In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Cold Stone Creamery franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Cold Stone Creamery franchise, based on Item 7 of the company’s 2019 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Cold Stone Creamery franchise, based on Items 5 and 6 of the company’s 2019 FDD
- Section IV – Number of franchised and company-owned Cold Stone Creamery outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
- Section V – Presentation and analysis of Cold Stone Creamery’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
- 2018 average gross sales for the top 20%, bottom 20%, and all 816 Cold Stone Creamery stores that share the following characteristics: (i) all are in a location in the United States; (ii) all offer a full menu and use the same recipes; (iii) all were open for a minimum of 12 months; and (iv) all operate under the same trademarks
Section I – Background Information
21 Things You Need to Know About the Cold Stone Creamery Franchise
Celebrates 30th Anniversary with Opening of 30 Stores in 2018
1. Cold Stone Creamery celebrated its 30th anniversary in 2018. The company opened its first location in Tempe, Arizona in 1988, and in a press release, the brand said that it had plans to open 30 new stores domestically and internationally by the end of 2018.
2. Cold Stone Creamery’s franchisees range from small business owners to large franchise groups, showing the versatility of the brand. The company offers franchisees a vertical in-house structure which streamlines the process of running a franchise. All franchisor services – development, real estate, design and construction, training, operations, purchasing and supply chain, research and development, marketing and public relations – are offered to each franchisee, which helps result in faster and continued growth.
3. According to John Wuycheck, senior vice president of franchise development for Cold Stone Creamery, “At Cold Stone Creamery our goal is to deliver super premium ice cream day in and day out, and we know that can only be achieved by making franchisee support a top priority. With our vertical in-house structure, we are able to achieve this and at the same time steadily grow the overall brand each year.”
4. In addition to the in-house services, Cold Stone Creamery also likes to work outside the box. Cold Stone Creamery collaborates with movie studios, such as Warner Bros., joining its ice cream marketing forces with major motion pictures. This creates a fun way for the brand to reach new audiences and create more opportunities for growth.
5. As for ongoing expansion, the 30-year-old brand shows no signs of stopping its push to open more locations in new markets. As of June 2018, Cold Stone Creamery had awarded more than 15 new stores across the nation for the year.
Parent Company Partners with DoorDash to Launch Nationwide Delivery
6. In mid-July 2019, Kahala Brands, parent company of Cold Stone Creamery, Pinkberry, Blimpie, TacoTime, The Counter Custom Burgers, Baja Fresh, and more, announced a nationwide partnership with DoorDash, the nation’s largest and fastest growing on-demand platform connecting customers with their favorite local businesses.
7. Kahala Brands is the first multi-concept restaurant group to launch several brands on the DoorDash platform at once. Partnering with DoorDash will provide Kahala Brands customers with best-in-class service, while supporting the growing customer demand for the convenience of delivery. With the potential of servicing thousands of restaurant locations across more than 25 brands under the Kahala Brands umbrella, the partnership provides substantial opportunity within the growing third-party delivery space.
8. Toby Espinosa, vice president of business development for DoorDash, said, “DoorDash is thrilled to offer our customers access to Kahala Brands’ incredible selection of premier dining brands. From build-your-own ice cream creations to customizable burgers, Kahala’s brands provide a whole new level of experiences that we’re proud to serve customers from the convenience of their homes.”
9. To celebrate the partnership, from July 15 through July 19, more than 700 participating Kahala Brands store locations (including several Cold Stone Creamerys) offered customers $0 delivery with a $10 minimum order through DoorDash using code KAHALA.
10. According to Steve Evans, senior vice president of marketing for Kahala Brands, “We are delighted to provide delivery services for all of our world-class concepts at Kahala Brands through DoorDash. We recognize that in today’s marketplace customers want their food to come to them, so that’s exactly what we are doing. Our mission is to create great experiences that make people want more and DoorDash will assist us in fulfilling that mission nationwide.”
Teams Up with Nintendo to Bring Fans New Video Game-Inspired Creation and Ice Cream Cake
11. At the end of August 2019, Cold Stone Creamery announced that it had partnered with Nintendo to introduce a delicious Creation and ice cream cake. Customers could also enjoy seeing their favorite Nintendo characters on three special-edition cups at any Cold Stone Creamery location until October 15.
