Shelly Hwang and Young Lee, co-founders of Pinkberry
Her restaurant idea was a flop. But like many entrepreneurs Shelly Hwang, 34, believed in herself. All she needed was the right concept. Partnering with architect Young Lee, 44, (first in business, then in love), the couple launched a frozen yogurt shop in Los Angeles. It was a sensation. Three years later, Pinkberry's less-like-ice-cream, more-like-yogurt tangy taste has helped revive the sagging frozen yogurt industry that peaked in the 1980s. Pinkberry's twist is its simplicity: it has three flavors, healthy toppings and a pop design. The 45 stores in LA and New York are just a start, as the company has global expansion ideas. A number of competitors have sprung up, and there are fights brewing over who was first and who copied whom. But the tension has only garnered more attention and more devotees to the product.
Lee: We first met in 2003 when Shelly hired me as a designer. I owned a small interior design firm and Shelly came in looking for a designer and architect to work with a 600-square-foot space she had rented. I thought it was one of the worst locations I had ever seen in my life--a former on-car garage, out of the way, set back from the boulevard. It was visually impossible to see it from the road. But she had already picked the place and had paid a year's rent up front. We started dating about six months after we met.
Hwang: I was planning to open a different concept in that spot. I wanted an English Tea House for afternoon high tea and I thought it was quite a nice place. It was quiet, set back away from the road where people could sit and enjoy their tea selections and relax, which is why I chose it. But things didn't go very well. I only had 600-square-feet and that wasn't even big enough for a kitchen. We tried to get permits for outdoor seating and a liquor license, but there was strong opposition in the neighborhood. They eventually voted 'No' to both after many hearings. Young started talking about the frozen yogurt shop he had been dreaming about setting up in a place like Westfield mall in Century City. We took his concept and put it in my location. It was a desperate move.
Lee: I have lots of ideas and sometimes I persuade people they are good, but most of the time I don't. Shelly really liked the frozen yogurt idea so she started to investigate the whole gelato/yogurt field and practiced making it. She practiced for almost a year while still working on the Tea House idea. Thank god that got rejected! We came up with the name Pinkberry because pink is a very positive color and the word had a nice rhyme to it. We wanted people to picture fresh, happy berries.
Hwang: I had no experience in the frozen yogurt or dairy business. But I had opened two restaurants before so I knew a little bit about the food business, although both of those endeavors failed. I had graduated from business school at USC (Southern California) and was inexperienced when I first opened those. I left restaurants and worked at my father's textile factory for three years. But I wanted to try and start something on my own again.
Lee: Many people have said the Pinkberry flavor reminds them of Greek yogurt and maybe that is because we stuck with a Yoplait-like concept. We weren't going for a frozen yogurt that mimicked the taste of ice cream, but one that had a natural yogurt flavor. I got the idea for this kind of yogurt when I visited Vienna in 1993 and first tasted a specific kind of soft serve gelato-like yogurt. Shelly researched and found the Italian inventor, Luciano Rabboni, and he gives us a lot of the ingredients today. Some places already had it in the U.S., but it never really took off. Shelly twisted the flavor by reducing the sugar and making it nonfat. Then, about five years ago, I was in Hawaii at the Dole Pineapple Plantation and tasted Dole Whip (a soft serve sorbet) with freshly chopped pineapple. It reminded me of the same kind of refreshing taste the Italian yogurt had. That's when I thought about focusing on using mostly fresh fruit toppings.
Hwang: What is so interesting about frozen yogurt is that it's a very simple concept. It's not like steak or pasta or other food where you have to learn how to cook it in different manners. I could really focus on the flavor of the frozen yogurt. And I don't mean 10 or 20 different flavors, but just the one plain yogurt flavor. It meant we had very little inventory. I used live active yogurt cultures from real yogurt and made sure the dessert was 100 percent nonfat. We reduced the sugar and played up its tangy tart flavor. I added more real yogurt to give it an even tangier finish than normal.
Lee: I wanted to have fun with the store's design. When you walk in, you see a pebble floor that might remind you of the beach. I think of a hot summer day where I am rewarded with ice cream at the end. I used Philippe Starck's Victoria Ghost chairs and a George Nelson-inspired bench. Scandinavian designs give the place a retro-modern look with green circle dots to evoke Danish butter and dairy products and a Le Klint lamp that looks like a yogurt swirl. The figurines on the side are from Alessi, an Italian company that makes everyday household products with an artistic flair. We sell them and people buy them as collectibles, but they also act like a flower decoration would, accentuating the pop feel of the place.
Hwang: We wanted to keep everything simple with only two or three flavors that were customized with toppings instead of adding many different kinds, which would mean more machines and more complications for us and for the customers.
Lee: The biggest challenge was selling the idea to people, like the landlord. We emphasized fresh toppings, a few flavors and a simple design. I would tell them we have two kinds of yogurt, plain and green tea. The response would be something like, "well, across the street they have ten different flavors and they aren't doing well and you have only two flavors. Why would that work?" Then I would say we have fresh fruit toppings. The response would be, "some of the big smoothie companies started with fresh fruit but now they freeze the fruit to stabilize the price. Why would you go with a fluctuating fresh fruit price which puts you at risk financially?" I would tell them my design ideas, which included $600 tables, $350 chairs and a $1,200 bench. I wanted to use an expensive build-out that made everything reflective. They thought we were crazy to spend that kind of money when the average yogurt ticket was only $6.
Hwang: We opened in January 2005 in my out-of-the-way place on 868 North Huntley Drive in West Hollywood.
Lee: About a month into it I got a phone call from an employee that the roof was leaking because of all the rain that month. Shelly and I were in the middle of dinner, but stopped eating and drove to Pinkberry. I was about to park, and tried to look inside but couldn't see anything because the windows were fogged. When I walked in, the place was filled with people having yogurt. It's not a big space, but all these people were sitting inside on a rainy evening in January. That's when I realized we might be successful. We forgot about the leak.
Hwang: I thought we had something that rainy day, too, but I truly believed it when customers kept coming up to me and telling me "I have to have this yogurt every day. I can't sleep if I don't have Pinkberry!" When I heard a few people tell me this I thought, we have something here.
Lee: In May we started getting these lines around the block. We would have fifteen customers come 30 minutes before we opened and wait there. Throughout the day the line never stopped. We had to hire a security guard and use a rope to guide the people in a zig-zag line to control everyone. The neighborhood was getting upset because people were illegally parked, ditching their cars in front of the houses. The parking enforcement came out and started ticketing. One of the meter maids told me the city was making $175,000 a month off of our customers' tickets. Ironically, the ruckus only got us more attention and more patrons. We were doing well because we used the highest quality products, had great service and provided a nice atmosphere. And obviously it was our own business so we were focused on it. Customers are extremely smart and businesses tend to overlook that. People understand instinctively when something is a good concept with a beautiful design.
Hwang: We did very little marketing or advertising. Ads don't really work with the Pinkberry concept because at the end of the day we want customers telling us what is good and what is not. The feedback serves as our marketing. Almost all of it was word of mouth. The newspaper articles talking about the yogurt wars and yogurt scandals helped put us on the map. The more that was written the more people showed up to find out about this yogurt.
Lee: We now have 36 shops in the Los Angeles area and 9 in New York. We plan to expand to more cities in the U.S. and overseas. It's important not to over do it. Today we have 12 franchises that own many of the stores. Pinkberry Corporate owns three. Howard Schultz, CEO of Starbucks, became our partner five months ago and he is helping us build the infrastructure to turn this into a global brand. It's a challenge to expand and keep up the high quality. Schultz will give us tips.