March Interview: Frozen Yogurt with Yul Kwon

Presenting Yul Kwon, this month's guest interviewee...

After graduating from Stanford with a degree in Symbolic Systems, Yul Kwon continued his studies at Yale Law and went on to work at law firms and other companies, including McKinsey and Google. In 2006, he was the winner of Survivor Cook Islands and went down in the show's history as one of the greatest strategists. Last year, he opened his first Red Mango frozen yogurt shop in downtown Palo Alto. In addition to Red Mango, he spends his time doing nonprofit/charity work and supports issues in the Asian American community, including bone marrow donations and political activism.

Froyo is one of my all-time favorite snacks and one that I partake in with best friends and family, so it was a real treat speaking with Yul Kwon and learning more about the froyo market from him. I found him to be a very genuine and funny individual to talk to. And who would have thought that Yul Kwon is lactose intolerant?!

After winning Survivor, why and how did you enter frozen yogurt industry?
It was completely serendipitous. After Survivor, I stopped eating well. I wanted to find something healthy to eat because I gained 40 pounds. When I went to LA, someone introduced me to frozen yogurt, and it helped me get back into shape. I met Dan Kim, the CEO of Red Mango, through a mutual friend, and he asked me if I was willing to help him expand in the Bay Area. I had never owned a small business before, never done franchising. Having worked in the corporate world, I never had the desire to work in retail food, but I thought it'd be an interesting experience. I love the product and the guaranteed supply of yogurt!

What is your specific role at Red Mango?
I'm a franchisee, a small business owner, of Red Mango. I'm the public face in the Bay Area, the deal maker kind of. I spend a lot of time on overall strategy and organizational fit and building relationships with landlords, brokers, and Red Mango corporate. I spend some time in the stores, too.

Is frozen yogurt a fad or here to stay?
I believe it's a sustainable trend. First, if you look at the frozen desserts market, frozen yogurt occupies only a small share, so there's room for growth, especially if you look at other parts of the world where yogurt consumption is much higher. Second, the product is healthy, and there's been a long-term trend and desire for healthier products in all categories of food. Consumers are choosing food options based on health investments. Frozen yogurt is a low-calorie food with a lot of health benefits. Red Mango was the first frozen yogurt brand to be certified by the National Yogurt Association.

Since Survivor, you've been getting a lot of media attention, including negative coverage on Red Mango being denied entry into San Francisco's North Beach community. How do you cooperate with the press and what did you walk away from North Beach with?
Engage the press and get to know reporters too, so that they can understand your perspective. Be proactive and develop a relationship with the media. When North Beach happened, the press wasn't positive because Red Mango seemed to be bringing a large chain into a local community.

San Francisco is a crazy place to open a business. There are lots of local politics, different political factions and local stakeholder groups. It's hard to navigate unless you're an insider. You need connections. For us, the problem was that there were written rules and unwritten rules. We didn't reach out to the right groups and politicians. We walked into a longstanding political issue (preserving the identity of the local North Beach community and preventing large chains from commercializing the neighborhood) that we weren't familiar with. That's an important and valuable goal.

So you now have two locations, one on University Ave in Palo Alto, and another in Valley Fair mall in San Jose. How would you compare the two?
Our Palo Alto store is an outdoor location, it's more of a neighborhood, whereas the one in Valley Fair is in a large mall, so there are different patterns in terms of the traffic you get and at what times. In Palo Alto, people go to Red Mango specifically because they want Red Mango. In a mall, it's a different proposition: people are shopping for other things and making spontaneous buying decisions along the way. There's less seasonality in a mall location; in Palo Alto, we've become weathermen.

Red Mango on University Ave:

What do you get at Red Mango?
It changes, but I guess my favorite right now is pomegranate with blueberries, Ghirardelli dark chocolate, and mango.

Who are your target customers at Red Mango?
The majority of our customers are women, ages 18 to 44, interested in health. Young kids like sweeter things, but once they get used to it, they like it a lot. We're trying to get men right now. They follow the women.

Haha. How do you stay competitive with popular brands in the area like Pinkberry and Fraiche?
There are relatively low barriers to entry in the frozen yogurt space, thus the proliferation of different frozen yogurt brands. The process of education is important, as are other factors such as the product, ambiance, location, and brand. I picked which yogurt I wanted to be involved with based on taste and quality. It's tart, but not so tart that it's off-putting. I'm actually lactose intolerant, so there are very few dairy products that don't give me digestive problems, but for some reason I'm able to eat Red Mango.

Fraiche recently opened a store on Stanford campus this year. Is this a missed opportunity for Red Mango?
It's a missed opportunity because Stanford is my alma mater, and it would've been personally meaningful for me. I wasn't involved in the negotiation, but there was some misunderstanding/miscommunication. I was pretty bumped and upset, but it is what it is.

What is your favorite non-Red Mango frozen dessert?
Quickly. It's made with Dreyer's.

The reason why you participated in Survivor was to break stereotypes of Asian men in the media. How do you continue to challenge stereotypes as a small business owner?
Premium frozen yogurt is an Asian concept that's been able to cross over. In general, though, there's a perception of Asian products being shoddy/inferior. As a Korean American, I like the fact that Red Mango is a Korean product, but is seen and accepted by a broader community that includes many racial and generational lines. In an indirect way, the Red Mango brand serves the larger purpose of trying to demystify Asian images and products.

Frozen yogurt can get pricey. How do you set prices?
The franchiser makes recommendations, but the franchisee determines prices. It's a difficult issue because on the one hand you don't want to price too high, and on the other you don't want to feel your margins, so it's a complex problem you have to solve. It's a combination of margin-based pricing, how price sensitive your customers are, your competition, and what kind of image/brand you're trying to cultivate. Even now we debate our prices.

Red Mango is a premium frozen yogurt brand. How is the economy impacting your sales?
The whole recession threw a big curve into everyone's business model. Every food retailer has been hit by the recession and is hurting, there's no question about it. We haven't lowered our prices, but are monitoring and discussing prices depending on how things change. Before, with so many frozen yogurt operators trying to open stores, our strategy was to compete and win market share. Now, our focus is on lean operations.

Share a memorable customer interaction, please.
You know, I've had all kinds of interactions. A lot of times, fans of Survivor get excited when they see me. I remember this one time I was working behind the counter and shook a customer's hand. Later, I read on a Yelp review that I had a "meek" handshake.

Define entrepreneur.
Someone who doesn't know better, a risk taker who wants to take a big gamble in terms of trying something new and controlling one's direction and destiny.

Thank you, Yul Kwon!


And in case anyone from Red Mango is reading, a couple questions from my readers:

• Can you get more flavors of the mochi topping at Red Mango like grape, strawberry, green tea?
• Will there be a Red Mango in San Francisco soon?