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 2021 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 2021 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 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Cold Stone Creamery’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• monthly gross sales for the 2019 fiscal year (December 1, 2018 through November 30, 2019) and 2020 fiscal year (December 1, 2019 through November 30, 2020) for the 869 Cold Stone Creamery stores that share the following characteristics: (i) all are located in the United States; (ii) all offer a similar menu; (iii) all were existing outlets that did not open for the first time during the past fiscal year; (iv) all operate under the same trademarks; and (v) all were franchised

• annual gross sales for the 2020 fiscal year for the top 20%, bottom 20%, and all 869 Cold Stone Creamery stores that share the characteristics stated above

Section I – Background Information

24 Things You Need to Know About the Cold Stone Creamery Franchise

Looks Ahead to 2021

1.  Back in mid-November 2020, Cold Stone Creamery reflected on the past year and looked ahead to the future. Despite all the challenges that 2020 brought to the restaurant industry, for the Cold Stone Creamery franchise, 2020 was a year full of silver linings.

2.  Cold Stone Creamery began the year by launching an online ordering platform, which allowed customers access to the full menu for the first time ever for online ordering, takeout, and mobile delivery. This investment in new technology was fortuitous, as when the outbreak of COVID-19 happened in early March, Cold Stone franchise owners were able to continue driving sales to their stores amidst lockdowns and social distancing.

3.  Blake Borwick, vice president of operations for Cold Stone Creamery, said, “There’s no question that putting the menu online has helped our franchise owners through these unprecedented times. Customers no longer needed to walk into our stores, wait in line, look at the menu boards, talk to a crew member, and make a decision. Now, they could do it from their couch or from their office, and it’s really helped to drive sales. In the middle of the pandemic, we saw a sharp increase in online ordering sales, and now, even as our customers are returning to our stores, it’s continued to play an integral part in our business. It’s had a tremendous impact.”

4.  Another silver lining that Cold Stone Creamery discovered in 2020 is the fact that people really do want comfort food during less than optimal times. As an iconic ice cream brand for over 30 years, Cold Stone Creamery is a destination for families, friends, first dates, and anyone who needs a reason to smile or make a great day even better.

5.  Borwick added, “A lot of customers couldn’t take a big vacation this year, but they all could take a 10-minute vacation with their families. That’s really the reason Cold Stone Creamery exists. We’re the go-to place for guests who want to forget about the world for 10 or 20 minutes and just have a joyful experience. Our franchise owners are exceptional in their ability to provide that experience day-in and day-out.”

6.  One of the big positives in launching an online ordering program is that Cold Stone Creamery had a new way to connect with fans and build customer relationships. “We already had a large loyalty program to engage with our fans, but this online ordering platform allows us to market directly to people who are new to us. Our marketing team does an incredible job with engagement, and since we’re so innovative in our new products and promotions, we’re always able to be relevant with our guests. Ultimately, our ability to generate excitement has kept the brand top of mind during this time,” Borwick said.

7.  Another silver lining for Cold Stone Creamery is that entrepreneurship is back in style. With millions out of work or furloughed, owning a business is an option for those who want a way to take control of their future. Cold Stone Creamery is highly experienced in helping entrepreneurs realize their dreams of going into business for themselves. Its parent company, Kahala Brands, is one of the largest franchisors in the world, and Cold Stone Creamery franchise owners benefit from robust support, including everything from site selection assistance and buildout, marketing, research and development, access to state of the art technology, and much, much more.

8.  “When you own a business, you’re driving the ship,” Borwick said. “Our goal is to help you excel as an entrepreneur. We have an incredible support infrastructure, and our franchise owners benefit from access to one of the largest franchisors in the world.”

9.  As Cold Stone Creamery headed into 2021, the brand was looking forward to another year of continued growth and innovation. On a final note, Borwick said, “We are optimistic for 2021 to be a really bright year. We’re doing a lot of innovative things, from online ordering, to developing new products, and new marketing promotions. In fact, we recently launched a promotion with Nintendo, which is just phenomenal. This is a great brand to be a part of, and we’re ready to welcome more entrepreneurs into the Cold Stone Creamery family going forward.”

Announces New Markets Availability

10.  In mid-April 2021, Cold Stone Creamery announced that it is focusing on specific markets for expansion, including: Charlotte, NC; Philadelphia, PA; Nashville and Memphis, TN; Oklahoma City, OK; Houston and Austin, TX; Cleveland and Cincinnati, OH; Detroit, Michigan; San Jose, San Diego, and Los Angeles, CA; Long Island, NY; Chicago, IL; Atlanta, GA; Orlando, FL; and Birmingham, AL. Despite the hardships of 2020, Cold Stone Creamery experienced a strong year of expansion and the brand expects this growth to continue throughout the next year.

