top blender tenders in place. The country's largest smoothie chain is tapping Carrabba's Italian Grill President David Pace as its new CEO. Former P.F. Chang's CEO Richard Federico is stepping up as Jamba's new chairman. The announcements come three months after James White -- Jamba's CEO, president, and chairman -- decided to retire. 

The parent company of the 884-store Jamba Juice chain is in the process of refranchising itself, converting most of its company-owned stores into franchisee-run locations. Just 9% of its stores were run by the company as of mid-November, a figure that declined a month later with the closure of nine company-operated stores in Chicago and New York. A year ago, it owned 30% of Jamba Juice stores.

Handing over locations to franchisees has naturally changed the financial dynamics at Jamba. Revenue is down sharply -- off by 39% in the third quarter when pitted against the same period a year earlier -- but profit margins and operating profit are surging. That's the nature of refranchising as low-margin revenue from running a store is replaced by high-margin royalties that are collected.  

Don't assume that the 39% drop in revenue means that folks aren't going to Jamba Juice these days. That's not the case at all. Systemwide comparable-store sales rose 5.6% during the seasonally potent summer quarter. 

Store-level growth should continue. It sees comps climbing 2% to 4% higher in 2016, adding 100 to 125 new units during the year.

The new hires are interesting. Instead of poaching executives from fellow beverage specialists or even the fast-food or fast-casual segments, Pace and Federico come from casual-dining chains. This certainly doesn't mean that Jamba Juice blender baristas will be taking table-side orders in the future. It's not the right model even before we consider the space limitations of most store locations. However, bringing on two restaurant execs can lead one to wonder if Jamba's trying to follow smaller rivals like Tropical Smoothie Cafe into beefing up its non-beverage food options to drum up more sales later in the day.

Jamba's stock dipped 11% in 2015 as the refranchising efforts intensified, but the shares have doubled over the past three years. Jamba continues to try to position its name as a wellness brand, and even with organic grocers and even the leading "food with integrity" burrito roller coming under fire lately, it's the right place to be for the long haul.

Jamba expects to generate $60 million in revenue through the refranchising process, and it's already putting some of that to work in stock buybacks that will pump up profitability on a per-share basis. Jamba has some interesting names now at the helm, and now with its leaner franchisee-fueled model, it could lead to the thick bottom-line results that investors have been missing out on in the past.

Rick Munarriz owns shares of Jamba. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.