In this segment we take you inside the Cold Stone Community to see what is said by franchisees who are in the trenches - working it everyday, dealing with corporate and working 15 hours a day. These discussions come from public forums (public to the franchisees with no copyright or IP restrictions) - they are discussions between
franchisees trying to figure out to how keep their franchises open, agonizing about how to pay the next bill, trying to turn a profit or just trying to get out by selling or closing them.
(names have been removed and highlights are by CSF).
|All Forums >> [How to operate your store effectively]
>> Profit Center
-> An Open Letter to
the Cold Stone Community (12/18/2006 6:02:20 PM) |
This is an open
letter to the Cold Stone community. I am writing this
advance of the 2007 AFM in Las Vegas, because I do not
whether I will still be here to write this for the
next AFM in
2008. This is not meant to be a rant, but rather my
communicate some points that I think are important and
the Creamery should take to heart. You may not agree
everything I have written here, and I don't expect
But hopefully this will generate some useful
perhaps even encourage some important changes to take
A year ago at the 2006 AFM I was awed by the
Stone image and message communicated superbly by Cold
Stone's highly-polished marketing machine. I came
convinced that my wife and I had made the right choice
signing with the preeminent force in the ice cream
year later I have the following observations to convey
first year as a Cold Stone Franchisee:
* After investing my life savings and
non-stop 7 days a week for an entire year, I have
lost money, not made money.
* We have endured a
no income, my wife having a nervous breakdown, and
losing our home. Only significant financial help from
family has kept us afloat during this difficult
* Virtually every new idea that the Creamery
would add to my profitability this year has cost me
made me money.
* Over-portioning: Yes, we know
over-portion. Using flat spades to pull ice cream will
result in over portioning. "Weighing-in" is not an
effective solution - it is more of a way for the
pass the buck back to the franchisee. If you really
make an impact on over-portioning, give us some 6 oz
can use to pull the ice cream with before mixing it on
stone with our spades.
* If I saved every drop
cream that we are over-portioning and was able to
always hold Labor + Food cost to below 50% of net sales, it
still not be anywhere close to enough to keep us in
There simply aren't enough top-line sales to begin
pay for all the overhead.
* My Profit Keeper and
Pay: I have tried them both and gone back to
both accounting and payroll. From my experience, it is
better way to go but that is only my opinion.
* In spite of having
ultra-clean store, on a recent Q inspection we were
rated as unacceptable because I took down the
Pyramid" signs hanging in my store. (I took them
because they kept sending me a subliminal message that
invested my life savings in a pyramid scheme!)
this same inspection most points were lost because the
inspectors were unimpressed by one of my daytime crew
member's execution of the PCST. This particular crew
is intellectually challenged and not particularly
a result, he is shy and has low self esteem. Working
Stone is the best thing that has ever happened to him.
the most reliable employee I have and will do anything
of him without question. In spite of his handicaps, he
learned to do almost every thankless job in my store. I
never received one customer complaint about him.
encounter him will almost certainly notice his social
handicaps and lack of polish, but they probably also
appreciate that he does a good job of making their ice
in a timely fashion. I expect they also appreciate the
that we have given this worthy, deserving young man an
opportunity to work when many other employers would
of these factors are considered by the Q, but these
factors that matter most to me.
get hung up on exact temperature settings for the
They don't seem to understand that these readings
all day long due to people constantly going in and out
during the day, defrost cycles, ambient temperature in
store, and the location of the product in the freezer /
We try to set the thermostats to produce an optimal
consistency across all the ice cream / sorbet products
on our real life experience working with these
day in our store.
* The Q inspectors
telling us that our dipping chocolate temperature is
when they measure it. The reality is that we have to
the temperature or the chocolate wonâ€™t melt. We turn
down again once it has melted.
* The Q
always seem to get upset that we have a Decopac
in our store that I accidentally ordered once when
order some cake toys. It has served as a good example
customers what our medium rectangle kids cakes look
they are flipping through the cake display.
various Q inspectors never miss an opportunity to take
off because we have this display cake in our store.
important is that really, and is this something you
want your Q inspectors to worry about? What does this
do with saving my business? (That is the only thing I
Stone is a double-edged sword. When done well, it is
appreciated. When done poorly, it is never
general, as many people hate it as love it and it has
bearing on whether or not I will survive as a business
year. When I have hired crew members because they were
entertaining and good at singing, I have usually had
rid of them because they were so into themselves that
didn't want to do the real work and also had a habit
irritating customers and their fellow crew members
constant self-indulgence. Some of my best crew members
never have passed a Cold Stone audition, but I
my store without them.
The New Drink Program
* The new smoothies are a bust. The system
make them is infuriatingly slow and cumbersome, hard
control, and produces smoothies that taste different
on who is making them. In general they taste OK, but
great. Sales spiked initially on their introduction
settled back down to where they were before, after
came to these same conclusions on their own.
new shakes are good and sales are about double of what
used to be. It's hard to say though if we have
many new customers with them or just converted
cream customers to shake customers. In any case, we
see any noticeable change in our total sales after
introduction. As a side note, over-portioning is worse
shakes than almost anything else we make.
