Cold Stone Creamery Franchises: Why the Numbers are Dwindling

Cold Stone Creamery has grown to become a popular franchise, but one that has seen its share of ups and downs. With a top ranking of #14 in 2007, it dropped to #90 in 2008, but has risen back to #35 in 2010, according to Entrepreneur Magazine’s annual reports.

Interestingly, what captures our attention is the drop in the number of Cold Stone Creamery franchises. In 2008, Cold Stone had a peak of 1,394 stores, but in one year, saw a drop down to 1,221 in 2009. From the Cold Stone Creamery in Santa Ana, California to the location in Fenton, Michigan, these delicious stores have shuttered their doors. Why has this popular brand of ice cream dwindled?

The Ravages of the Economy

By and large, the most common factor is the economy. Cold Stone Creamery offers delicious frozen products and “the ultimate ice cream experience,” but it does so at a price. For over 20 years, Cold Stone has offered creative and unique ice cream products using only the highest quality ingredients and a “signature process.” What customers enjoy is a great-tasting product that is priced at expendable income levels.

With the economy slump beginning in 2007, many people have simply stopped paying for luxury items such as the Cold Stone process ice cream. Ice cream can be bought much cheaper in the grocery store or at other locations.

High Overhead

In addition, many of the new Cold Stone locations opened at the height of the real estate boom with overinflated rents. When the market imploded and rents dropped to more reasonable levels, many new franchise owners were stuck in a long-term lease that they simply could not afford.

Heated Competition

Another reason Cold Stone numbers are dwindling could also be increased competition. Dairy Queen has been a long-term staple that offers reasonable priced ice cream products similar to the Cold Stone process. Why would consumers pay more for Cold Stone when they can go down the street and to Dairy Queen for a cheaper and similar product, or find a cheaper and healthier frozen yogurt alternative such as Pinkberry?

It is true that consumers still like their ice cream, and many consumers are loyal to their brands, especially when it comes to Cold Stone. However, Cold Stone will need to see better management of locations and competition to see them become a favored franchise once again.

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