Cold Stone Ice Cream retail brand closing many stores as franchisee complaints mount

In the late 90's Cold Stone Creamery was becoming a "hot" brand of retail ice cream stores positioning itself as the "Ultimate Ice Cream Experience". In the past several years the brand has lost its luster, the ice cream is melting and franchisees are unhappy many of whom have gone into personal bankruptcy over failed stores.

Complaints from franchisees seem to be typical. Overpriced raw goods, limited choice of suppliers, over-promised profitability, too much local competition (even from same brand stores) etc.

Some of the complaints appear to be legit others primarily due to the lack of experience of franchisee owners.

I do believe there is a another major factor here. The brand itself was not that special despite the hype.

The idea of "mixings" using a variety of ingredients (candy, fruit and other toppings) and mixing them into the ice cream on a marble slab in front of the consumer was not a new idea and Cold Stone Creamery didn't do it especially better than any other ice cream mixin' brand. The concept of mixing in toppings into the ice cream likely originated in the seventies with a one-store brand calls Steve's out of Cambridge, MA. It developed cult like "love it" status and people trekked from all over the East coast to sample Steve's ice cream with toppings mixed in. Steve's even offered free ice cream all day once a year which caused multi-hour lines to form outside the tiny store.

After Steve's many other ice cream and frozen yogurt brands popped up offering stirred in toppings and the once unique concept became a commodity benefit.

I never found Cold Stone Creamery to offer any unique brand elements that other stores didn't offer as well. Also, I never sensed they did anything better than everyone else. Their "friendly" song like welcoming offered up by staff seemed so phony I couldn't stand going back there after a few tries. Plus, the ice cream was very pricey and not worth it. This became especially apparent as business weakened and the corporate office started dispensing nationwide two for one coupons to boost sales. It did but significantly ate away at franchisee profits, (another major franchisee complaint).

Too often people buy into franchises because the brand's hype sounds successful, retail stores look busy and they think they can make a killing. However, potential franchisees many times are not marketers and don't do the proper due-diligence to really determine if the brand they are buying is truly differentiated enough for long term growth and fierce competition.

Understanding what makes any brand unique, differentiated and meaningful to current and potential consumers is important. Learning this from empirical evidence/research and not a company's franchise sales brochure is imperative.

Of course the weakening economy doesn't help matters and splurging on mini-indulgences such as Starbucks Coffee and Cold Stone Creamery is being reduced dramatically. Starbucks is going back to its brand's reason for being and will fix its problems and survive because the brand's core essence was meaningful, differentiated and desirable at the beginning. Going back to their roots will help guide their future.

On the other hand, I can't see the original brand reason for being for Cold Stone thus its prognosis for recovery in my opinion is not especially good.

Watching out for you everyday.

Eli

Comments

[GEORGE & SHEILA LAMBERTI]

WELL MY WIFE AND I GOT "SUCKED" IN WITH THE (COLD STONE CREAMERY" GREAT AMERICAN DREAM. (BULL-S*#T). WE WERE OPEN FOR ABOUT (9 MONTHS). WE INVESTED ABOUT ($235,000.00), WHICH I WOULD OF HAD MORE LUCK THROWING IT DOWN ON A (CRAP - TABLE IN "LAS VEGAS"). THEY THE (CONE - HEADS) LIED TO US AND EVERYBODY ELSE WHO BELIEVED IN THEM. NOW WE ARE "DEFUNKED" AND WHEN WE CALLED ON (COLD STONE) FOR HELP , THEY COULDN'T BE BOTHERED. SO THE (CONE-HEADS) WHICH TOLD US THEY HAVE NEVER HAD A "FAILURE" AND WOULD HELP A (FRANCHISEE) IF THEY HAD SOME PROBLEMS. (YEA - RIGHT) WELL I HOPE THEY ARE ENJOYING THEMSELVES ON THEIR "YACHT" IN THE (MEDITERRANERN). "THOSE BASTARDS"
IF ANYBODY HAS ANY INFORMATION ON THE "CLASS ACTION LAWSUITE" PLEASE CALL US , WE WANT ON BOARD.
THANK YOU
"GEORGE & SHEILA LAMBERTI"
(775) 626-5345

[Matt]

I agree. Cold Stone sucks!!! I own four stores that have never made a profit in more than three years. They’ve nearly sucked me and my family completely dry of all our savings. Now to hear that they are taking kickbacks was just the last straw. And you can’t sell these stores because the whole world knows they are a great big loser. Mine have been for sale for more than two years. In that time I have not received one serious offer.

I’ll be through with this chapter in my life real soon. I will close all of my stores after the Holidays and join in with the class action lawsuit that the franchisees are bringing against the company. This is swamp land at its best.