Frozen yogurt shops have become like Starbucks in many big cities and college towns—they're on seemingly every corner.
But there's a bigger reason for the explosion of storefronts such as Pinkberry and Red Mango. Major American private equity firms—which specialize in spotting trends early and investing in smaller businesses set to explode—have poured money into the franchise-friendly industry since 2007. So far the strategy has worked, and a surge of new locations across the country has made frozen yogurt bigger than ever.
Examples of private equity invested in the industry include CIC Partners' stake in Red Mango; The Carlyle Group's investment in TCBY (which it sold in July to another PE firm, Z Capital Partners;) Boxwood Capital Partners involvement in Sweet Frog; and Maveron's partnership with Pinkberry, (Starbucks chairman Howard Schultz is the venture capital firm's co-founder.)
(Read more: Can frozen yogurt and ice cream coexist?)
"FroYo"—as the product often is called by fans—has grown in part because customers prefer a healthy alternative to ice cream and other calorie-heavy desserts. People also love the self-serve model, which can save money and calories by controlling portion size.