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Freezing delight with hot profits

Tags: Kahala, Cold Stone Creamery, ice cream, MENA, Middle East, Gulf, Master Franchise, business , Apparel Group, Europe, Latin, Asia, Africa

BY Namita Bhagat | October 11, 2012 | comments ( 0 ) |

Freezing delight with hot profits

Eddy Jimenez

Known for its finest treats including super-premium ice cream and sorbets made fresh daily in its stores, Cold Stone Creamery is expanding worldwide. In an interview, Eddy Jimenez, Vice President, International Development & Logistics, Kahala parent company of Cold Stone shares brand’s expansion plans in MENA.   

Namita Bhagat (NB): Brief us on history and growth of ‘Cold Stone Creamery’ (CSC). What is the brand’s USP?
Eddy Jimenez
 (EJ): The Cold Stone Creamery that we know today is the direct result of two ice cream lovers’ crusade for the perfect ice cream dessert. After years of tirelessly searching for ice cream that met their standards of quality, flavour, consistency and variety, Donald and Susan Sutherland opened the first Cold Stone Creamery in Tempe, Ariz., in 1988. From unique ice cream Creations, cakes and shakes, to ice cream cupcakes and cookie sandwiches— nobody serves the Ultimate Indulgence like Cold Stone Creamery. For over 20 years, Cold Stone has been scooping up only the finest treats using super-premium ice cream and sorbets made fresh daily in our stores. Served with wider choice of mix-ins and prepared on a frozen granite stone, Cold Stone delivers the ultimate ice cream experience completely customised for its customers.

Today, Cold Stone Creamery is headquartered in Scottsdale, Ariz and in 2007 it became part of Kahala, one of the fastest growing franchising companies in the world with a portfolio of 15 quick service restaurant brands and annual worldwide revenues of US$1.1 billion.


NB: How and when did the brand enter Middle East? What business model does it follow here?
 In early 2007, we announced our plans to enter the Middle East and reached an agreement with the Apparel Group to launch and develop the Cold Stone Creamery brand in the Gulf Cooperative Council, which includes the United Arab Emirates, Saudi Arabia, Kuwait, Qatar, Bahrain, Oman and Jordan. Our first store opened in Dubai, United Arab Emirates in October 2007 in the Dubai Festival City Mall. The business model is that of a Master Franchise, and the Apparel Group (master franchisee for the GCC region) is developing all markets via the company owned business model.

NB:  Share CSC’s current store presence in Middle East?
 Cold Stone Creamery’s current store presence in the Middle East is 36 stores across the region. We have 29 stores in the UAE, 3 stores in Qatar and one each in Oman, Kuwait, Bahrain, and Saudi Arabia.

NB:  What is the region’s market potential for CSC? How do you plan to develop the brand further in the region? What are the target locations? 
  The success of the Cold Stone Creamery brand has been fantastic in the Middle East and although we have been in the market for five years, we feel there is a tremendous amount of opportunity and market potential that still await the brand. We will continue to maximise our presence across the UAE and all markets within the GCC. We do understand that there will be a limited number of stores that some of the smaller markets will be able to support but in addition to them, we will continue to focus as well on some of the bigger markets like Saudi Arabia. Saudi Arabia is a market we just entered this year, but this market alone would be able to support 60 plus locations. Our target locations across the GCC will continue to be those areas where customers like to spend time in, while also enjoying a high quality, super-premium ice cream product as well as a great customer experience. Locations such as premium malls and premium high streets will continue to be the primary areas we’ll seek, in addition to key locations in airports, etc.

NB: Tell us about the franchise business scenario in MENA? Why did you opt for franchise route to expand into the region? 
 We are excited about the franchise business scenario across all countries in the MENA region. We actually just launched the Cold Stone Creamery brand in Egypt this year (currently have two stores open with three total by the end of the year), and are also looking into markets such as Morocco, Libya, and others in the region. There is a great potential in this region and a high appreciation for high quality brands, and we feel we will do great across all of the MENA countries. Our international expansion strategy is to partner with the most experienced restaurant operators and retailers in their respective markets. We believe that combining our know-how with our partner's unique knowledge of its country's culture and retail community creates the best recipe for success.

NB: What store formats does the brand follow? What is the investment required to open brand’s store in Middle East?
In addition to our traditional Cold Stone Creamery stores that you’ll find in malls and high streets, we have also opened several kiosks in these same venues. Our average store size is about 80 sq. m, but we are fortunate to have a brand that can easily fit into larger as well as smaller spaces, without sacrificing the integrity of the brand. There are many variables that may affect the investment required to open a store in the Middle East, but one can expect the range to be between US$276,125 – US $431,025, again, depending on the location, store size, etc.

NB: How does the brand deal with competition and maintain its exclusivity in the market? 
 We feel competition is very healthy. At the same time, it is important for us to maintain our exclusivity in the market in order to stay ahead of the competition. With this said, it comes down to execution of the Cold Stone Creamery brand, which in and of it will expose what makes our brand very unique and different from the rest of the competition.

NB: Kindly share your worldwide growth plans with us.  
EJ: Cold Stone Creamery’s explosive international growth began in November 2005 when the brand opened its first international store in Tokyo, Japan. Today, the brand’s stores are operating in more than 400 international locations in 19 countries. Our plans are to continue the development of Cold Stone Creamery across the world. We are continuing to look at markets in the MENA region, as well as Europe, Latin American, Asia, and the rest of the Africa for growth of our wonderful brand across the world. 


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