Ice Cream Chain Has Sales Growth Down Cold

Discussion
Aug 09, 2005
George Anderson

By George Anderson

Cold Stone Creamery made an important discovery in Alaska back in 1999. It doesn’t take warm weather to sell its high-end ice cream, only consistently excellent product quality
and the right people behind the counter.

In the past six years, Cold Stone has gone from 75 stores to roughly 1,100 with a new location opening on almost a daily basis.

The company’s chief executive, Doug Ducey, told The Associated Press that a persistent Anchorage, Alaska native seeking a franchise finally convinced the company to take
a chance on the northernmost state and its performance gave the company the confidence it needed to expand beyond warm weather havens such as Arizona and California.

An impressive aspect of Cold Stone’s growth, according to analysts, is that it has prospered at a time when ice cream consumption is flat or down in many markets across the country.

Sales of ice cream in supermarkets have been down six to seven percent over the last couple of years, according to Jerry Dwyer, a dairy industry analyst.

Those bucking the trend seem to be shops catering to more upscale tastes, if not consumers, said Mr. Dwyer. Ben & Jerry’s and Marble Slab Creamery are two other companies
that have seen sales increase.

While Cold Stone offers basic ice cream flavors, such as vanilla and chocolate, what makes it different are choices like ginger wasabi and fruit cereal ice cream. “Customers,”
reports AP, “then choose from dozens of different fruits, syrups, candies and nuts that are mixed into the freshly made ice cream on a frosty slab of granite.”

Moderator’s Comment: What is your assessment of Cold Stone Creamery? Does the current business and marketing/merchandising of the company provide it
with a sustainable point of difference versus those businesses competing for the same consumer market?

– George Anderson – Moderator

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9 Comments on "Ice Cream Chain Has Sales Growth Down Cold"


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M. Jericho Banks PhD
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M. Jericho Banks PhD
15 years 6 months ago

Remember the frozen yogurt shop boom in the late 80s and early 90s? TCBY was everybody’s darling. I remember the same evangelical look in friends’ eyes back then when they rhapsodized about TCBY, that I now see in the eyes of Cold Stone proselytizers.

Remember the custom popcorn shops? I researched them for Orville Redenbacher when I handled some of the Hunt-Wesson business at Ketchum Communications. They were ready to go, and then the buzz disappeared.

Custom-blended premium ice cream is a wonderful, fun, social product. It’s date night, family night, etc. It’ll enjoy its cycle, and then retreat back to a sustainable level, and I doubt that Cold Stone will ever be (forgive me) stone cold.

Stephan Kouzomis
Guest
Stephan Kouzomis
15 years 6 months ago
Maybe. There is DQ and Baskin-Robbins who may challenge Cold Stone Creamery, and a couple of strong regional Brands. It is reported that ‘premium to superior tasting’ ice cream sales are growing; and faster than the category in supermarkets. There are a lot of local and regional ice cream retailers, with superior tasting ice cream, that don’t need to add candy, nuts, etc. to sell the product. Cold Stone does provide theatre, and fun for the family. But, can you see the Baby Boomer adults with major disposable food dollars going to Cold Stone for vanilla with M&Ms or crushed pecans every week? It’s a young person’s product; and an okay product in the marketplace. Varieties like toffee chip, peanut butter blizzard, black raspberry chip, etc. are what adults want, and surprisingly kids, teens, and young adults. Don’t know how long theatre and gummie bears in ice cream can sustain a company’s growth. But there are better ice cream retailers, and not to mention DQ, Baskin Robbins etc. Hmmmmmmmmm
Traci Ellis
Guest
Traci Ellis
15 years 6 months ago

I’m with Ian. Cold Stone ice cream is simply the devil–and I love it! It is irresistible. The quality is great–it beats anything at the grocery store hands down. I, too, am amazed at the service by teenagers, who typically deliver service in retail establishments in a “brain dead duh” fashion. But Cold Stone’s teenagers are lively, engaging, friendly, and service-oriented. The prices are ridiculous, but I enjoy the service and the quantity, so my family and I keep going back, even though along the 9-mile trip, we pass up 3 grocery stores, a Carvel and a Buster’s!

