Cold Stone Creamery

Overview

Cold Stone Creamery, Inc.

type	Wholly owned subsidiary
industry	Ice cream parlor Franchising
founders	Donald Sutherland Susan Sutherland
foundation	1988 in Tempe, Arizona
location city	Scottsdale, Arizona
locations	929 (US domestic, 2022)‡R1R‡
key people	Éric Lefebvre (CEO - MTY)
areas served	United States Bahrain Burkina Faso Cambodia Cameroon Democratic Republic of the Congo Djibouti Egypt Ethiopia Guam India Indonesia Iraq Japan Kenya Kuwait Lebanon Malaysia Mali Morocco Nigeria Oman Pakistan Philippines Qatar Saudi Arabia Somaliland Taiwan Thailand Turkey United Arab Emirates United Kingdom Uzbekistan‡R2R‡
products	Ice cream Ice cream cakes Frozen yogurt Sorbet
parent	Kahala Brands (through MTY Food Group (2007–present)
location country	U.S.
homepage	coldstonecreamery.com

Cold Stone Creamery, Inc. is an American international ice cream parlor chain. Headquartered in Scottsdale, Arizona, the company is owned and operated by Kahala Brands.[3] The company's main product is premium ice cream made with approximately 12–14% butterfat,[4] made on location and customized for patrons at time of order. Cold Stone has also expanded its menu with other ice cream-related products, including: ice cream cakes, pies, cookie sandwiches, smoothies, shakes, and iced or blended coffee drinks.

History

The company was co-founded in 1988 by Donald and Susan Sutherland,[5] who sought ice cream that was neither hard packed nor soft-serve. Cold Stone Creamery opened its first store that year in Tempe, Arizona.[6]

Co-Branding

Cold Stone franchisees in New York City began partnering with Soup Kitchen International to sell soup in their stores beginning in late 2007.[16] In 2008, the company signed a master agreement with the Rocky Mountain Chocolate Factory to open licensed locations carrying that company's products.[17]

Tim Hortons

The parent company of Cold Stone Creamery, Kahala Brands, announced in February 2009 that it had reached an agreement with Canadian coffee shop chain Tim Hortons to open 100 co-branded stores in the United States after successfully testing two locations in Rhode Island.[18] The strategic alliance was intended to pave the way for Tim Hortons to operate in more US locations while allowing Cold Stone Creamery to expand into Canada. The most notable co-branded store opened in August 2009 when Tim Hortons moved into three Cold Stone Creamery locations in New York City, including its flagship Times Square location.

In June 2009, Cold Stone Creamery started testing the Canadian market by opening seven co-branded locations with Tim Hortons in Toronto, Oakville, Mississauga, Hamilton, Pickering, Sudbury, and Halifax, Nova Scotia.[19] They had locations in every Canadian province except for Newfoundland and Labrador.[20]

The Tim Hortons venture followed on the footsteps of a similar co-branding efforts in 2007 and 2008, but ended in 2014.[21]

Legal issues

There have been allegations by independent franchises that Cold Stone's business practices have put them at a competitive disadvantage. These former franchises claim that the parent company opens locations too close to each other, requires expensive remodeling and overstates potential revenues and income.[28] Other franchises have contended that is not the case and that they are experiencing growth amid financial uncertainties and higher costs associated with fuel and energy prices.[29]

In June 2008, The Wall Street Journal examined the issue. The article stated that a large number of locations, approximately 16–20%, of Cold Stone Creamery franchises have closed or were put up for sale by their owners, many of whom had suffered significant financial losses due to their investment. The article included claims by franchisees that the company had misrepresented the average revenues of Cold Stone stores and acted in ways that reduced stores' profit margins. A company spokeswoman said that the number of stores for sale was "at par with industry expectations" in light of "the economically challenging times."[30]

CNBC documentary and lawsuit

In December 2010 lawyers from Cold Stone Creamery threatened a lawsuit over some of the contents of a then-upcoming documentary by CNBC.[31]

Behind the Counter: The Untold Story of Franchising reported on the failures and successes of franchising. After several edits the program was broadcast on CNBC on March 21, 2011. Brands such as Dunkin' Donuts and Five Guys were highlighted as successful franchise brands. Cold Stone Creamery's executives and corporate lawyers were interviewed. The lawsuit was discussed with former franchisees and the litigation threats with CNBC. An apparently successful Cold Stone franchise was also featured. Another expose was not aired due to threats of litigation and stores that were closed for years appeared on search engines for some unknown reason.

Misleading ingredients class action lawsuit

In June 2024, a class action lawsuit by a customer from Long Island for serving a flavor that did not contain any actual ingredients representative of its marketed flavor was allowed to proceed into court. Around July 2022, the plaintiff purchased a serving of pistachio ice cream from a Levittown, New York location before researching on the company website that the pistachio flavor did not contain any actual pistachio nuts, but instead "pistachio flavoring". The pistachio flavoring was composed of a "mixture of water, Ethanol, Propylene Glycol, natural and artificial flavor, Yellow 5, and Blue 1". The plaintiff claimed that ice cream flavors should include what they advertise instead of a "concoction of processed flavors", noting that the mango, coconut, orange, mint, butter pecan ice cream flavors also did not include ingredients representative of their marketed flavors. U.S. District Judge Gary R. Brown concurred and called these "deceptive practices" under New York's General Business Law.

Kahala Brands tried to dismiss the case on the basis that there were no signs saying that an ice cream flavor actually contained that ingredient, that each flavor had detailed and easily accessible ingredient lists online, and that customers should reasonably be able to see for themselves that the ice cream flavor doesn't actually contain any particular ingredient before buying.[26]

Cold Stone Creamery

History

Co-Branding

Tim Hortons

Tim Hortons

Products

Licensing

Legal issues

CNBC documentary and lawsuit

Misleading ingredients class action lawsuit

Safety issues

Food safety

Workplace safety

Corporate headquarters

External links

References