* Cold Stone marketing seems to spend a lot
generating monthly packets of information that I
time to read. They spend money running national
that few of our customers show interest in (e.g. Shake
Dance Contest) and that have little or no affect on my
line. They push novelty cakes and pies that few
and that cost me money to produce. They ship me very
expensive, colorful signs to hang in my store that
just add to the clutter and an already overwhelming
information that bombards customers when they walk in.
* Last year we were told that LSM was the
way to go
when marketing our store because advertising on TV was
expensive. A year later, I am here to tell you that
helpful, is nowhere near enough. I can also tell you
running radio spots from time to time has very little
* The mass-couponing that the
done in the fourth quarter of this year HAS helped
new business. For that I am grateful. I am concerned,
that we are training our customers to not come in
The Cold Stone Business Model
* I do
not believe Cold Stone's current business model is
most locations. The initial investment is way too
build-out is too expensive (the creamery is working on
problem I'm told), stores are too large and fancy,
labor is required, there are too few "non-stone"
for sale in our stores (see Starbucks), and the system
running a Cold Stone is WAY too complex.
minor changes to the "Stone" business will not
Stone. Besides adding new "non-stone" products for
sell in our stores, Cold Stone needs to reinvent
turning its stores into ice cream distributors, not
cream parlors. They need to enable local franchisees
Cold Stone products through local restaurants and
suitable venues in their community. The franchisees
in this regard does not necessarily need to include
manufacturing and delivery, but should focus more on
aspect â€“ building relationships and servicing
* To help boost sales, Cold Stone needs to
customers to place orders via the web. Done correctly,
believe this could possibly double our cake business
enable us to run a highly profitable catering business -
both to consumer and corporate / restaurant accounts.
probably also give a boost to our take-home container
* In general, coming up with a Cold Stone
business model would be extremely helpful. Right now
out there doing catering has to figure it out on their
basically re-invent the wheel.
Cold Stone - in your quest to become the #1
cream brand in America, you have grown too fast, built
many stores too close together, set up new franchisees
almost certain failure by putting them in bad
saddling them with excessive debt and high rents. The
result has been devastating on a personal level for a
families that bought in to all the hype. In many cases
devastation has resulted in personal bankruptcy,
of homes, depression, nervous breakdowns, and even
suicide. I implore everyone working at the Creamery to
hard about what you are working on. Are you working on
something that could add $100,000 or more in net sales
every struggling store in the country? If you
your efforts will probably have little significance to
like me. Are you spending your time on trivial details
frivolous programs of one kind or another? If so, you
making my job harder. From my perspective, if more
the creamery don't start thinking along those lines,
the Creamery itself could well end up facing
as many of its own franchisees already are. The time
with these issues is running out quickly and has
out for many of my fellow franchisees.
-> RE: An Open Letter
to the Cold Stone Community (12/18/2006 9:24:19
Unfortunately, you are 100% correct on most of
you have said. Cold Stone is teetering on the brink.
myself just closed my store on Saturday. Even though I
filing bankruptcy and could lose my house, it was by
best decision I have made in a long time. Cold Stone
was not worth the stress - physical, mental,
marital. I feel as though a huge burden has been
look forward to starting the new year fresh.
you are not alone. If you would like to talk, feel
call me at xxx-xxx-xxxx
or email me at firstname.lastname@example.org.
-> RE: An Open Letter to
the Cold Stone Community (12/19/2006 8:56:01 AM) |
I usually don't reply on here unless I
something to say as I can be fairly opinionated.
truly sorry that things have not/did not work out for
No matter what we do in life,
important things are our health and family.
these things improve.
My involvement with CSC
4 years ago. Prior to that my Wife and I took 8 months
what we could about CSC, being in
one's self and working with a Franchise System.
paid dividends, as we came into this with conservative
I would guess 99.8% of us would
things differently if we had it to do over, including
Susan and Doug.
As time unfolds, it becomes
me that in order to become successful at this you have
1. Location: 100 ft. can make a
difference. If its not right - don't sign.
Expectations: or, a back up plan if things don't take
worse case does not feel comfortable - don't sign.
Plans for Multiple Units: I could not remain in the
with the notion of owning just one store. ( just my
I apologize to the singles)
Our 3 stores are
well. The reality of it is I'm not driving around in
Escalade, its a '95 Buick. I'm fine with that however.
mortgage gets paid and there's food on the table, and a
extras during the year. For most of us the payoff
asset values and when our SBA loans get paid in
Until that time its more of an investment than a
We would still make the same choice as we did 4
-> RE: An Open Letter to
the Cold Stone Community (12/19/2006 11:25:30 AM) |
okay i own one
store slated for another store
to become a multi
Please explain the concept that multi store
make you money
if one store is all ready losing
Mxxxxx and Pxxxxx
a typical creamery
that we spend too much time on creamery talk and not
time running the store
not my word
-> RE: An Open Letter to
the Cold Stone Community (12/19/2006 12:01:29 PM) |
is not the only answer or the end-all answer. We have a
profitable store and a very not profitable store.
the major difference. The 'bad' store will be moved in
year to a new and far better location, at considerable
to us. We still believe in the Cold Stone concept and
continue to give it all we have( or until we can't
We have been able to teach all of our
they change often, how to portion correctly using the
spades. It takes practice and bosses that insist they
right or loose their job. There is no excuse to not be
get this right. Changing our portion sizes will only
look like BR!
