Cereality Growth Begins By Shutting Two of Seven Stores
On acquiring the seven-unit Cereality Cereal Bar & Café chain, one of the first moves franchising powerhouse Kahala-Cold Stone made was to close two stores, one in Chicago, the other in Evanston, Ill, a suburb north of the city.
By Derek Gale, Associate Editor -- Restaurants & Institutions, 7/23/2007
 Doug Ducey, Kahala-Cold Stone CEO  MORE ON THE WEB Kahala Cold Stone Cereality Cereal Bar & Cafe MORE IN R&I The Cereality Acquisition: Big Ideas Live Read the R&I Interface interview with Kahala-Cold Stone principals Kevin Blackwell and Doug Ducey. |
On acquiring the seven-unit Cereality Cereal Bar & Café chain, one of the first moves franchising powerhouse Kahala-Cold Stone made was to close two stores, one in Chicago, the other in Evanston, Ill, a suburb north of the city.
The stated purpose is to transition from company-owned to franchise units but the two that have gone dark may not re-open in the same locations. “I can’t speak specifically to the location,” says Doug Ducey, Kahala-Cold Stone CEO. “But we think the Chicago market is one of the best in the entire world. It is viable for Cereality and we will grow and develop in Chicago.”
Chicago was an important launching pad for Cereality, which began as a kiosk at the Arizona State University, Tempe. Its quirky, mix-and-match cereal-centric menu quickly caught on with students. Philadelphia was picked for its second location and then Chicago, which also was chosen as the upstart chain’s headquarters. Asked what existing Cereality customers in the Chicago market may think as the fate of the locations is decided, Ducey says, “We always want to make our customers happy. We would ask folks to be patient, give us more time, and let us get Cereality open in their market. It’s our top priority to determine what the best opportunities are for locations and franchisees in a way that will please existing customers and expand [the Cereality] brand to those unfamiliar with it.”
As for expansion of the brand into other key markets, Ducey says, “We have 1,400 operating Cold Stone Creameries, and under Kahala-Cold Stone, we have 4,600 operating stores. One thing we definitely know how to do is to develop and build brands. The wonderful thing about the [Cereality] brand and category is that it’s wide open—it’s first to market. Once we figure out where it works and how well it works, we can grow it as quickly as we would like.”
He mentions Los Angeles as “an incredible foodservice marketplace,” noting that the city has “a lot of people who are open-minded and who love to see and try new things.” Ducey also says Kahala-Cold Stone has some brand equity in the Phoenix market (it is based in nearby Scottsdale, Ariz.), so the company will focus there as well. “But there’s not a market in the U.S. that doesn’t love cereal,” he says. “This is about us finding the right franchisees in the right locations. We want to go where the people are.”
As for types of stores, Ducey says co-branding and co-location with existing Kahala-Cold Stone brands both make sense, with Cereality being the company’s only breakfast brand. “We want it inside Cold Stone, next to Blimpie, next to Samurai Sam’s, inside malls, on campuses… we want to take our key learnings, tweak these concepts and then re-apply them.”
“As you reach the 30 to 50 mark in terms of stores, you get a good handle on what works and what needs to be fixed,” Ducey adds. “That’s when you can build dozens of stores and have a high probability of success with both the brand and franchisees.”Whats On The Menu?
Cereality stores offer a wide variety of popular cereals and fun toppings (like malted milk balls). Customers can customize a mix with two scoops of cereal and one topping, or choose from several specialty mixes (both cold and hot). How much milk to add is up to each individual, and the chain offers soy and lactose-free varieties as well.
For those who want something slightly different, the concept also offers cereal-infused smoothies, custom-made parfaits and Cereality Bars.
Specialty mix examples:
S’more Than You Know
Graham-cracker and cocoa cereals, triple chocolate chips and mini marshmallowsLife’s A Bowl Of Cherries
Oat-squares cereal, dried cherries, triple chocolate chips and sliced almonds
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