For some reason, Phoenix is in the midst of frozen yogurt wars. A few years ago a store opened with a new concept - they set up about 12 self-serve frozen yogurt machines so you could fill your own bowl, and then gave the customer direct access to heaps and heaps of toppings (e.g sprinkles, chocolate sauce, m&m's, gummie bears, etc). At the end, you weigh your bowl and pay based on weight, exactly as one might do in one of those salad bar restaurants.
Over the last few years, the market has exploded with new stores in the same model. We must have at least 10 different chains. We have about 6 within a short drive of our house. Already, the price per ounce they charge has fallen by over half.
I have learned from my out-of-town visitors that this is not a concept that is common in other parts of the country. Which leads me to ask why so many restaurants with the same concept are piling into Phoenix. Is it just people in the local market thinking it is a great idea and deciding to copy the idea in their neighborhood? I can sort of see the appeal - these stores were (initially) popular, had low barriers to entry, and probably elicit dreams of creating a franchisable concept. Which leads me to two questions:
- Why is the tenth or twentieth incremental store being opened in Phoenix? I would find some place like Georgetown or Harvard Square that has not seen this concept yet and open it there. Or even better, open one on Sand Hill Road or wherever retail investors work.
- Seeing the low barriers to entry and the quick proliferation in this market, combined with sagging visitation as the novelty wears off and steeply falling prices, why is anyone attracted to this at all? One guy will probably get out ahead on this and establish a national brand, and everyone else will likely get slaughtered (and the first mover will probably go bankrupt anyway as many fast-growing franchise model from Jiffy Lube to Boston Chicken have). Is it the lottery value? Or am I too much like the joke about Milton Friedman, who refused to pick up a twenty dollar bill on the ground because he argued that the money couldn't be real since in a free market someone would have already picked it up.