I agree that catering can help our
profitability, but I don't think it is the final
need to be "unique" again. We have lost that with all
stores opening. Our niche was our entertainment factor
"fresh-made ice cream". We need to focus on letting
know what we are about again. I am hearing customer
your ice cream just all chemicals?"
This is just
thoughts, but I do believe we need to get back to the
that made Cold Stone great in the first place. A
fresh product and a happy, fun environment.
won't be at
the AFM because we simply can't afford it this year,
would love to hear what new ideas come from it.
-> RE: An Open Letter to
the Cold Stone Community (12/19/2006 2:29:20 PM) |
I do believe that
there are good people at CSC working very hard to make
successful. I also believes that it maybe too late for
that are in trouble like mine and others out there.
did grow to fast. I see the number of stores
decreasing to a
number that will be profitable. That is just business!
not Mcdonald or Starbuck. We cannot use their model to
-> RE: An Open Letter
to the Cold Stone Community (12/19/2006 3:00:02
I agree Rxxxxxx.
Cold Stone will shrink to an equilibrium of stores
make it. I also agree that Cold Stone has many highly
intelligent and wonderful people working for it. I
vast majority are there for the right reasons too and
working hard to correct things. Hiring Jim Flaum, in
opinion, was an excellent decision and a good first
just think the Creamery has been moving in the wrong
for a long time and doesn't know what to do to turn
around. In the mean time, the lives of a lot of other
hard working people are being destroyed in the
sure this wasn't anyone's intention, but it is
nevertheless. No doubt there will be a lot of
this at the upcoming AFM. The really sad thing for me
personally is that I still love the concept of Cold
love working with my crew members and serving my
still even look forward to getting up and going to
sadly, I am going broke in the process. It's really a
And people still regularly come in and tell us what a
location we picked for our store. Unfortunately, there
other Cold Stones within 5 miles of us which is most
our number one problem.
-> RE: An Open Letter to
the Cold Stone Community (1/7/2007 5:53:28 PM) |
You are 100% correct and since you are telling
truth we do not see a valid response from the
this topic. I am sure that if we ask for help, the
be Local Store Marketing or the Creamery is working on new plans that
I remmember the T-Shirts, Music
downloads, etc that failed. Maybe someone will figure
another way to increase sales without giving a way the
The creamery is aware that franchisees are not
with the marketing plans that have failed
are more store for sale everytime I log into the
which confirms the community feelining.
will only make money if the franchisees are. There
will be a
time that this fad will be over and there will not be
franchisees added to the system and the current
will start filling for bancruptcy.
I have been
for 18 months, working 7 days a week like everyone
without any profit. The interesting thing is that i
increased sales in a time that everyone else has lower
but it still does not pay my mortgage.
-> RE: An Open Letter to
the Cold Stone Community (1/8/2007 12:57:30 AM) |
It was a bit eerie reading your post because
of it reflects our situation. I know and feel your
wish you peace and hope that 2007 will be a better
spite of how incredibly humbling it has been to have
family to loan us money sometimes just to buy
groceries, I can
sleep at night because, in the end, I have a family
love and adore. Although I may end up losing
I've worked for my entire life, I always remember that
most important things in life aren't things. I hope
find strength in each other and please know that our
are with you and your wife.
If you haven't
done so, I would suggest sitting down with your AD to
there are any options they're aware that can help. We
incredibly surprised and pleased with the level of
support/guidance/assistance we've received from our AD
we came in to meet with them and put all our cards on
We're still in it to win, still believe
concept and desperately want to make it to a point
debt service is paid off, but like you, every single
day is a
fight for survival right now -- personally and
I try to keep hope alive and sincerely hope that there
come a time when we can both afford to attend the AFM
back on this particular time in our lives and toast
made it through our darkest days. Our thoughts are
-> RE: An Open Letter
to the Cold Stone Community (1/8/2007 4:36:13 AM) |
Thank you Cheryl.
I appreciate your thoughts and sentiments. Sadly I
encountered numerous other franchisees who are even in
shape than we our. We are very fortunate not to have
service whatsoever. Nevertheless, we would not have
to break-even last year if not for $30K worth of
Improvement money that we received from our landlord
opening our store. Hopefully now that I am more
with operations, maybe we can eek out some kind of a
this year if we can grow by 10% or more. Of course if
raises the minimum wage as they have promised to do,
have to fold our tent before finding out. I often tell
employees that they all make more than I do working at
Stone and they think I am joking! I wonder how many
executives would ever dream of working under the
that its franchisees do. Not many I suspect.
[CSF]- This is another in our continuing series of posts from the Creamery Talk of Fall of 2006. These are discussions between franchisees trying to figure out how keep their franchises open or try sell them. (names removed and highlights by CSF).
INVESTOR!!! Please help! (Full
Forums >> [Getting your store open]
>> Buying/ Selling/ Transfering Stores
Mxxxxxx.xxxxxxxn -> NEED AN INVESTOR!!! Please help!
(11/7/2006 12:43:40 PM)
Well, I just watched the webcastand I do
feel better about the future of Cold Stone.
