Fro-yo free fall: how a once surging business model can stabilize, by marginalizing itself.

Singling out an apparently unsuccessful business is even too cruel for a cad like me—especially when the business is still functional.  (I have no problem conducting an entrepreneurial post-mortem though.)  That said, since the business in question here not only is still operating but was in operation while I shot these pics, I have to be careful.  As a result, I’ll withhold the exact location of these ruminations; those who recognize the architecture and streetscapes can probably figure it out anyway.  And besides, I’m not trying to flog this particular business as much as the product that it’s selling…a product that is lingering well past its late 2000s popularity peak.  (Then again, by flogging the product, I suppose I’m denigrating the business too.  Well, I purchased something at the same time I took these photos.  Does that redeem me at least a tiny bit?)

Here’s the business of note:

A small but welcoming space saturated in freshly painted pastels.  Could it be another frozen yogurt distributor?  Obviously—my title as usual was a dead giveaway.  And I’ve deliberately obscured any references to the name of the business.

But across the street, another business has unleashed its secret weapon.

Good old fashioned ice cream.  Kilwin’s might not be as familiar of a name as Cold Stone Creamery, Baskin-Robbins, or Ben & Jerry’s, but it has greater breadth in its product line: it’s not just an ice cream parlor but a confectionery, offering fudge and chocolates in addition to ice cream.  Although founded in Michigan in the 1940s, Kilwin’s appears most commonly in the East Coast of the US, particularly in areas popular with tourists, and not necessarily in large cities.  The Midwest has its fair share too.  Having begun in the popular lakefront resort town of Petoskey, the company does seem to skew heavily toward walkable urban districts—not malls or suburban shopping centers.  Proximity to waterfronts seems common.  While its location in the featured photo comports with Kilwin’s general site selection criteria, the focus of this article isn’t where it’s located; it’s those crowds out front.

Witness people lingering outside the door because there’s a line inside, coronavirus be danged.  No such line at the fro-yo shop.  In fact, the place at that moment was empty.  In fairness to fro-yo, Kilwin’s does have a much greater array of sugary offerings, while this particular fro-yo venue also sells smoothies and bubble teas.  But let’s face it: people are queueing up for the ice cream.  And, in defense of the fro-yo shop, I caught it at a particularly inopportune moment; ten minutes later, a few people had ventured to the brightly colored interior to make their order.  But smoothies, bubble tea, and self-serve fro-yo still don’t seem to compete favorably with ice cream, despite the fact that ice cream has been around much longer; the three items at the fro-yo parlor are comparative novelties.  And, amidst a more health-conscious consumer base, ice cream, fudge, and chocolates compare unfavorably to all three of the primary offerings at this fro-yo shop.

What’s the real story here?  Obviously, the inconvenient truth is that frozen yogurt is but a shadow of its former self, during its heyday of the late 2000s and early 2010s.  Remember those colorful names like Red Mango, Orange Leaf, and Pinkberry?  None of them are fully defunct; they still offer dozens of locations.  But in 2010, most of them had hundreds, and nearly all of them have receded to regional relevance.  Or they’re bigger overseas than domestically.  While fro-yo has existed as a concept since at least the early 1980s, with TCBY (The Country’s Best Yogurt) having endured long before the late 2000s surge, it was only with the emergence of the aforementioned brands that fro-yo achieved two feats: a hip cachet associated with walkable urban lifestyles (not purely the domain of strip malls), and a pay-what-it-weighs concept, where self-service gave customers almost unlimited freedom to experiment with mixtures of flavors and a variety of toppings.  Not only did the franchised locations of the colorful chains (and Sweet Frog and Menchie’s among others) proliferate wildly, but mom-and-pop ventures began to appear in cities large and small as well, sometimes paired with coffee, tea, pastries, or salads, usually with an emphasis on a healthier alternative to the typical dairy confections.  And yes, in time, they started becoming equally easy to spot in strip malls.

Fro-yo isn’t gone.  It’s not as easy to find any of the aforementioned chains, but none have gone bankrupt.  But in 2010, those lines often ran out the door, with people eager to grab their little styrofoam bowl, then venture over to the self-serve machines and turn the big levers to crank out their one-of-a-kind swirly combo of flavors, replete with an ultra-customizable toppings bar.  That doesn’t happen very often anymore; fro-yo has lost a lot of its clout, and the self-serve approach is no longer a novelty.  Instead, on days hot and cold, we continue to witness people in lines 30 deep, waiting for the non-health conscious scoops of sub-freezing creamed cow’s milk, where a staffer assumes full control over the size of the scoops and the dispersal of any toppings.  Coast to coast, people have decided they favor this end product and its high fat content over the freedom, autonomy, and comparatively lightweight fro-yo.

So what prompted the fro-yo ascendency?  It had filled a niche as a low-fat dessert for decades, then it rapidly became ubiquitous.  I think the power that it conferred upon the customer offered subtle signals presaging its downfall.  After a few years of working out the exact format, by 2009 or 2010 virtually all fro-yo vendors used the pay-what-it-weighs approach, so people could decide the exact quantity of self-serve yogurt and exactly what their toppings would be.  This freedom seemed emancipating at first, but it also hinted at exactly how disposable the product was.  Simply put, most fro-yo is manufactured in bulk through a very simple mix.  While ice cream doesn’t really perish if it remains frozen, it can get “frost bit” and might deteriorate over time.  Mixture-driven fro-yo does not.  And, much like any other food product with self-serve options (candy, fountain drinks, some beer halls, salads, the hot plates at buffets), the bulk delivery of the product hints at a very high profit margin through the inevitable benefits conferred by economies of scale.  Ice cream offers this to some degree; it certainly arrives in bulk tubs at the typical parlor.  But the manufacturing process is more time consuming, and there’s more nuance in different styles of preparation (levels of cream, consistencies, how additional flavors get introduced to the base).  Outside of some variation in flavorings (presumably through a syrup), most fro-yo shops offer the same approach to the mix, resulting in little variety in the texture or consistency between major fro-yo brand names.

Therefore, ice cream’s resiliency amidst fro-yo’s decline has little to do with the quality of the product, which is a matter of personal preference.  I genuinely believe many small business owners jumped the bandwagon in the late 2000s, overestimating the spike in demand and responding with an oversupply of fro-yo businesses.  The potential for high profit margins within a relatively simple business model (very little in the way of perishable food waste) helped seduce people into the industry.  Fro-yo isn’t gone.  Much like cross-fit gyms, another lifestyle trend that soared in the late 2000s, the industry has retracted and right-sized, becoming another offering alongside ice cream, for which many (but not all) people seem to favor the latter.  Though I don’t expect fro-yo will deliver an encore any time soon, it also isn’t going to fade into complete obscurity.  And at this point, it certainly seems to be faring better than specialty tea shops.