David Andow

Cold Stone Creamery believes no obstacles can keep the chain from its goal of operating 1,000 profitable stores by Dec. 31.

By Allison Perlik, Senior Editor -- Restaurants & Institutions, 6/1/2004

Less than a decade after launching its franchising program in 1995, Scottsdale, Ariz.-based Cold Stone Creamery is speeding toward its long-stated goal of operating 1,000 profitable stores by Dec. 31. The superpremium ice cream chain posted sales of $154 million in 2003 on a whopping 63% unit growth rate. Now, despite an industry history replete with the perils of too-swift growth, Chief Operating Officer David Andow and the rest of the creamery team are poised to accept nothing less than sweet success.

Q: You opened your 500th store in October 2003. What is your unit count now?
A: We have approximately 670 stores currently open—I say approximately because we’re opening new stores every day—and 875 in some stage of construction.

Q: The company has made clear its objective of having 1,000 stores operating and profitable by Dec. 31. Is that goal still achievable?
A: Absolutely, positively. We are right on schedule in our real estate and logistics, the construction teams are ready and vendors are partnering with us to get them built. In essence we’re ahead of schedule on awarding [franchises] and right on schedule for openings. We’re on pace to exceed 600 awards this year.

Q: How can you be confident the stores will be profitable by your stated date?
A: Profitability means different things for different franchisees. Operators may choose or not choose a variety of [additional elements that add to] expenses. We just want to make sure the model is profitable. Our goal is that revenue exceeds the expense [to open a model store].

Q: The industry is full of stories illustrating the dangers of fast growth. Why is it so important to the company to continue on such a pace?
A: The pace was designed back in 1999 when there were 70 to 80 stores open, so it wasn’t something we just thought of yesterday or the day before. Is it too fast? No, as long as we’re being selective and bringing on the right partners and the right customers. The philosophy we use when we’re looking at the criteria for a franchisee is the very same for a person who works at the creamery [our headquarters], and that is that they absolutely have to have passion, drive
and ultimately the desire to want to make people smile. And really, our product does. It’s ice cream!

Q: The economy has picked up, but do you have concerns about moving forward with such aggressive growth when the economy is not growing at as fast a rate?
A: We’ve been really lucky that the folks around the country have responded to our ice cream. ... Our focus is more about providing the ultimate ice cream experience, so when they walk in—regardless of their surroundings or of the economic conditions around them—they can go to this place and even if it’s just for 10 minutes, it’s an opportunity to indulge.

Q: With a product that is an indulgence aimed at creating a special experience, do you still get customer frequency or is it more of a special-occasion treat?
A: Cold Stone is changing the way people think about ice cream in terms of it being not just an experience but a dessert. And dessert, as you know, is consumed all year round. So customers come and often times, they’ll change it up [and order different things]. That’s why our employees ask customers what their favorite desserts are so they can make new recommendations.