Alas, my store is on the verge of bankruptcy and locking
the doors. Without help, I will not be able to experience the new
I know it's a long shot, but if anybody out there is
willing and able to make an investment in my store, I would love to stick
around for a while and hopefully reap the benefits of what The Creamery
has planned. I love Cold Stone and don't want to close my store, but, on
my own, I do not have the funds to keep it open much longer.
Should anybody be serious about helping, please contact
me via email at email@example.com
or call me directly at xxx-xxx-xxxx.
The store is located in St. Louis, MO.
Jxxxxxx.xxxxxxxxa -> RE: NEED AN INVESTOR!!! Please
help! (11/7/2006 9:35:14 PM)
Hey buddy, hang in there. It's tough in MN
too. I feel the pain as do others. I know these are just words and don't
mean much, but there is always the light at the end of the tunnel. I'm
still at the other end in the darkness, but I know that light is there.
You are not alone.
Mxxx.dxxxx -> RE: NEED AN INVESTOR!!! Please
help! (11/7/2006 11:48:07 PM)
I ditto that. I still don't know how I'll
get through the winter. Many bills are already very behind, and I don't
see any way to pay them. If I had just the one store, I'd probably be
closing my doors too. I feel for you. Hang in there.
Cxxxxx.xxxxxx.xxxxxxxg -> RE: NEED AN INVESTOR!!! Please
help! (11/8/2006 3:51:05 PM)
I hear people talk about closing the doors
,but its probably a serious issue. As a franchise whose had stores for
four years and am in the process of selling them . I'm finding its
difficult to transfer them for a profit. The Creamery has an equation
based on the net times 3 or 4 . If the sale price does'nt fit there
equation they don't approve the sale. In many instances this is below
establishment costs. I really thought I owned my businesses and could
sale them when I wanted at a fair value. I was wrong. I'd appreciate some
feedback on this equation.
Cxxxx.xxxxxxi -> RE: NEED AN INVESTOR!!! Please
help! (11/8/2006 6:29:14 PM)
I have a big issue with the Creamery
giving numbers and ranges to potential buyers. When we bought our stores
they did not give me multiples based on net income. I have a store for
sale and they were actually trying to do the valuation. Valuation ranges
are all over the board, they should not be discussing this with potential
buyers. In South Carolina AUV and net income was very low when I bought
my stores, and still is, but they were more than willing to let me build
a couple of 350K stores. Based on their model I should of not purchased
unless I could build for undre 175K. If the Creamery loses you a
potential purchaser, I would be calling your attorney ASAP! They have no
place to get involved in this!
Nxxxxx.xxxxxxs -> RE: NEED AN INVESTOR!!! Please
help! (11/9/2006 8:43:15 AM)
Just so I understand what you are
saying... For the sake of round numbers if my net sales are 100,000 the
Creamery is saying I have to sell for $300,000 to 400,000? Even though I
essentially just want to get out from under my debt which is 200,000. I
get a buyer who agrees to the price of $200,000 and is financially sound
to run the store the Creamery can reject them because my price isn't high
enough? Is that what is happening to you now?
Mxxxxx.xxxxxh -> RE: NEED AN INVESTOR!!! Please
help! (11/9/2006 9:52:16 AM)
I have no idea what the real answer is to
your question Nancy, but what I do know is that it is nearly impossible
to sell a store to break even let alone make a profit.
There is a store in my area that did 600k two years ago
and now does about 475k and accepted an offer for somewhere around 300k
for the store yet the person could not get approved for financing from
and bank. Cold Stones are too risky for any bank right now. Also,
apparently many people show interest in the store until you have to show
them your tax returns, then they pretty much laugh.
I have no interest in selling at this point, not that I
could, I still enjoy owning the store and am still able to pay all the
bills. I just hope that when the time is right for me to move on that I
can actually sell.
Mxxxx.xxxxxxt -> RE: NEED AN INVESTOR!!! Please
help! (11/9/2006 11:07:34 AM)
I have heard the same numbers. What the
Creamery is trying to do is get the next wave of franchisees in without
much debt, so they can "claim" to be more profitable, when the
loan essentially isn't part of net profit. I think we all now realize
that the current business model for Cold Stone isn't working. The
buildout and operating costs are far too high to make good money and sell
your business. You'll get a good price for those buyers that are
emotionally involved (highly passionate), but you won't get top dollar
for the business savvy who see that the bottomline isn't good enough at
this point. Combine that with decreasing sales nationwide and we are all
looking at a dim future right now. Maybe in a few years it will turn around.
We'll see. I was always told and have heard that if you can pull 20% net
from your store, that's pretty good. Let's see how that fits into the
numbers mentioned above.
20% of our AUV of 380,000 = 76,000 net profit. (AUV
information from my AD, but I think it's not that high)
76,000 x 3= 228,000 selling price or
76,000 x 4= 304,000 selling price.
