Franchise Deep Dive: Cold Stone Creamery Franchise Costs, Fees, Profit and Data

Company history

Cold Stone Creamery® is a 35-year-old franchise in the rapidly growing ice cream segment, competing against La Diperie Ice Cream & Desserts, Dippin' Dots and Baskin-Robbins. Cold Stone is known for making fresh ice cream daily and on-site, with customers encouraged to add additional mix-ins to the ice cream and make their own unique creations.

In 1988, Donald and Susan Sutherland embarked on an exciting venture in Tempe, Arizona, giving birth to Cold Stone Creamery. Being avid ice cream enthusiasts, the Sutherlands sought to create an ice cream offering that struck a balance between being neither too hard nor too soft. Steve Herrell's unique method of permitting customers to select their ice cream flavors and mix-ins served as a source of inspiration for the Sutherlands, and they integrated this concept into Cold Stone.

The initial establishment was met with great success, prompting the Sutherlands to launch more Cold Stone Creameries throughout the Phoenix Metropolitan area. The concept of franchising the Cold Stone Creamery was introduced by the Sutherlands in 1995, leading to its expansion not only within the U.S., but also to various international locations.

As the company was on a progressive expansion spree, Doug Ducey, who would later become the Governor of Arizona, stepped in as the president of Cold Stone Creamery. His contribution played a significant role in accelerating the company's nationwide growth. In 2000, Ducey ascended to the role of CEO, a position he held until 2007. His final year also marked a new phase for Cold Stone Creamery as it was bought by Kahala Corp, leading to the establishment of Kahala-Cold Stone.

In an investigation by The Wall Street Journal in June 2008, it was revealed that approximately 16–20% of Cold Stone Creamery franchises had either shuttered or been listed for sale by their owners. Over the years, there have been allegations by some independent franchise owners suggesting that Cold Stone's business practices may have placed them at a competitive disadvantage due to close proximity, mandating costly renovations, and inflating potential revenue and income projections. However, other franchisees dispute these claims, stating that they've experienced growth despite the uncertainties in the financial landscape and the rising costs of fuel and energy.

As of today, the reach of Cold Stone Creamery extends to over 1,000 locations — primarily franchise-owned — across 20 countries around the globe.

Business models

The Cold Stone Creamery franchisees can operate three different business models: a traditional model, a nontraditional model or a kiosk.

You don’t need experience in the restaurant industry or the service industry to open a Cold Stone Creamery. You just need a passion for ice cream; enthusiasm for the brand’s product; and the desire to be a positive, meaningful force in your community. The business model and training and support make a Cold Stone Creamery franchise easy to run and easy to scale.

The average gross sales amounts contained in the table below pertain to the historic performance of all Cold Stone Creamery franchised stores in the United States. They are also existing outlets that did not open for the first time during the past fiscal year. The time period measured was December 1, 2020 through November 30, 2021.

• Number of Stores: 864

• Average Gross Sales: $593,868

• Number of Stores That Met or Exceeded Average Gross Sales: 392

• Percentage of Stores That Met or Exceeded Average Gross Sales: 45%

• Median Gross Sales: $570,001

• Number of Stores That Met or Exceeded Median Gross Sales: 432

• Percentage of Stores That Met or Exceeded Median Gross Sales: 50%

Top 20% of Franchised Outlets

• Number of Stores: 173

• Average Gross Sales: $939,264

• Number of Stores That Met or Exceeded Average Gross Sales: 55

• Percentage of Stores That Met or Exceeded Average Gross Sales: 32%

• Median Gross Sales: $884,736

• Number of Stores That Met or Exceeded Median Gross Sales: 87

Bottom 20% of Franchised Outlets

• Average Gross Sales: $321,509

• Number of Stores That Met or Exceeded Average Gross Sales: 99

• Percentage of Stores That Met or Exceeded Average Gross Sales: 57%

• Median Gross Sales: $339,821

Franchise costs

Cold Stone Creamery franchise costs, based on Item 7 of the company’s 2022 FDD:

• Initial Franchise Fee: $12,000 to $27,000

• Rent/Security Deposit for 3 Months: $9,750 to $19,500

• Travel and Living Expenses (Two People) While Training, Not Including Salaries, if Any, for You and Your Employees: $3,000 to $7,500

• Lease Review Fee: $0 to $2,500

• Architectural Fees: $7,000 to $20,000

• Leasehold Improvements: $97,500 to $250,000

• Exterior Signage: $9,700 to $15,000

• Equipment: $123,000 to $185,375

• PCI Compliance Costs: $150 to $1,300

• Opening Inventory: $8,000

• Employee Uniforms: $500 to $800

• Grand Opening Marketing Advertising: $10,000

• Insurance Premiums: $500 to $2,500

• Permits and Licenses: $2,000 to $3,000

• Telephone and Utility Deposits and Hookups: $250 to $1,000

• Computer Training and Food Safety Certification Course: $100 to $250

• Miscellaneous: $3,925

• Depository Account: $3,000

• Additional Funds — Three-Month Initial Period: $20,000

• Total Estimated Cold Stone Creamery Franchise Costs: $310,375 to $580,650

The initial franchise fee is $12,000 to $27,000.

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