Cold Stone Creamery
|Wholly owned subsidiary|
|Industry||Ice cream parlor|
|Founded||Tempe, Arizona (1988)|
|Founder||Susan and Donald Sutherland|
|Headquarters||Scottsdale, Arizona, US|
Number of locations
Cold Stone Creamery is an American-based ice cream parlor chain. Headquartered in Scottsdale, Arizona, the Company is owned and operated by Kahala Brands. The Company's main product is super premium ice cream made with approximately 12–14% butterfat, made on location and customized for patrons at time of order. Cold Stone has also expanded its menu with other ice cream related products, including: ice cream cakes, pies, cookie sandwiches, smoothies, shakes and iced or blended coffee drinks.
Since 2008, the Company has been co-branding its locations with other chains in an attempt to not only increase its presence outside of the United States, but transform its business model from seasonal to year-round.
The Company was co-founded in 1988 by Susan and Donald Sutherland, who sought ice cream that was neither hard-packed nor soft-serve. Publicity materials describe it as "smooth and creamy super-premium ice cream." Cold Stone Creamery opened its first store that year in Tempe, Arizona. The original Cold Stone Creamery, store #0001, is still in operation today at the original Tempe location.
The Company has maintained the same original business model created by founder Steve Herrell of Steve's Ice Cream. Patrons first select what flavor of ice cream they would like and then choose from a plethora of mix-ins available to be folded into their ice cream. Mix-ins can include, but are not limited to: candies, nuts, brownies and/or syrups. Cold Stone's derives its name from the frozen granite slab that the team members use to fold your mix-ins into the ice cream.
In 1995, Cold Stone Creamery opened its first franchise store in Tucson, Arizona. Shortly after, a second location (first out of state) was opened in Camarillo, California. Today, nearly 1,400 franchises are in operation. Cold Stone Creamery is now the sixth bestselling brand of ice cream in the US and operates stores in Japan, Taiwan, South Korea, Thailand, Brazil Puerto Rico, Indonesia, Guam, China, Mexico, Bahrain, United Arab Emirates, Saudi Arabia, Kenya, Trinidad and Tobago, Qatar, Nigeria, Kuwait, Singapore and The Philippines. In 2008, Cold Stone opened its first European franchise in Copenhagen, Denmark. Three more stores were later opened in other parts of the country. In January 2006, the Company was named the 11th fastest-growing franchise by Entrepreneur magazine. In June 2009, the Company opened its first locations in Canada, Mississauga and Ontario. As of 2012, three stores had opened in Singapore.
In May 2007, Cold Stone Creamery merged with Kahala Corp to form Kahala-Cold Stone, which collectively owns 13 brands. Doug Ducey, former president and CEO of Cold Stone Creamery, was named CEO of the newly established company. Kevin Blackwell, the former CEO of Kahala, became chairman of the board and chief strategist. However, in September 2007, Ducey announced he was leaving the company. Blackwell was named CEO. In 2013, the Serruya family purchased a majority interest in Kahala and changed the name to Kahala Brands to better align with the focus of the business. Based in Toronto, Ontario the Serruyas comes with decades of franchising experience.
The parent company of Cold Stone Creamery, Kahala Brands, announced in February 2009 that it had reached an agreement with Canadian coffee shop chain Tim Hortons to open up 100 co-branded stores in the United States after successfully testing two locations in Rhode Island. The strategic alliance will pave the way for Tim Hortons to operate in more US locations while allowing Cold Stone Creamery to expand into Canada. The most notable co-branded store opened in August 2009 when Tim Hortons moved into three Cold Stone Creamery locations in New York City, including its flagship Times Square location.
In June 2009, Cold Stone Creamery started testing the Canadian market by opening seven co-branded locations with Tim Hortons located in Toronto, Oakville, Mississauga, Hamilton, Pickering, Sudbury, and Halifax, Nova Scotia. They had locations in every Canadian province except for Newfoundland and Labrador.