Now, I know that two years ago, I couldn't build my
store for that price. So, what that tells me is that the average Cold
Stone will sell for less than it cost to build. Take out any transfer fee
you might share, or any broker fees if you have a broker and you are at a
severe loss. I can also guarantee that if you are doing 380,000 AUV, that
it's pretty tough to pull a 20% net profit. A 380,000 store on average
might net 10-15%, depending on rent and things of course. Add that into
the equation and you can see that we are all going to be here for awhile,
or we're closing our stores. It's that simple. Cold Stone is taking care
of the future franchisees with this equation, not us. Hate to be straight
forward, but those are the brutal facts. What they should be doing is
helping us by reducing that exhorbitant transfer fee and franchise
renewal fee. I was told that the transfer fee is as high as it is because
it was designed several years ago to deter people from buying stores,
opening them, and trying to flip them for an instant profit. Now, we can
see that isn't the case at all, so I am hoping the Creamery will
reevaluate the transfer fee. It is more costly to own a Cold Stone over a
10 year period than almost any other major franchise. I did a lot of
research and found that our franchise fee, transfer fee, and renewal fee
combined is outrageous compared to most franchises. We were put up on a
pedestal, but now we are all getting knocked off one by one. I hope it
can be turned around. I've been trying to sell my stores for over a year
now. I have had so many close calls, but in the end, people aren't taking
the risk. For this reason, I am somewhat happy to say that I will be here
for awhile. Hope to meet some of you at the AFM. The only reason I am
able to go is because I won 2 free registrations last year. I'll stay at
the Stratosphere like I did last year and as long as I can sell one of my
kidney's before the end of the year, I should be able to afford it!
Sxxxx.xxxxxt -> RE: NEED AN INVESTOR!!! Please
help! (11/9/2006 12:56:49 PM)
I have heard that the formula is net sales
x 1.0.... so yes, basically your net sales.
I believe that the policy was set up at a time when CSC
was a super hot commodity. This was to avoid a franchisee from selling
the store to an over-zealous prospective franchisee that would pay ANY
price for a stone just because they wanted one so bad. The new franchisee
would then be unable to pay the crushing debt and go out of business.
Interestingly enough, even with that policy in place, I
know of one franchisee in the market that is falling victim to this very
Also of interest is that we have had 3 stores close in
our metro area within the last month and there have been no new suitors, even
after offering the stores for basically nothing. So I wouldn't subscribe
to the "new franchisees with no debt" theory just yet - you
have to have new franchisees first. To be fair, maybe someone will
eventually step up to the plate, however, I wouldn't hold my breath.
Bring on Gene Krantz!
Pxxxx.xxxxxxo -> RE: NEED AN INVESTOR!!! Please
help! (11/9/2006 1:44:29 PM)
and since there are up to 236
stores/agreement for sale on this website and growing
the creamery is trying to stop the hemmorage
and hopeful not by just saying dont give up
or spending my money
Bxxxxx.xxxxxg -> RE: NEED AN INVESTOR!!! Please
help! (11/9/2006 11:28:03 PM)
When the creamery sets a price range for a
potential buyer, it is for a number of reasons, but it seems the main one
is avoid having a new owner that is overburdened by excessive debt. The
Creamery's interest lies in the future franchisee, the one that is
looking to enter the system, and the creamery certainly doesn't have an
interest in trying to get a higher selling price for the person leaving
the system at the expense of the new franchisee that is going to operate
The current system appears to be 2.5-4x EBITDA earnings.
Basically what your profits would be without debt service, taxes,
depreciation and amortization. They also allow you to add back in items
such as management salary and salary the franchisee may have given
themselves to increase the EBITDA. While this number does correlate
indirectly to sales, it more closely correlates to profits. Two stores
with identical sales but different rent or labor levels will be valued
differently. Also, an owner that feels that they may be just breaking
even after paying their debt service would actually have a positive
EBITDA because the debt service would not be factored in the formula.
Depending on your profit levels, this number could quite possibly be much
less than the cost to build a new store.
Sally.Bell -> RE: NEED AN INVESTOR!!! Please
help! (11/10/2006 12:03:15 PM)
The November issue of Behind the Stone will provide
information regarding the transfer program and the valuation estimate
tool that will clarify most of your questions. You should receive your
copy next week. Further, I'm happy to meet with you and your Area
Developer via conference call if you have additional questions or
concerns. Just let me know.
Cold Stone Creamery
Vice President - Store Transfers & Renewals
[CSF]- This 2006 discussion thread comes from the "Creamery Talk" before it was sanitized by Corporate executives. It is an internal forum for franchisees - this thread comes from Fall of 2006 after a terrible summer for sales. The Cold Stone fad was in full fade mode at this point. (names have been removed for privacy considerations). It took us another 12 months to close our store, in retrospect, I should have closed it the year prior to this. A pathetic mistake on our part... take a look at some candid conversations between franchisees during this period.
Anyone actually make a profit?? (Full
xxxxx.xxx -> Does Anyone actually make a
profit?? (9/22/2006 2:41:10 AM)
I've been at this for a couple years now and there's no
profit in sight. As I talk to the franchisee's around me, I hear the same
thing. We're all losing money. Many of us are running out of cash to
"invest" in the stores and don't know how we'll pay the bills
this winter. Of course, they've decided to open ANOTHER store between two
stores that can't make a profit as it is (and yes, that is just a bit
over 3 miles from my store...)!!
When I went to AFM last year, the only people I saw that
gave the appearance of doing well financially were the creamery
employee's and the vendors.
Now, my definition of profit may differ from others. My
definition of profit is when there is more money in the bank this month
than there was last month (and I didnt have to put more capital in).
Are there people really making cash doing this? Is it a
family wage? If so, what's your sales volume? I'm talking about an annual
profit - not just what happens during the good or bad months.
