Cold Stone Creamery scooping out more territory
By Donna Hogan, Tribune
Cold Stone Creamery chief operating officer Sheldon Harris stands behind the counter
of the store at the southwest corner of Loop 101 and Scottsdale Road.
Scottsdale-based Cold Stone Creamery is so hot it has nearly doubled in size every year since its fifth
store and first franchise opened in 1995.
In 2003, the ice cream stores sold $156 million worth of frozen delights, up from $88 million in
2002.
Cold Stone, which debuted in 1988 in Tempe, invites customers to design their own sweet treats by
selecting basic ice cream or yogurt flavors and adding "mix-ins" of fruit, candy, nuts, syrups and
other ingredients. The ice cream, yogurt and even the waffle cones are made fresh at each store. The
personalized creations are combined on a slab of frozen granite — the "cold stone" that gave the
company its name.
Local couple Donald and Susan Sutherland came up with the concept.
Now the Scottsdale company, with more than 600 stores, has whipped up a new growth incentive.
Cold Stone plans to sign leases for new stores instead of letting the franchisees negotiate on their
own, putting the power of the hugely successful company behind each individual store owner,
spokesman Kevin Donnellan said.
That gets the attention of landlords, even the national giants, and ensures that Cold Stone
franchisees will get the cream of the available spaces with minimum hassle, he said.
It’s not as though the shops have escaped notice to date.
Entrepreneur magazine listed Cold Stone 25th in its February 2004 list of "101 Fastest Growing
Franchises." A year earlier it was dubbed 35th fastest.
In 2004, the company expects to see 469 new stores start serving its ice cream concoctions — 88 of
them have already opened, said Sheldon Harris, chief operating officer. Cold Stone also expects to
issue 600 franchises this year, and 220 of those have already been handed out, Harris said.
When Harris joined Cold Stone six years ago, there were eight employees at the Scottsdale
headquarters. Today the company has 131, and it is outgrowing its leased space in Scottsdale
Airpark, he said. Cold Stone hopes to build a new headquarters to handle its growth, he said, but
won’t stray from Scottsdale.
"Scottsdale is our home. We live here, and we have passionate customers in Scottsdale," he said.
Cold Stone has become a favorite for both ice cream lovers and entrepreneurs.
Despite about $250,000 in franchise fees and other expenses to get a store open, the Scottsdale
company received more than 23,000 applications for franchises in 2003, Harris said. Only about 2
percent of applicants are selected to become store owners, he said.
Harris said the brand has been so successful because the stores are "high-energy — a place you want
to be."
The company fosters that by clever promotions, such as those celebrating the Academy Awards with
punfilled creations such as Lost in Banana Splitation and The Lord of the Pecans: The Return of the
Caramel.
The newest reason to come to Cold Stone is the just-launched ice cream cakes, Harris said. Cookie
Dough Delirium features yellow cake, sweet cream ice cream, cookie dough, chocolate shavings,
white frosting and chocolate chip cookies on top.
"We feel we’ve taken ice cream to a new level," Harris said. "Now we plan to take ice cream cake to
a new level."
The recent Atkins Diet fad hasn’t slowed Cold Stone sales, but the company has been experimenting
and "is in the final stages of creating a low-carb ice cream," he said. Cold Stone already offers a
"sinless" ice cream with no fat and no added sugar.
Harris said he doesn’t know how long Cold Stone can keep up its rapid growth, but he doesn’t see it
slowing anytime soon.
"The saturation point is when customers stop coming in increasing numbers to our stores," Harris
said.
Don DeBolt, president of the International Franchise Association, an industry trade group, would
agree.
"Saturation? That’s what they said about Starbucks when they had 1,000 stores. That’s what they
said about McDonald’s when they had 5,000 stores," DeBolt said. "In the last five or six years, we’ve
seen hometown, regional and upscale ice cream concepts explode. I don’t think anybody has gotten
a handle on how much money they generated, but I’m sure the industry has quadrupled in the last
decade."
DeBolt said entrepreneurs love ice cream franchises because "it’s a simple concept to execute, it
doesn’t involve inventory complexity, or the same health and safety issues of other restaurants, and
the investment is reasonable."
Besides, DeBolt said, "Most people love ice cream."