Maui Wowi, Inc.

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Maui Wowi, Inc.

5445 DTC Parkway, Suite 1050
Greenwood Village, Colorado 80111
U.S.A.
Telephone: (303) 781-7800
Toll Free: (888) 862-8555
Fax: (303) 781-2438
Web site: http://www.mauiwowi.com

Private Company
Incorporated: 1983
Employees: 35
Sales: $11 million (2005 est.)
NAIC: 445299 All Other Specialty Food Stores; 722330 Mobile Food Services; 533110 Owners and Lessors of Other Non-Financial Assets

Maui Wowi, Inc., is a franchiser of mobile kiosks and stores that sell blended fruit drinks, specialty coffees, and dessert beverages, marketing its products under the Maui Wowi Hawaiian brand name. The company presides over more than 400 franchise operations in more than 40 states, with an additional 800 units under development. Mobile kiosks are located in office buildings, hospitals, schools, universities, fitness clubs, event venues, and shopping centers. Through a partnership with Experimental and Applied Sciences, Inc., Maui Wowi offers its products alongside nutritional supplements in fitness clubs.

ORIGINS

The company was founded in 1983 by Jeff and Jill Summerhays, newlyweds at the time who celebrated their marriage by launching a business. The Salt Lake City, Utah, couple spent their honeymoon in Hawaii, where they came up with the idea of selling blended fruit drinks, or "smoothies," as they would become known. When they returned to Salt Lake City, the Summerhayses began putting their plan into action by building a cart to prepare and sell smoothies. The reaction to the product was positive, encouraging the pair to become masters of their craft. They experimented with recipes, researched different parts of the world for exotic, native fruits, and, over time, developed an all-natural line of fruit blends based on their signature nonfat yogurt recipe. The Summerhayses sold their drinks wherever they went, combining business with pleasure on a vacation in Australia, for instance, but mainly the couple operated their cart, or kiosk, in Utah. They parked their kiosk and operated their blenders at special events, conventions, and festivals, presiding over a mobile business that consistently attracted lines of patrons.

The Summerhayses created and cultivated a successful business that answered their financial needs. Years before smoothies developed into a national food craze, the couple tapped into the public's desire for healthful beverages, but a lone cart crisscrossing the state of Utah was far from creating the stir that would elevate the Maui Wowi name to national prominence. Maui Wowi drew the attention of the national business press after control over the concept passed from the Summerhayses to an individual who envisioned far more than a single cart operating in one state. The change in leadership marked the end of one era and the beginning of a decidedly more ambitious period in the company's history.

Michael Haith was in college when the Summerhayses first began making smoothies for a living. A Colorado native, Haith attended the University of Colorado, graduating with degrees in advertising and journalism in 1984. With his degrees in hand, he made the common move of choosing a professional career unrelated to his undergraduate training. Haith joined the foodservice industry, becoming a franchisee of the Pour Le France Restaurant Group, which sparked the entrepreneurial inclinations in his character. He started a separate catering business in Denver called Pour Le France Catering, serving as the company's president, and founded a consulting group aimed at helping event concession planners. As a part of his consultancy business, Haith attended the festivals and events that concessionaires served, including the Utah Arts Festival, where he first met the Summerhayses in 1997. "They had the longest lines," Haith said in a February 9, 2000, interview with the Denver Post, remembering his first impression of the Summerhayses' cart at the festival. "They were having the most fun, they had the fewest employees, and they were making the most money."

By the time Haith came across their kiosk at the Utah Arts Festival, the Sumerhayses had been running their business for 14 years. The couple had been considering franchising their concept before they met Haith, but they lacked the confidence to make the next evolutionary step in the operation of their business. "We are creative concept people," Jill Summerhays said in a March 1, 2003, interview with FSB. "As far as the business end is concerned, we really stink." The Summerhayses knew their limitations, whereas Haith, having successfully started a catering business and a consultancy firm, was eager to take on a new challenge. In 1997, he persuaded his father to join him in investing in the Summerhayses' business. He gave the Summerhayses $100,000 for a one-third interest in their smoothie business. The following year, the Haiths became majority owners in Maui Wowi Fresh Fruit Blends and Michael Haith became president, chief executive officer, and director of the company.

