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Franchise Pick

Pinkberry Gets $27.5 Million Infusion from Starbucks Founder

by Sean Kelly on October 17th, 2007

  (FranchisePick.com)   In a June 14, post on FranchisePick.com, we asked:  WILL PINKBERRY BECOME THE NEXT STARBUCKS?.  Reactions from our visiting experts were mixed:

Foodette said:  Yes! I said this exact same thing, and now I know it’s true. I live in Brentwood, and the SECOND Pinkberry is about to open…We have two starbucks, and soon, each with have a Pinkberry less than a block away. UNbelievable.

CrazyZOR said:  This is a dog. And this dog won’t hunt. I have spoken to these folks and they have no idea what they are doing when it comes to franchising. They think hype will carry the concept…. Their is no barrier to entry and only an idiot would buy this franchise.

Golden Spoon Frozen Yogurt said:  …Pinkberry stores are indeed doing well too, but I seriously doubt they will experience any longterm success with what is essentially a powdered milk product, Also, kids don’t like the sour taste and if you want a large yogurt with lots of fruit, be prepared to spend around $8 bucks…

The question turned out to be somewhat prophetic.  Pinkberry has just received a $27.5 million infusion of cash from Starbucks founder Howard Schultz’s venture capital firm.  Here’s the news from Fortune’s Matthew Boyle:

Starbucks founder bites into Pinkberry

The red-hot frozen yogurt chain gets a big boost from the man who brought you the $4 latte, reports Fortune’s Matthew Boyle.

October 16 2007: 10:50 AM EDT

(Fortune) — Red-hot frozen yogurt chain Pinkberry has received a $27.5 million infusion of cash from Starbucks founder Howard Schultz’s venture capital firm, Fortune has learned.

The deal, which will be announced later today, confirms long-held speculation that Seattle-based Maveron - whose prior investments include eBay, drugstore.com, and Good Technology, now owned by Motorola - sees a bright future for Pinkberry, which was launched two years ago by a failed restaurateur and a former nightclub bouncer. (See story here.)

Schultz was not available to comment, but in a press release touting the deal he called Pinkberry founders Shelly Hwang and Young Lee “visionary entrepreneurs” and labeled their brand “a cultural phenomenon.”

The burgeoning chain now has 32 stores in New York and Los Angeles, and plans to grow by expanding its roster of company-owned stores and franchises. Hwang and Lee told Fortune earlier this year that they hope to have 50 locations by year-end. Stores in Las Vegas and London are also on tap.

Pinkberry’s tart-yet-sweet yogurt, topped with the customer’s choice of fresh berries, granola, or even Fruity Pebbles cereal, has won it a cult following that includes celebrities like Salma Hayek and Paris Hilton. (Mike Tyson once demanded his cookies and cream topping on the bottom, and the staff wisely complied.) It’s pricey - a large green tea with three toppings is nearly ten bucks - but Pinkberry’s largely female clientele doesn’t pinch pennies.

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