11.  2020 once again proved the resiliency of the brand’s franchise model, as Cold Stone Creamery customers needed a 10-minute vacation more than ever before. By focusing on online ordering and mobile delivery, Cold Stone Creamery franchise owners had the potential to experience strong sales, and now, as the economy is opening up, growth is expected to continue.

12.  Cold Stone Creamery has helped entrepreneurs realize their dreams of small business ownership, featuring start-up costs that can be affordable with the potential of high rewards. With a straightforward business model that is designed for scalability, Cold Stone Creamery can be a worthy investment for 2021 and beyond.

13.  John Wuycheck, senior vice president of franchise development for Cold Stone Creamery, said, “Our franchisees make real investments of both time and money, and we honor that by going above and beyond in providing an exceptional initial and ongoing training platform. We’ve been helping entrepreneurs establish new Cold Stone Creamery businesses for a long time, and we’re honored to report our franchisee satisfaction is at an all-time high.”

Announces Return of Fundraiser Benefiting Best Buddies International

14.  At the beginning of June 2021, Cold Stone Creamery announced that it was once again hosting a nationwide fundraising promotion benefiting Best Buddies International, a global nonprofit dedicated to creating opportunities for friendship, employment, leadership development, and inclusive living for people with intellectual and developmental disabilities (IDD).

15.  For more than 30 years, Best Buddies has been helping individuals within the IDD community form meaningful friendships with their peers, secure successful jobs, live independently, improve public speaking, self-advocacy and communications skills, and feel valued by society. Cold Stone Creamery is working with Best Buddies to support its mission of ending the social, physical, and economic isolation of the 200 million people living with IDD.

16.  In honor of the fundraiser, two Best Buddies program participants, Drew and Stan, developed their very own Better Together Creation. The Creation features mint ice cream, brownies, M&Ms, and whipped topping. In addition to the promotional Creation, customers who donate $1 or more will receive double My Cold Stone Club Rewards points on their entire purchase. Customers enter a phone number at checkout in-store or login into their rewards account when ordering online to earn their double points.

17.  Cold Stone Creamery has also launched an exclusive Give Back eGift card campaign. With every limited edition Give Back eGift card purchased online, Cold Stone will donate 10% of the amount to Best Buddies.

18.  Sara Schmillen, vice president of marketing for Kahala Brands, parent company of Cold Stone Creamery, said, “We are thrilled to announce the return of our annual fundraiser supporting Best Buddies International this month, a cause very near and dear to our hearts. We invite and encourage our customers to show their support of friendship through the purchase of a Best Buddies eGift or by making a donation with their purchase.”

Company History

19.  Cold Stone Creamery was founded in 1988 by Donald and Susan Sutherland in Tempe, Arizona. The Sutherlands loved ice cream and traveled all around the world looking for the perfect ice cream. They were unsatisfied with both soft-serve and traditional hard-packed ice creams and wanted to offer an alternative.

20.  The Sutherlands wanted to offer ice cream that was made in-house and featured mix-ins that customers selected themselves. They were inspired by Steve Herrell’s concept, which allowed customers to pick their ice cream flavors and mix-ins, while an employee mixed the ice cream up on a frozen granite slab.

21.  The first Cold Stone Creamery was a success and the Sutherlands opened additional locations around the Phoenix Metro area. In 1995, the Sutherlands began franchising the Cold Stone Creamery concept. Not long after, the first store outside of Arizona opened in Camarillo, California.

22.  Also around this time, future Arizona Governor Doug Ducey joined Cold Stone Creamery as its president. Ducey helped fuel Cold Stone’s national growth, and he became the company’s CEO in 2000 and remained in that position until 2007. In 2007, Cold Stone Creamery was sold to Kahala Corp. and Kahala-Cold Stone was formed.

23.  Today, Cold Stone Creamery has locations all across the United States and international locations in Japan, Taiwan, South Korea, Puerto Rico, Indonesia, Guam, China, Mexico, Bahrain, Egypt, United Arab Emirates, Saudi Arabia, Qatar, Nigeria, Kuwait, the Philippines, Turkey, Pakistan, India, and several more countries.

