Cold Stone Creamery does not get it any better than Crumbs or Krispy Kreme

Last week I posted on what I felt was a strange and less than good move by Crumbs Bakery to go the route of an IPO. Indulgence based products and services seem to me to be a difficult area to sustain a consistent demand.

In this week’s Advertising Age it was reported that Cold Stone Creamery had embarked on a venture to compete in the self-serve, you weigh it and pay frozen yogurt category. http://bit.ly/fjmmXR . You remember Cold Stone Creamery don’t you? They were a darling for a few years and then not so much. In 2009 Cold Stone Creamery did U.S. $ 429 million in sales, but those sales were flat year over year.

My wife and I live in a town in Connecticut that has a small ice cream store with a couple of small sit down tables. Back in 2000 we thought about opening a Cold Stone Creamery which at the time was a relative newcomer (we remember Steve’s Ice Cream from Massachusetts and then New York from the 1980’s with the concept of mix-ins). We ended up passing on the idea because we were concerned about how the store would perform in the dead of winter. Cold Stone Creamery is a one trick pony.

A recent story on franchising on CNBC http://www.cnbc.com/id/39911155 outlined how Cold Stone Creamery franchisees (who have to purchase EVERYTHING from a company set up by – Cold Stone Creamery, were having difficulty making money – even those that were near the top in gross sales. Cold Stone denied much of the story. But the move to enter the Frozen Yogurt bar area suggests that the management of Cold Stone Creamery is uncertain as to what to do next.

Cold Stone Creamery has a brand – a pretty good identity at that. Rich tasting, indulgent and expensive ice cream treats/confections. If you remember the young people that did the mixing would sing while they worked – supposedly for tips. Now they are moving away from that concept entirely yet under the same brand umbrella.

I for one do not get it. Also noted in the Ad Age story is that Cold Stone Creamery spends $ 3 million on average in measured media. And now they are offering a completely different concept so there is a need to inform the consumer that what the perception of Cold Stone Creamery has been has changed. The management of Cold Stone Creamery acknowledges that Americans have moved to serve-yourself yogurt bars. So they are reacting by joining in the newest rage.

To me Cold Stone Creamery does not have any idea what to do next and is reaching for a solution and will come up empty. The next thing you might see them do is float out an IPO.

It’s too bad. I thought they had something that could have been built upon.

How about you? Have you gone to Cold Stone Creamery recently? Ever? What do you think?

About markkolier

Futurist, entrepreneur, left lane driver
This entry was posted in Best business practices, Customer Experiences, Marketing stuff and tagged , , , , , , . Bookmark the permalink.

8 Responses to Cold Stone Creamery does not get it any better than Crumbs or Krispy Kreme

  1. StrikeThree! says:

    Yet another pathetic attempt…

    Yet another pathetic attempt to hide the fact that Cold Stone Creamery is based on broken business model that sells a $4 ice cream that costs the franchisee $7 to make.

    So, let’s see… Blue Bunny low fat yogurt (STRIKE ONE!), Wasabi ice cream, Black Licorice ice cream, Cake Batter fiasco, Cereality cereal bar, Sinless sweet cream yogurt (STRIKE TWO!), Soupman Soup Bar, Coldstone Coffee bar, Ghirardelli chocolate, Cup Cakes, Grab-n-Go’s, CSTim Horton Combo, CSBlimpie Combo … and now a New Cold Stone Yogurt BAR (STRIKE THREE!).

    What concept will the next AZ University graduate student bring to the Cold Stone franchisee?! Pathetic…

    “The new Cold Stone Yogurt Bar will be available to franchisees at no additional fee.” -Dan

    “Every location that adopts the yogurt bar concept will feature a variety of self-serve machines along with an accompanying fresh toppings bar.” -Dan

    So KahalaCold Stone charges no new franchise fee, BUT, every adopting franchisee will have to pay out plenty for soft serve machines and a self-service topping build out. This concept won’t even generate enough additional customer traffic to pay for the new equipment much less increase profitability. Just look at the batting average…

    “we see a significant opportunity for our brand, our franchisees,” -Dan

    Dan needs a new pair glasses – he has franchisees dropping left and right!

    Like

  2. Tom says:

    One across from the hotel in Shanghai. Empty.

    Like

  3. markkolier says:

    Might work better in Tokyo but probably not by much..

    Like

  4. Chris McTague says:

    Mark,

    As a person that had a 18 month business relationship with CSC — I can tell you that they only ever had one idea in mind…selling franchises. I have heard more than ten different franchisee stories directly from franchise owners about the cut ’em loose behavior from management — and when Kahala took over it wasn’t much different.

    CSC was the darling because it did have a cool brand concept and execution up until about 2006…then it the toothpaste was out of the tube.

    I actually had a conversation with the CEO of Ben & Jerry’s in 2006 — and he predicted their almost immediate demise. B&J didn’t have a worry at all about them — because as the CEO told me "it ain’t just about selling ice cream…it is about the brand and the franchisees as well." Simple words — but so very true.

    Like

  5. markkolier says:

    The product has to be the gold and the customer experience the foundation. CSC appears to never have been about that. Thanks for the great comment Chris.

    Like

  6. Fail Safe says:

    Cold Stone is the best. I own three and I am making money. The lazy ones who do not want to work their stores, they are the ones who are crying and blaming the big bad company.

    Like

    • markkolier says:

      While I am sure there are indeed what you term ‘lazy ones’ the concept itself has not been well executed and there is sufficient evidence of high grossing stores still not being able to turn a profit to support the idea that there are inherent problems. Maybe those problems can be fixed, maybe not. Thanks for reading and the comment.

      Like

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