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Cold Stone looks to lunch, candy counters to fight recession

Cold Stone Creamery's owner wants franchisees to fight the recession by adding lunch, coffee or candy counters

Cold Stone Creamery chief executive Dan Beem cancelled his yearly franchisees' meeting in Las Vegas, put his four-person management team on a bus, and has spent the past few weeks driving across the country trying to sell store owners on a plan to meet the expected decline in fancy eat-out dessert spending, as more Americans lose their jobs.

Beem passed through Philadelphia yesterday on his way to one such meeting near Atlantic City. He told me he'd been promoted last year to run the Cold Stone division of Arizona-based Kahala Corp. (they also owns Blimpie, Taco Town and Samurai Sam) "in a robust economy" with a mandate to move average yearly unit sales at 1,400 stores to 500,000, from 360,000.

But "now, it's a lot slower economy." The store count's down to 1,350. Sales are short of target. What to do?

"We control some of the best real estate coast to coast," including prominent corners in Berwyn, Ardmore and other upscale neighborhoods. "We only really utilize about 50 hours a week, weekends and nighttime. We're busier in summer than winter." If he can't move more ice cream, Beem wants to find other ways to get store use up.

In meetings like the Galloway gathering, Beem is asking franchisees to consider adding one of two other stores -- Colorado-based Rocky Mountain Chocolate Factory, and the Canada-based Tim Horton's chain, which Beem calls "Dunkin' Donuts amalgamated with Starbuck's, plus a good lunch component." Also, he wants to add products blended with Jell-O, Country Time Lemonade, coffee, and other partners. Kind of like the way Rita's Water Ice (which Beem says he admired) put pretzels, soft-serve, and mixed-serve ices on its menu.

The tough thing about running a franchise company is that you have two sets of customers -- store owners as well as end users. "They want to make sure the leadership team cares about their success," Beem said. "They want to know we have a plan."