My wife has decided that this is a very expensive hobby
and I need some evidence to encourage the both of us.
Sxxxxxxxxxxxt -> RE: Does Anyone actually make a
profit?? (9/22/2006 5:20:05 AM)
Are there people really making cash doing this?
(Sound of crickets)
Cxxxx.xxxxi -> RE: Does Anyone actually make a
profit?? (9/22/2006 6:30:44 AM)
I make a bit of money in the summer but
not enough to get through winter without putting money back in the
system. I am hoping to find a way to at least break-even until the bank
notes are paid. I think it will be smooth sailing in about 7 years when
my stores are paid off. But yes I had to go back in the corporate world
to support my family. Not fun, but I think the Creamery is starting to
really focus on the problems, hopefully same store sales will start going
up. My hopes are:
1.) Interest rates go down next year. (Will most likely
2.) Same store sales go up 10+%. (Hopefully this is
possible with our enhanced marketing efforts)
3.) Operating Cost go down through better vendor pricing
and hopefully a continued drop in Sweet Cream pricing.
4.) Labor goes down through initiatives like the
pre-made cakes, brownies, and perhaps other effeciencies which we can
Yes it is far fetched, put it could happen!
I am hoping that we all look back at this time in Cold
Stone history as the low point.
Jxxxxx.xxxxxx.xxxxxa -> RE: Does Anyone actually make a
profit?? (9/24/2006 5:59:14 PM)
Nxxxxx.xxxxxxs -> RE: Does Anyone actually make a
profit?? (9/25/2006 6:29:40 AM)
It is getting very scary. I am into my
15th month. For the past 3 that I have been able to track my SSS they are
down 30-35%. How can you put money away for the slow season when your
busy season has done a nose dive? I'm in the northeast and the top
selling store in my state and struggling. I have no additional funds to
infuse into the business and quite frankly am unwilling to go into
further debt since I'm already struggling with the debt I have. Granted
we had a very raining spring and no one can control that. Our biggest
reason is the debt to income ratio. Between my SBA loan and my equipment
loan there is very little left. My payroll is with in the acceptable %
amount as is my food cost which I am watching like a hawk. I have cut out
every extra expense from a payroll company - I now do it myself to the
water dispenser I had for the staff - they now get tap water. My floor
cleaning people are down to my three busiest nights Friday Saturday and
Sunday and by next week will most likely be cut all together. I have even
cut the number of trash pick ups and every few days climb into the
dumpster to stomp it all down so more will fit! What more can I do?
What is minimum wage in MN? Here in RI it's 7.25 with my
payroll for Sept almost double yours. As I lie awake at night worrying
about the next few months and what I can do better or different I try to
remind myself to take each day as it comes. My husband and I made the
decision last week to put our store on the transfer list. It was a hard
decision, but the best desicion. I just hope we can hang in there until a
buyer is found.
All the best to everyone who is having a hard time.
Mxxxxxx.xxxxxxh -> RE: Does Anyone actually make a
profit?? (9/25/2006 10:59:54 AM)
Do I make a profit? Depends what one
considers a profit. Does one consider 80 hour work weeks at about $4 an
hour profit at the end of the year? The concensus seems to be that VERY
few stores are making a profit, let alone the 10-20% that the Creamery
says we should be making. I have been at this now for nearly 3 years and
my sales continue to drop with NO relief in sight. Is it all Cold Stones
fault? NO, they can't do anything about the economy, but they set ALL of
us up for failure with the astronomical cost of buildouts. And now they
just keep pushing more expenses at us. In my case this new insurance will
cost me as much as $10,000 to $15,000 more per year. Any idea where I can
get that type of money from?
Good luck with selling your stores if you are up for
transfer. My guess is that at least 25% of all stores across the country
are up for sale. Unless you are willing to take a loss, which might be a
wise descion at this point, I would speculate that you are stuck with your
Txxx..xxxxxk -> RE: Does Anyone actually make a
profit?? (9/25/2006 12:38:20 PM)
SSS are down in Arizona, actually we were
up thoughout most of the year, but when the Creamery opened a new
location 2 miles from one of my existing stores, sales took a dive. I
agree if the overhead and cost of buildouts were less, it would be much
easier to make a profit. I know more stores mean more money for the
creamery, but I think an impact study should be completed prior to the
decision to open locations within a 2-4 mile radius from existing stores.
It would also help greatly if store square footage requirements could be
reduced to 1000-1100 sqf. I am sorry you are not doing well, it makes me
so sad. I have been with Cold Stone for over 10 years, don't give up. If
I can help you in anyway, please feel free to call me (xxx) xxx-xxxx.
Mxxxx.xxxxxxn -> RE: Does Anyone actually make a
profit?? (9/25/2006 7:33:34 PM)
Well, Jxxxk, I felt like I should post
something up here for you, so I held on the email I got with your
original posting. However, it looks like everybody has already said it.
I have been open for nearly a year and a half. Cold
Stone was my dream of owning my own business, but it's turned into a
nightmare. I have put my entire life savings into the store and haven't
made a penny. SSS are about 20% below what they were last year and I
honestly don't know if I will make it through the winter. Lots of people
have told me to get a LOC of some type, but I'm in agreement with Nancy
(earlier post). I have no security and see no reason to take on more
debt. Being that my house is cosigned on the SBA loan, bankruptcy and
losing my house are two very real possibilities. That's not exactly what
I signed up for. I also had to put my store up for transfer. I am willing
to take a loss to get out of it, but it doesn't look good.