Alyson Anderson
Guest
Alyson Anderson
15 years 6 months ago
Cold Stone Creamery started out so strong but, recently, I have been disappointed. The last several times I have entered a store, it has been dirty, and confusing. The help wasn’t trained or pleasant. Flavors were advertised and had signs in the cases and then were not available. The beauty of the original concept was that it was not that unique (Steve’s did the same thing way back in the ’80s followed by Herrell’s and now Maggie Moo’s and Marble Slab) but that they did it so well. The staff was so helpful, upbeat, and having fun serving ice-cream and suggesting flavors. In the process of franchising the concept, they seem to have lost their original qualities. Additionally, for such a fun concept, the stores themselves lack anything of amusement! The design is very corporate. The stores are always crowded and, therefore, it is hard to see the menus. If it is your first visit, there is no clear explanation on how to order, what your choices are, etc. You have to know the process… Read more »
Robert Kim
Guest
Robert Kim
15 years 6 months ago

Recent experiences for me at Cold Stone have involved a lot of teen customers and teens behind the counter, resulting in a chit chat session among them and a long line of other customers waiting. The ice cream’s fine, but I’ve come to think I’d rather go to other places for faster service and still good quality product.

Ian Percy
Guest
15 years 6 months ago

“Get thee behind me Satan!” I could turn down a Krispy Kreme doughnut if I was starving to death…but I couldn’t turn down a Cold Stone after one of Aunt Martha’s Thanksgiving dinners. Great product, endless variety, and great corporate soul.

I’ve looked at these franchises myself and the only thing that scares me a little is how their success is dependent on those kids who serve you from behind that cold marble slab. Every one of them I’ve ever met has been superb – polite, great attitude and they like doing what they do. Makes you think the future just might be in good hands if one of them becomes President. And where else can you spend seven bucks on an ice cream cone (if you build it right) and love doing it?

Al McClain
Guest
Al McClain
15 years 6 months ago

While their concept is great, I have concerns. In my area (Stamford, CT), there has been an explosion of ice cream stores of all shapes and sizes – at last count there were 25-30 options within a 10 mile radius of my home. Cold Stone is definitely a high end offering, with great taste, good to very good service, and huge portions.

However, in my experience, the enthusiasm and service from the young kids doing the serving, and literally singing for tips, tends to decline the longer a store has been open. And, the enormous portions run counter to the fitness/diet concerns many people have. This could be a big fad, with people flocking to new stores when they open, then consumption declining over time.

There are parallels to Krispy Kreme in the fun aspect, excessive calories, and rapid expansion. For what it’s worth, the Krispy Kreme on 72nd Street in Manhattan recently closed.

Cold Stone can succeed as they have a great concept, but the quick expansion is worrisome.

Mark Lilien
Guest
15 years 6 months ago

The Unique Selling Proposition for Cold Stone is based on the mixing of the add-ins. At first glance, this might not seem to be a sustainable USP over the long run, but the USPs for Carvel and Baskin-Robbins are similarly easy to copy. Anyone can buy a soft ice cream machine and copy Carvel and anyone can make or acquire ice cream in 31 flavors and copy Baskin Robbins.

Yet Carvel and Baskin-Robbins have each survived several decades and enriched their franchisors and franchisees. Perhaps the real strength of the business plan is simply choosing great locations without excessive competition nearby.

Peter Fader
Guest
15 years 6 months ago

Cold Stone Creamery is marketing at its worst — great sizzle, lousy steak.

It’s a wonderful experience the first time and maybe the second or third time too. But by the fourth trip, you realize that it’s very poor quality ice cream, the prices are high, and the charming, energetic people behind the counter begin to wear on you.

I’ve spoken to numerous people who have had the same experience. Even my kids are in no rush to go back there anytime soon. We’d rather just buy pints at the Wawa and eat them in the car.

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