Ice Cream Battle Getting Hotter
The Cold War is back. Only this time it’s being fought in Southern California’s ice cream shops.
Baskin-Robbins, the nation’s biggest ice cream chain, is unveiling an upscale design today as part of a five-year expansion designed to fend off two hard-charging competitors, Carvel and Cold Stone Creamery.
The future of Baskin-Robbins, best known for its 31 flavors, can be seen at its Old Road store in Santa Clarita, which features softer hues and a crescent-shaped sundae bar where patrons can watch their ice cream creations being built.
“The idea is that you don’t order a sundae and then the person making it turns his back on you,” said Ken Kimmel, brand manager for the 5,100-store chain, which for now is owned by French liquor company Pernod Ricard.
To cater to kids, the Santa Clarita store lowered the ice cream cases to make it easier for children to look down into the bins. Baskin-Robbins hopes to have the new look in all of its 2,600 U.S. stores within three years and open 600 stores over the next five years, Kimmel said.
The strategy is designed to regain market share lost to Scottsdale, Ariz.-based Cold Stone Creamery, a privately held 17-year-old company that has 1,200 stores in the U.S. and plans to double that amount.
Cold Stone stores -- where chocolate pieces, nuts, candy and other toppings chosen by customers are mixed into ice cream on granite slab counters in an elaborate show -- are in such demand that the company is no longer taking applications for franchises in Los Angeles County, where it has 60 stores and 41 in development, said Greg Ferrell, who owns the franchising rights to Cold Stone in the Southland and Nevada.
Cold Stone is setting the pace for the industry, said restaurant consultant Malcolm M. Knapp, who did consulting work for the company that owned Baskin-Robbins in the late 1990s.
“You can go to the supermarket and get great ice cream these days,” Knapp said. “Going out for ice cream with the kids or with friends is about having an experience, maybe a little theater ... and that sells.”
Cold Stone found a popular niche by preparing its menu offerings in view of the customers. A Cold Stone ice cream cone costs $3 to $5, but toppings can pad the bill considerably.
“We’ve had kids come in and start ordering every extra we can think of and it can get to $10,” Ferrell said. The average Cold Stone shop in his region does about $400,000 a year in sales, he said.
Like Baskin-Robbins, Carvel Corp., another vintage ice cream chain, is also mounting a comeback.
Carvel, now owned by Roark Capital Group in Atlanta, was nearly given up for dead in the late 1990s.
Its previous owner put Carvel’s most famous product -- ice cream cakes that were the centerpieces of many New York birthday parties -- into supermarkets. But Carvel’s franchisees were left mostly to their own devices.
“In five years, the company introduced no new products,” said Geoff Hill, current head of franchising at Atlanta-based Carvel. “You can’t do that in the food business.”
When Roark bought the company in 2001 for $30 million, there were only 350 Carvel franchises, down from a high of about 950.
Carvel now has 545 shops, including a store that was opened Thursday in Granada Hills by Emad Fawzi, 40, an Egyptian emigre. “I was interested in Cold Stone, but I didn’t know [whether] a store would become available for me,” he said.
Until Roark bought the company, there were no Carvel stores outside the East Coast. Now there are stores in Texas and California, including nine in the Los Angeles area. They are targeted in part at former New Yorkers who grew up with the brand.
“I’ve been waiting for this since I left Long Island nine years ago,” said Jennifer Murphy, 38, who brought her two kids and a young friend to the opening of the Granada Hills store.
Carvel stores have also been redesigned after a period in which its parlors consisted of little more than a counter for ice cream and a freezer for cakes. Now there are tables, graphics on the walls that tell colorful stories about founder Tom Carvel and quilted stainless steel for a retro look.
“What we all learned from Starbucks is that it’s not the coffee, it’s the experience,” Hill said.
For Baskin-Robbins, it has been a chaotic few years. Founded in Glendale about 60 years ago, the company was acquired in April along with its parent, British food and beverage giant Allied Domecq, by Pernod. For the fiscal year that ended in August 2004, Baskin-Robbins posted worldwide sales of $1 billion, with about half from the U.S.
Baskin-Robbins is again up for sale because Pernod is jettisoning the non-beverage holdings that came with Allied, but management is going ahead with the new store design and an aggressive franchising push, Kimmel said.
With all three companies competing for the same consumers, there’s bound to be a shakeout period, analyst Knapp said.
But he thinks there is room for all three. As long as there are kids, Knapp said, “there will be ice cream shops.”
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Scooping the competition
Cold Stone Creamery
* Founded: 1988 in Tempe, Ariz.
* Stores: 1,200
* 2004 sales: $285 million
* Sample indulgence: Strawberry Banana Rendezvous (strawberry ice cream with graham cracker pie crust, white chocolate chips, strawberries and banana). Price: $5.99 to $6.99.
Baskin-Robbins
* Founded: 1946 in Glendale
* Stores: 5,100
* 2004 sales: $535 million in U.S.; $501 million elsewhere
* Sample indulgence: Razza Dazza Chip (chocolate ice cream with chewy brownie pieces, mini chocolate chips and a raspberry ribbon). Double scoop: $2.99.
Sources: Cold Stone Creamery, Baskin-Robbins, Hoover’s
Los Angeles Times
