National franchise heats up Milwaukee’s ice cream market

National franchise heats up Milwaukee’s ice cream market

By Mark Kass, for SBT

The Milwaukee ice cream market, already crowded with shops dishing out their favorite flavors, is getting a new national competitor that hopes to grab a large scoop of local business.
Cold Stone Creamery, based in Scottsdale, Ariz., recently opened its first two stores in the Milwaukee area, at the Ruby Isle Shopping Center in Brookfield and the RiverPointe Shopping Center in Fox Point.
Other new Cold Stone Creamery stores are slated to open in the next several weeks at Mayfair Mall in Wauwatosa and as part of new shopping center near Highway 83 and Interstate 94 in the City of Delafield.
Additional stores are planned for Kenosha, Janesville, Appleton and Madison. In all, the company wants to have 30 stores in the Dairy State within the next five years.
The company is ready to take on Kopp’s Frozen Custard and Leon’s, the two most well known ice cream retailers in the Milwaukee ice cream market.
"We want to have a major impact on Milwaukee and Wisconsin," said Dale Johnson, a real estate representative for the company. "So far, our numbers are good in the Milwaukee area, and as people get to know our name and try our product, we believe our numbers are only going to get better."
Cold Stone Creamery, an independently owned franchise system, was developed in 1988 to offer combinations of customized ice cream creations. Matt and Lisa Gangl operate the franchise at RiverPointe, and Jay Miller operates the franchise in Brookfield.
With more than 390 stores operating in 36 states and the Caribbean, Cold Stone Creamery plans to establish 1,000 stores by 2004. Its real estate team has already fully executed 169 leases in 2003, with another 70 leases currently in various stages of negotiation.
The company’s goal is to be "the second best thing in Milwaukee, next to beer," Cold Stone Creamery spokesman Kevin Donnellan said.
"We have a very unique product that attracts people who really like ice cream," he said. "We are a lot like a micro-brewery and aim for a more sophisticated palate. It is much different than the hard pack ice cream you find at other stores."
The uniqueness of the product is that the ice cream is homemade and mixed up right in the store on a frozen granite stone. Donnellan said the process allows Cold Stone Creamery to offer flavors that other ice cream retailers can’t.
The company’s stores average 1,600 square feet and have as many as 30 employees, many of them high school students looking for extra income. The stores average about $358,000 in annual sales.
"We do very well in high traffic areas, such as malls, or in residential areas where we are more of a destination retailer," he said.
At the recent International Council of Shopping Centers Convention in Las Vegas, the company’s booth, where free samples were being handed out, was one of the busiest in the convention hall that was filled with some of its competitors. Employees sang popular songs as they mixed flavors for customers.
"We try to have fun in our stores and engage our customers," Donnellan said.
Donnellan said Cold Stone Creamery is one of the fastest-growing franchises in the nation. In fact, the company’s prospective franchise applications were up 257 so far in 2003, with 1,621 applications received in April 2003 alone.
"There is a tremendous amount of interest right now in what we have to offer," he said.
The only place that prepares a similar ice cream in the Milwaukee area is Ferch’s Malt Shoppe in downtown Greendale, where workers have been preparing combinations of ice cream on a granite stone since 1999, said Betty Ferchoff, the owner of the store.
"It has been very popular because people can make up any flavor they want," said Ferchoff, who started the store in 1987. "We are not fast food. We interact with the customer and put on a show for them. Coming to our store is a unique experience."
The operator of the popular Kopp’s Frozen Custard restaurants here said there already are enough ice cream outlets in the Milwaukee area, with the growing Culver’s Restaurant chain and smaller ice cream shops that have opened throughout the area.
"I don’t know how much more room there is in this market," said Bud Reinhart, general manager of the Kopp’s in Glendale and Greenfield. "It is getting to be a tougher market. There is no doubt that people in Milwaukee like their ice cream and custard, but there is always a limit."
Ferchoff said she is not worried about the increasing competition from Cold Stone Creamery. "I am not very impressed by them," she said. "I tried their product when I was out West, and it wasn’t that good, and it was very pricey for the amount they gave you."
Plus, her store has more offerings than just ice cream, with a full menu, a soda jerk and a 1950s look. The same goes for Kopp’s, which offers hamburgers and other food at its three Milwaukee-area restaurants.
"There is no place like us in Milwaukee," Ferchoff said. "We’ve had national competitors come in here before like TCBY (Yogurt), and what happened to them? How many of their stores are left here nowadays?"
Added Reinhart, "These national people go in and out of the market all of the time. I really don’t think they are going to have too much of an impact because people in Milwaukee like to stay with what they are used to."
Ferchoff and Reinhart predicted that Cold Stone Creamery would struggle during the cold Wisconsin winters. Ferchoff said her ice cream sales drop by as much as 50% during the winter months.
"It always surprises me how someone can stand outside when it is 10 degrees below zero, licking an ice cream cone," Reinhart said. "But I love them because they are helping my business."
But Donnellan said the company has stores in many cold weather locations, including Eagle River; Alaska; Maple Grove, Minn.; and Bismarck, N.D.
"Ice cream is really built into our social conscience, and it is, for the most part, recession proof and weather proof," he said. "We believe that we can be successful in any market because people will like our product."

June 13, 2003 Small Business Times, Milwaukee

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