| LOS ANGELES
LOS ANGELES Jamba Inc (JMBA.O) will use some proceeds from a $35 million stock sale to introduce food items ranging from sandwiches and salads to tea-based drinks, hoping to sustain long-term growth, Chief Executive James White said.
The smoothie chain, which alleviated a cash-flow shortage with the stock sale, will begin selling new "Grab and Go" items like ready-made sandwiches, wraps and salads, and Fruit Tea Infusions on Monday.
Jamba's 16-ounce fruit smoothies start at around $3.50, or about the cost of three shares based on Wednesday's Nasdaq closing price of $1.15.
White, saying that Jamba's sharp declines in same-store sales had bottomed, said the new menu items would be introduced first in California Jamba Juice stores. They would be in outlets across the country by July 27, the company said.
Robeks, a privately held rival, already offers sandwiches and salads in some stores.
White said Jamba, which up to now has served a limited number of baked goods in stores, hopes that the sandwiches and salads will bring in more customers throughout the day.
The chain started to offer steel-cut oatmeal in an effort to appeal to the breakfast crowd recently.
"This is not food as a hobby, this is food as a play to transform the company and our offering," White told Reuters.
"Food has the opportunity to be 20 percent of our total sales" within 18 months, said White, who declined to say how much of the company's revenue currently comes from such sales.
Jamba is targeting health-conscious consumers and already offers made-to-order fruit smoothies and a line of drinks that are lower in calories, sugar and carbohydrates.
They're not alone. Starbucks Corp (SBUX.O) is targeting the same type of customers and plans to introduce baked goods that are reformulated to exclude high-fructose corn syrup, artificial flavors or dyes.
Emeryville, California-based Jamba said on June 1 it sold $35 million in convertible preferred stock, and would use the proceeds to pay down a high interest $25 million two-year note and fund investments in food and other projects.
Consumer-focused buyout firm Mistral Equity Partners invested $19.6 million, reportedly getting a 19 percent stake. A company controlled by the Toronto-based Serruya family, which founded the Yogen Fruz chain, invested $15.5 million.
The refinancing has helped ease worries that Jamba could be choked by its debt load.
But falling sales remain a concern as the restaurant industry fights to pry money from diners' wallets amid a recession that has driven the U.S. jobless rate to a 25-year high.
In the quarter ended April 21, sales at established company-owned Jamba outlets fell 13.8 percent.
"We've certainly found a bottom" with regard to same-store sales declines, said White.
But until a full recovery gets underway, the company is slashing costs and limiting store openings until sales stabilize.
White said the company, which now has 732 outlets throughout the United States, could one day have 2,700 outlets in the United States, helped by growth in airports, college and university campuses and malls.
(Reporting by Lisa Baertlein, editing by Leslie Gevirtz)