The Tim Hortons venture follows on the footsteps of a similar co-branding efforts in 2007 and 2008, but ended in 2014. Cold Stone franchisees in New York City began partnering with Soup Kitchen International to sell soup in their stores beginning in late-2007. In 2008, the company signed an agreement with the Rocky Mountain Chocolate Factory to open seven locations in the Western US. The venture is designed to bring in customers on a year-round basis as opposed to the seasonal draws that each company experiences. The mingling of Cold Stone and Rocky Mountain led to more than 10% increase in weekly sales in Rocky Mountain stores after co-branding.
All ice cream creations are offered in four sizes: Kid's size (3 oz (85 g)), "Like It" (5 oz (140 g)), "Love It" (8 oz (230 g)), and "Gotta Have It" (12 oz (340 g)). Also offered are milkshakes and smoothies, among them the Cold Stone PB&C; its large size was designated by Men's Health Magazine as the most unhealthy drink in the USA for two consecutive years. The drink has 2,010 Calories, 131 grams of fat with 68 grams saturated fat, and 153 grams of sugar.
All ice cream is made in house using natural ingredients and waffle cones and bowls are baked daily. The ice cream and ingredients are often mixed in together in consumer view. Cold Stone also offers chocolate-dipped waffle bowls. The company also has a line of ice cream cakes and pies. Ice cream cupcakes and ice cream cookie sandwiches are also available, most of which are made on-site. Stores also offer the option of customizing these frozen desserts much like their ice cream creations. Most recently, Cold Stone Creamery has come out with various desserts ranging anywhere from hot brownies to warm churros.
Cold Stone has entered into partnerships with other companies to promote brand name products inside its stores. The first major partnership the company entered into was with Kraft Foods for its Jell-O brand in 2009. Cold Stone introduced a series of flavors of ice cream based on popular Jell-O pudding flavors; Chocolate, Butterscotch, Banana, and Vanilla. Because the pudding additives cause the ice cream to gel, it was recently noted that these flavors do not melt.
In the spirit of joviality and to encourage customers to give tips, Cold Stone instructs employees to sing a special song related to the company, usually to the tune of recognizable melodies such as "Take Me Out to the Ball Game", "I've Been Working on the Railroad", or "Bingo", when a customer places money in the tip jar. Lyrics include short, catchy phrases such as, "This is our Cold Stone song, it is not very long."
There have been allegations by independent franchises that Cold Stone's business practices have put them at a competitive disadvantage. These former franchises claim that the parent company opens locations too close to each other, requires expensive remodeling and overstates potential revenues and income. Other franchises have contended that is not the case and that they are experiencing growth amid financial uncertainties and higher costs associated with fuel and energy prices.
In June 2008, the Wall Street Journal examined the issue. The article stated that a large number of locations, approximately 16–20%, of Cold Stone Creamery franchises have closed or were put up for sale by their owners, many of whom had suffered significant financial losses due to their investment. The article included claims by franchisees that the company had misrepresented the average revenues of Cold Stone stores and acted in ways that reduced stores' profit margins. A company spokeswoman said that the number of stores for sale was "at par with industry expectations" in light of "the economically challenging times."
CNBC documentary and lawsuit
Behind the Counter: The Untold Story of Franchising reported on the failures and successes of franchising. After several edits the program was broadcast on CNBC on March 21, 2011. Brands such as Dunkin' Donuts and Five Guys were highlighted as successful franchise brands. Cold Stone Creamery's executives and corporate lawyers were interviewed. The lawsuit was discussed with former franchisees and the litigation threats with CNBC. An apparently successful Cold Stone franchise was also featured.
While the company was originally headquartered in Tempe, in 1997 the company moved its headquarters to Scottsdale, Arizona. In July 2005 Cold Stone moved into its current headquarters. The two story building has classroom space, a product development laboratory kitchen, and a training store.
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