Entrepreneur’s Franchise 500

24.  Cold Stone Creamery ranked No. 391 on Entrepreneur’s 2021 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 2021 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 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year:  902
• Outlets at the End of the Year:  893
• Net Change:  -9

2019

• Outlets at the Start of the Year:  893
• Outlets at the End of the Year:  895
• Net Change:  -2

2020

• Outlets at the Start of the Year:  895
• Outlets at the End of the Year:  881
• Net Change:  -14

Company-Owned

2018

• Outlets at the Start of the Year:  5
• Outlets at the End of the Year:  3
• Net Change:  -2

2019

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  3
• Net Change:  0

2020

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  3
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

• The average gross sales contained in Parts 1 and 2 below pertains to the historic performance of Cold Stone Creamery stores that share the following characteristics: (i) all are located in the United States; (ii) all offer a similar menu; (iii) all were existing outlets that did not open for the first time during the past fiscal year; (iv) all operate under the same trademarks; and (v) all were franchised.

Part 1 – Monthly Gross Sales for the 2019 Fiscal Year and the 2020 Fiscal Year

• The time period in Part 1 was December 1, 2018 through November 30, 2020 and shows a comparison of the same-month gross sales in the 2019 fiscal year (which includes gross sales between December 1, 2018 through November 30, 2019) to the 2020 fiscal year (which includes gross sales between December 1, 2019 through November 30, 2020).

Average Gross Sales

• December 2018 (869 Stores):  $24,814
• December 2019 (869 Stores):  $26,230

• January 2019 (869 Stores):  $27,069
• January 2020 (869 Stores):  $31,823

• February 2019 (869 Stores):  $27,113
• February 2020 (869 Stores):  $33,856

• March 2019 (869 Stores):  $39,219
• March 2020 (869 Stores):  $28,266

• April 2019 (869 Stores):  $38,427
• April 2020 (869 Stores):  $21,985

• May 2019 (869 Stores):  $44,225
• May 2020 (869 Stores):  $39,038

• June 2019 (869 Stores):  $48,143
• June 2020 (869 Stores):  $47,516

• July 2019 (869 Stores):  $47,976
• July 2020 (869 Stores):  $51,831

• August 2019 (869 Stores):  $43,127
• August 2020 (869 Stores):  $50,724

• September 2019 (869 Stores):  $34,392
• September 2020 (869 Stores):  $42,320

• October 2019 (869 Stores):  $29,826
• October 2020 (869 Stores):  $39,937

• November 2019 (869 Stores):  $26,600
• November 2020 (869 Stores):  $32,465

• 2019 Fiscal Year (869 Stores):  $430,932
• 2020 Fiscal Year (869 Stores):  $445,992

• Part 1 includes franchised outlets that did not open for the first time during the past fiscal year and excludes 23 franchised outlets that permanently closed during the past fiscal year. The following outlets have also been excluded: 3 corporate outlets and 12 franchised outlets that opened for the first time during the past fiscal year.

Part 2 – Yearly Gross Sales for the 2020 Fiscal Year

• The time period measured for Part 2 was December 1, 2019 through November 30, 2020.

Franchised Stores Only

• Number of Stores:  869
• Average Gross Sales:  $445,992
• Number of Stores That Met or Exceeded Average Gross Sales:  367
• Percentage of Stores That Met or Exceeded Average Gross Sales:  42.1%
• Median Gross Sales:  $417,588
• Number of Stores That Met or Exceeded Median Gross Sales:  436
• Percentage of Stores That Met or Exceeded Median Gross Sales:  50.1%

Top 20%

• Number of Stores:  174
• Average Gross Sales:  $734,236
• Number of Stores That Met or Exceeded Average Gross Sales:  66
• Percentage of Stores That Met or Exceeded Average Gross Sales:  37.9%
• Median Gross Sales:  $681,774
• Number of Stores That Met or Exceeded Median Gross Sales:  87
• Percentage of Stores That Met or Exceeded Median Gross Sales:  50%

Bottom 20%

• Number of Stores:  174
• Average Gross Sales:  $225,519
• Number of Stores That Met or Exceeded Average Gross Sales:  104
• Percentage of Stores That Met or Exceeded Average Gross Sales:  59.7%
• Median Gross Sales:  $241,640
• Number of Stores That Met or Exceeded Median Gross Sales:  87
• Percentage of Stores That Met or Exceeded Median Gross Sales:  50%

• As of November 30, 2020, there were 884 franchised and corporate stores open in the United States. Of these 884 stores, 869 were franchised, existing locations that did not open for the first time during the past fiscal year, and located in the United States.

• The following outlets have been excluded from the table above: 3 corporate outlets and 12 outlets that opened for the first time during the past fiscal year.

• The information is based upon gross sales, which means the total revenue derived from the sales of goods and services less sales tax, discounts, allowances, and returns, of franchised stores.

• Some outlets have sold this amount. Your individual results may differ. There is no assurance that you’ll sell as much.

• The above tables and information were prepared from weekly sales reports provided to Cold Stone Creamery by franchisees. Cold Stone Creamery has not audited the information provided by the franchisees.

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