My bit of advice to anybody that doesn't have a lease
set in stone yet - DO NOT assume the Creamery will get it right!!
Especially if you are in a brand new shopping center. INSIST on a
graduated lease, with the rate you pay directly tied to the vacancy rate
of the center. I didn't know any better and my terms are about 40% above
comparable rates in the area and my center is over 50% vacant.
Good luck everybody.
Txxxxxxx.xxxxy -> RE: Does Anyone actually make a
profit?? (9/26/2006 7:58:03 AM)
Lets face it. $ 300 - 400K revenue is
realistic # on higher side for any ice cream store. That is what more
than 70% stores doing in our system. $ 450K was fade and it is gone.
There are few stores making $ million is just because of locations. I
think I am set for failure and will not be able to survive. Way to much
in buil out cost. On top of that I have 1600 Sq. ft store to support
(rent is 22% of revenue thanks to AD and creamery team). Now there is
added $ 5000 on insurance. We act like having all store doing $ million
Jxxxxxx.xxxxxx.xxxxxa -> RE: Does Anyone actually make a
profit?? (9/26/2006 9:37:07 AM)
Hopefully the economy picks up
Jxxxxxx.xxxxx.xxxxt -> RE: Does Anyone actually make a
profit?? (9/26/2006 1:39:08 PM)
Jxxxxk, I feel for you, I guess I should
feel pretty lucky. I been in the system for over 5 years -- I have 3
stores with sales of $1.5 million. My net profit is 18.7% before debt
service. The key for us making money is labor control. We run a little
less than 23% payroll (taxes included). Rent runs 8-14% of sales
depending on the store. Our sales have grown every year and we're up 1.5%
this year, although our region is down 6%. We spend zero hard dollars on
advertising, instead we use the power of free ice cream to promote in our
communities. We have worked a lot with grade schools and youth
organizations to build our sales.
I have many of the same concerns about the future as
others. For the first time, I feel vunerable to competion, even yogurt
shops. I've seen many people come and go, but I know of numerous people
who are making money and are still here after five years. I know today, I
couldn't justify the buildout costs if we couldn't guarantee a 450k a
year store. We built our first store for $230k. We've had five solid
years in business. If sales had dropped double digits the second year in
business, we'd have been in big trouble.
If your not making money the questions you should be
1. Is the population growing around your store?
2. What your rent factor? If you got a big nut there,
it's going to be tought to overcome.
I know a lot of people need help in a big way to keep
going in this business. It's sad to see so many good people in trouble
Bottom line, is that the Creamery is going to have to
make a committment to a full scale marketing program to bring stores
back. That means committing big $$ to advertising including TV and
reaching out to people who don't know about us. Everything continues to
be in the box-- trying to squeeze every last penny out of our existing
customer base. This year, I've seen a lot of panic marketing and poor
execution. If you really want to move the needle on sales, let's talk
Cakes and Catering. To date, we have no Catering programs, and cakes seem
to have disappeared off the marketing radar. Businesses love Cold Stone and
there is good money in it for both the franchisee and the Creamery. I
think the move to reach out to kids and families is really positive --
although the summer kids discount promo was the wrong approach. The
Creamery needs a long-term marketing calender (which they've never had),
to build sales and turn things around. It will be interesting to see
what's ahead for 2007 at the AFM. Best wishes. Hang in there.
Mxxxxx.xxxxxxn -> RE: Does Anyone actually make a
profit?? (9/26/2006 1:54:21 PM)
The new insurance requirements should not
be costing you thousandsâ€¦.the requirements changed very minimally and
with the underwriting concessions from our national program, you should
save money. If your insurance costs went up, it is because you have a
coastal location (e.g., like Florida). If you send us your premiums broken
out by type of coverage, this point will be very clear. On average, the
new requirements are about $158/year in additional premiums, but the
national program saves over $1000/year.
Melanie Hansen, General Counsel
Cold Stone Creamery
Facsimile: (480) 362-4767
Jxxx.xxxx -> RE: Does Anyone actually make a
profit?? (9/27/2006 12:24:53 PM)
Thanks for the encouragement!! There are some stores out
there that are making it. I wonder if the profitable stores just don't
spend time on creamery talk.
I'd love to hear more about what they do and don't do...
I'm less concerned about rent factor and growing
population because they are not something I can control or influence at
this point. My population is growing but since they are opening another
store 3.3 miles away, that positive will be overwhelmed...
Sxxxxx.xxxxxxr -> RE: Does Anyone actually make a
profit?? (9/28/2006 5:10:58 PM)
Profit-what a joke!!!!!
Think about this- if there were any profit for our
franchisee comunity, why would there be so many stores for sale???
Even the multi unit owners are jumping ship and do not
tell me it is for personal reasons because not all of these sellers are
selling because their personal situation has changed.
If anyone out there was making money they would not
Personaly, I have been in this for 13 months now and I
am considered number 1 in percentage sale increase in my community. it is
the result of hard work and long hours, but it does not pay my mortgage
so it does not matter.