12. Mario & Luigi’s Masterpiece Creation features Sweet Cream Ice Cream, Rainbow Sprinkles, Blue Frosting, and Fudge, creating the perfect treat for the young and young at heart. Cold Stone Creamery also introduced a new ice cream cake, Rainbow Sprinkle Road (inspired by the iconic Mario Kartcourses), featuring layers of moist Yellow Cake and Sweet Cream Ice Cream with Rainbow Sprinkles and wrapped in fluffy Blue Frosting.
13. In addition, Cold Stone Creamery featured three limited-time Gotta Have It cup designs, inspired by popular Nintendo video games – Super Mario Maker 2, Mario Kart 8 Deluxe, and Yoshi’s Crafted World.
14. Sara Schmillen, vice president of marketing for Kahala Brands, parent company of Cold Stone Creamery, said, “Nintendo is the perfect partner for us at Cold Stone Creamery as we both focus on creating experiences the entire family can enjoy and memories that last a lifetime. We are thrilled to introduce these Nintendo inspired treats. No matter what your age, there are two things almost everyone can enjoy – ice cream and video games!”
15. Nick Chavez, senior vice president of sales and marketing for Nintendo of America, added, “Both Nintendo and Cold Stone Creamery love putting smiles on faces. Now people can play their Nintendo Switch games at home and on the way to get their Nintendo-inspired treats.”
16. To celebrate the partnership, Cold Stone Creamery offered customers a chance to win one of 10 Nintendo Switch game bundles, which included the Nintendo Switch game system and the following games: Super Mario Maker 2, Mario Kart 8 Deluxe, and Yoshi’s Crafted World. (Nintendo was not a sponsor, co-sponsor, or administrator of the sweepstakes.)
17. Cold Stone Creamery was founded in 1988 by Donald and Susan Sutherland in Tempe, Arizona. The Sutherlands had looked for the perfect ice cream, which to them was neither soft-serve nor traditional hard-packed ice cream, and decided to create an ice cream that was “super-premium, smooth, and creamy.”
18. According to Cold Stone, its ice cream is superior because it’s made fresh every day in store. The brand is also known for allowing customers to make custom creations as customers get to choose the ingredients that get mixed into their ice cream on a frozen granite slab. The Sutherlands did not create this mix-ins technique, but were inspired by the concept created by Steve Herrell who founded Steve’s Ice Cream in 1973.
19. While the first Cold Stone Creamery was a success, the Sutherlands did not start franchising until 1995. The first franchised store was also opened in Tempe and not long after, the first Cold Stone Creamery out of state opened in Camarillo, California. Eventually, Cold Stone expanded beyond the United States and there are now locations all around the world in countries such as Canada, Denmark, the Philippines, Singapore, Turkey, Japan, Thailand, Puerto Rico, Egypt, Bahrain, and several more.
20. In May 2007, Cold Stone Creamery merged with Kahala Corp. to form Kahala-Cold Stone, which is now Kahala Brands. Today, Cold Stone Creamery is still owned and operated by Kahala Brands.
Entrepreneur’s Franchise 500
21. Cold Stone Creamery did not rank on Entrepreneur’s 2019 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Cold Stone Creamery franchise costs, based on Item 7 of the company’s 2019 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Cold Stone Creamery’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 916
- Outlets at the End of the Year: 914
- Net Change: -2
- Outlets at the Start of the Year: 914
- Outlets at the End of the Year: 915
- Net Change: 1
- Outlets at the Start of the Year: 915
- Outlets at the End of the Year: 899
- Net Change: -16
- Outlets at the Start of the Year: 10
- Outlets at the End of the Year: 10
- Net Change: 0
- Outlets at the Start of the Year: 10
- Outlets at the End of the Year: 8
- Net Change: -2
- Outlets at the Start of the Year: 10
- Outlets at the End of the Year: 4
- Net Change: -6
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
- The average gross sales contained in the table below pertains to the historic performance of Cold Stone Creamery stores that share the following characteristics: (i) all are in a location in the United States; (ii) all offer a full menu and use the same recipes; (iii) all were open for a minimum of 12 months; and (iv) all operate under the same trademarks.
- The time period measured was December 1, 2017 through November 30, 2018.
Franchised and Corporate Stores