HAITH TAKES CONTROL IN 1998

Haith took control of one cart and quickly set about transforming the Maui Wowi concept into a revenue-generating machine. He intended to expand aggressively by using a franchising system, utilizing the experience he gained after college. His expansion program began in earnest in 1999, when aspiring entrepreneurs were offered the opportunity to emulate the success the Summerhayses had enjoyed for more than a decade. Midway through the year, Haith moved the franchising operations to his home state, near Denver, but the production of carts and the proprietary drink mixes that represented the lifeblood of the franchising operation remained in Utah. Franchisees, who were trained by the Summerhayses, had several options for entering into the business, each involving a flat franchise fee. A single cart cost $4,500, with an additional $5,000 to $13,000 required to equip the cart. Franchisees who were more ambitious could purchase three carts for $20,000 or ten carts for $50,000. After paying for the cart and equipment, franchisees purchased the drink mixes from Maui Wowi, but the financial commitments to the company ended there. Unlike traditional franchising programs, Maui Wowi's system offered enticing autonomy, financial and otherwise, to participants, freeing them from geographic restrictions, royalty payments, and virtually any oversight. Eager entrepreneurs, drawn by relatively low start-up costs and operational freedom, approached Maui Wowi, enabling Haith to collect $300,000 from the sale of franchises, carts, and drink ingredients in 1999.

COMPANY PERSPECTIVES

Maui Wowi Hawaiian is as close as you can get to going to Hawaii without hopping on a plane. It is a cool gathering place where you'll find great Hawaiian coffees, all-natural smoothies and lots of island attitude. It's the kind of place you would have stumbled upon on the North Shore during the sixties. Inspired by the original long board surf crowd, it's laid back and relaxed. Cool without trying to be. It's a mini vacation from all things mundane—and all things corporate. We have built a franchise organization focused on the Hawaiian tradition of family called 'Ohana. And that's how every single one of us treats every single person who comes into Maui Wowi Hawaiian. While there are lots of coffee and smoothie shops around the country, there is nothing like Maui Wowi Hawaiian. No one has our exclusive line of Hawaiian blend coffee, Kona espresso drinks or our signature Fresh Fruit Smoothies. And no one has our "Aloha Spirit." Welcome to another smoothie day in paradise.

Maui Wowi, now guised as a franchiser, registered steady growth before demonstrating the rampant pace of expansion that made its 20th anniversary a genuinely celebratory event. By the beginning of 2001, the Maui Wowi concept appeared in 34 kiosks, units that were located primarily in the Midwest and Northeast and situated in shopping malls, convention centers, national sporting events such as the Kentucky Derby, and college campuses. Fewer than three dozen carts selling smoothies fell short of constituting a story that the national business press bothered to take notice of, but the company began to gain momentum as the year progressed. By the end of the year, in which the company leaped past the $1-million-in sales mark, Maui Wowi had its name attached to 80 kiosks in operation. Haith was beginning to impress onlookers and to attract attention from industry publications, particularly after the size of his franchise operation more than doubled during the first months of 2002. Nation's Restaurant News requested an interview as the Maui Wowi concept exhibited financial strength, publishing a May 20, 2002, article that highlighted the market success of the Greenwood Village, Colorado-based company. Maui Wowi represented a 165-kiosk chain at the time, nearly halfway toward collecting the $7 million in revenue it would generate during the year, an increase of 150 percent of the total posted in 2001.