If I were to breack it down to hourly wage, I bough
myself a minimum wage job sorry to say.
Thus far all i hear is marketing initiatives that are
suppose to help increase sales. Can anyone name a marketing plan that
really worked in 2005 or YTD.
By the way, if you ask for help, the answer is LSM!!!!!!
I think there are some people that are wishing for the
best. First chance i get I am out.....
Pxxxxxx.xxxxxxk -> RE: Does Anyone actually make a
profit?? (9/29/2006 6:09:36 AM)
I was so sad to hear that you would be leaving the
franchise community. We'll be losing a bright, caring , vital team
member. I, too, have many sleepless nights worrying about how to pay
college tution for two children. I am committed to sticking with
Coldstone. I still believe that it is the best product of its kind out
there and I love working with my Crew. They are the greatest kids on the
face of the earth. I've spoken with many of the retailers and
restuaranteurs in my town and all have said that their sales are down
20-25%. With gas prices lowering and a mid-term election on the way my
hope is that consumer confidence will go up, as well as our sales. I may
be unrealistically optimistic but with another store opening in the
spring I'm going forward wioth hopes of sales I heard about when I signed
I understand your decision but am saddened by it. I wish
you all the best and want you to know how much I've enjoyed my contacts
with you, afterall we are O.J.E. buddies! Please stay in touch.
Dxxx.xxxx.xxxxxxn -> RE: Does Anyone actually make a
profit?? (10/1/2006 4:18:28 PM)
Jxxx.xxxxxxx.xxxxxn -> RE: Does Anyone actually make a
profit?? (10/2/2006 4:45:50 PM)
Yes! I am going to tread very lightly. I
agree with everyone. Those who make money, like myself, and those who
don't. How? Well I have talked with many of the top operators in the
South. College campus locations that do over 600K gross. Big city theater
locations that do 525K gross. Others that are on the beach and do over
55K month all Summer. The sentiment is pretty much all the same. Yes we
get a return and some cash flow but at the end of the year when you look
back, 15% is not enough for the amount of work that this takes.
Unfortunately it has gotten more and more complicated. Both to operate
CSC and to run a business in general. Perhaps with some of the
operational changes (pre-made cakes) things will get easier and more
profitable. In the end I think it is just to expensive to operate a
store. If you don't get a location that does north of 500K yearly and run
it so tight that it makes you crazy, you will just have bought yourself a
job. Two years ago it was a different story. You would never have seen
this post. Since then yearly revenue has dropped. For some of us as much
as 50K a year. At the same time COG has gone up and rent, insurance,
utilities, and labor. If you haven't already don't quit your day job. The
extra cash flow will make it easier for you to adjust and see if you can
completly transition to CSC. The Creamery, and myself included, believe
that you need to be hands on in your stores daily to be successful. So
this is the daily challenge. How to be involved full time and have a top
dollar store, and at the same time provide a source of consistent
reliable income. So far I have held off from reentering the rat race. I
fear however my days are numbered. Also, as a side note, if you do quit
your day job it is highly unlikely that you will be able to provide
health insurance for your family with the income from your business. This
may be one of the sadest realities of small business today. If you had a
million dollars and opened 3-4 CSC it might make some sense, then again
who knows. Remember that everyone's situation, motivation, and financial
situation is different. You must do your own soul searching and decide
what is right and acceptable for you and your family. No two of us are
the same in that regard. What we all do agree on is that we want to see
some money for our time and investment. How much is going to be acceptable
will vary for all of us. But, again cautiously, as I am sure others out
there do very well, I don't think Cold Stone is the vehicle if you want
to make a load of money or retire well off. Make a living without
answering to anyone else, perhaps if done right and worked hard. In the
end I wouldn't trade any of the last three years. Will I say this in
three years from now? Ask me then.[;)]
Txxxxxxx.xxxxy -> RE: Does Anyone actually make a
profit?? (10/2/2006 7:00:47 PM)
I am from N. Texas market and I would
share this market's performance.
out of 26 stores, 20 are makeing loss, 4 closed or
walked out and atleast another 10 - 12 stores in financial perils.
Mxxxxxxx.xxxxxxn -> RE: Does Anyone actually make a
profit?? (10/9/2006 9:36:52 AM)
You say several in your market, that 4 have either closed
or walked out. What exactly do you mean by "walked out"??
Axxxxxxxxxxxxxxs -> RE: Does Anyone actually make a
profit?? (10/22/2006 8:48:03 AM)
In my opinion, a franchise relationship
should be a win-win relationship between franchisee and franchisor
These are my questions:
1 - Are net profits supposed to equal royalties?
2 - When we discount $3 - $5 on a cake sale who should
subsidize that? Franchisee's net profits or royalties or both? I agree
it's good for lost leaders but who should pay for it?
3 - Does increasing sales volume by discounting
increase/decrease net profit or royalties or both? should there be a
limit to how much discounting we can afford?
4 - Is there any real certified comparitive analyses of
the new programs to net profit ? i.e. 5=10 cake sales, fruitcake freedom,
drinks, pepsi, kid's summer pricing, birthday club, sygma?
5- Are there any goals, plans and timelines to develop
new ways to optimize net profitablity. Something like the plans in to
increase gross sales
What can we do to make this a win - win for everyone