When Haith discussed the state of his franchise operation with Nation's Restaurant News, his vision of what the company could become was beginning to broaden, but he remained committed to preserving the defining physical characteristic of Maui Wowi. "We only do kiosks; no buildings," he said in his interview. "The beauty of the cart system is that if the space is not fulfilling the needs of the operator, he can move it to another location—people just aren't going to make smoothie purchases a destination buy." Haith's perception of the draw of his concept soon adopted a more expansive view, but before he began seriously considering franchising permanent locations, he initiated wholesale changes within his existing cart-based network. He began trying to broaden the concept's appeal beyond smoothies, launching an expanded line of products and anointing the more diverse selection with a new brand name. Maui Wowi Fresh Fruit Blends became Maui Wowi Fresh Hawaiian Blends in 2002, the same year the company introduced hot beverages such as espressos, lattes, and cappuccinos. "We needed something to serve for the mornings," Haith offered in his interview with Nation's Restaurant News.

One year after Haith talked with one of the food-service industry's leading publications, the size and scope of the business had advanced. The 164-unit chain in May 2002 became a 255-unit chain comprising kiosks and storefronts by May 2003. Haith, during the year, embraced the idea of permanent locations, opening up new avenues of growth that fueled decidedly ambitious projections for the Maui Wowi concept. Company officials, quoted in the May 12, 2003, issue of Crittenden's Restaurant Chain Report, projected 500 additional units by the end of the year and another 1,000 units, both cart and storefront, by the end of 2004. Maui Wowi fell short of achieving its predicted stature within the period, but as a private company, free from suffering the wrath of disappointed shareholders expecting it to meet its growth projections, no damage was done. Maui Wowi was hitting its stride, becoming a success story in a fast-growing niche in its industry and preparing to unveil a new package to prospective franchisees: $100,000 to manage an unlimited number of kiosks within a specific region, with the franchisee given a percentage of franchise fees and product sales.

KEY DATES

1983:: Jeff and Jill Summerhays begin selling blended fruit drinks in Utah.
1997:: Michael Haith acquires a one-third interest in the Summerhayses' business.
1998:: Haith becomes the majority owner of Maui Wowi and takes over leadership responsibilities.
1999:: Haith moves the company's franchising operation to Colorado.
2004:: Maui Wowi signs an agreement with Experimental and Applied Sciences, Inc., to sell nutrition supplements alongside its smoothies at fitness clubs.
2006:: The company announces plans to expand to as many as 2,000 units by 2011.

"As we grow older," Haith said in a March 1, 2003, interview with industry publication FSB, "we're not going to be as focused on selling franchises as we are on extending the brand and letting franchise owners within the system grow." Haith's comment manifested itself at the beginning of 2004, when Maui Wowi announced it had formed a partnership with Experimental and Applied Sciences, Inc., a Colorado-based producer of nutrition supplements. Under the terms of the agreement, the two parties began opening kiosks and fixed units in fitness centers that featured Maui Wowi fruit blends and Experimental and Applied Sciences' nutrition supplements, unveiling the first property in January 2004 at the Energy Fitness Center in Paducah, Kentucky. "We are projecting opening between 100 and 150 units in fitness centers this year," Haith said in a February 9, 2004, interview with Nation's Restaurant News Daily NewsFax.

BOLD PLANS FOR THE FUTURE

As Haith plotted expansion beyond the company's 20th anniversary, his plans continued to be ambitious. There were talks of venturing overseas for the first time, with Japan the likely home of the first international Maui Wowi. The majority of the company's attention was expected to be directed toward building its domestic base, however, using both kiosks and fixed locations to expand. "Our target," Haith said in an April 29, 2006, interview with the Rocky Mountain News, "is folks who don't go to Starbucks—younger kids and mothers with kids, people who just want an oasis for 15 minutes." To attract his target audience, Haith announced another expansion of the Maui Wowi menu, which was expected to add a line of "hot koko" drinks in the winter of 2007. Plans to expand the chain physically promised to maintain the 1,100 percent growth rate recorded between 2001 and 2005. Haith wanted to add 50 kiosks and 50 storefronts in 2006 as he progressed toward his goal of franchising as many as 2,000 units by the end of the decade. The fulfillment of such plans promised to create a national retail giant, lifting the Maui Wowi concept to heights never imagined by its creators.

Jeffrey L. Covell