Cold Stone Creamery's entertainment helps build global business

Cold Stone Creamery has taken its custom scoops global. Just in the past few years, the company has expanded into more than 20 countries, with plans to open more franchise stores in Vietnam, El Salavador, Costa Rica, Panama and Guatemala.

Cold Stone, owned by Scottsdale-based Kahala Brands, says the combination of handmade confections and entertainment is helping it capture the interest of franchisees and customers in far-flung markets.

The company, which has 1,000 corporate and franchised stores in the U.S., began its international expansion in 2005 in Tokyo. Japan now has 38 stores.

This week, Cold Stone Creamery hosted its annual global conference at Talking Stick Resort on the Salt River Reservation. The event celebrated the ice-cream store's presence in 28 countries, including Nigeria, Egypt, Singapore, Pakistan and Turkey.

At the event, Kahala also signed on a Vietnam company to be a master franchise in the Southeast Asian country. MCRC Holdings Corp. plans to open 30 stores over the next five years, starting in the metropolitan area of Ho Chi Minh City.

"We first ventured into Tokyo, Japan, and in a short nine years we have been able to expand the brand around the world," said Eddy Jimenez, senior vice president of international operations and development for the company. "We're lucky in the sense that everybody loves ice cream."

The company's accelerated global growth comes after more than a year of new leadership at Kahala Brands under Michael Serruya, chairman and chief executive officer.

The Serruya family of Toronto in 2013 purchased a controlling stake in Kahala, which also owns submarine-sandwich chain Blimpie, Taco Time, Samurai Sam's Teriyaki Grill, Great Steak, America's Taco Shop and other quick-serve restaurants.

The company's 15 brands operate more than 2,700 locations globally. The company has a systemwide annual revenue of roughly $1billion.

"My brothers and I have been doing business for more than 25 years, and what attracted us to Kahala and Cold Stone is its international footprint and ability to attract top-of-the-class international partners," Serruya said. "That's been the key success."

Another success for the company is creating flavors that are relevant to the consumers in various global markets. For example, in Japan, Cold Stone has added frozen yogurt and more fresh-fruit toppings to the menu.

Cold Stone Creamery was founded in Tempe in 1988 and merged with Kahala in 2007. The company is updating its 1,000 U.S. stores with a clean, bright look that centers around its entertaining servers behind the counter, Serruya said.

"It's all about making a customer happy and creating an environment that's inviting to them," he said. "Cold Stone is so much more than a product. Our product is superior to anything else that's out there. And when you add a layer of a fun environment and playfulness, it's just a place that makes you want to go back."

Food in an entertaining way

Fun and entertainment are part of the emerging culture at Cold Stone. Employees learn the basics of preparing ice cream and are coached on offering personalized service. Each store can put its own spin on the companywide entertainment act with juggling ice cream, singing and dancing.

To ensure that type of service, Cold Stone hosts a global employee competition for the most entertaining team of ice-cream servers. This year's winner is a team from Brazil.

"They never experience anything like this," Serruya says of the company's international customers. "They may be used to your usual dipped chocolate ice cream. You walk in, you get your scoop, you walk out. When you enter a Cold Stone store, it's so inviting. One of the first things they (servers) do is they ask for your name, and they bring you into the whole production process."

The family had watched the Kahala-Cold Stone brands grow for years before the acquisition. Serruya said the goal is to expand all of Kahala's brands, with a big focus on Cold Stone as the largest. In Arizona, Kahala employs roughly 550 people.

Cold Stone began at a single Tempe location and grew into a public company. Doug Ducey, now running for Arizona governor, was the CEO at the time of the Kahala merger.

Kahala started in the 1980s, around the same time that brothers Michael and Aaron Serruya started a frozen-yogurt chain before expanding into ice cream and other areas.

When Cold Stone merged with Kahala, the entity, Kahala-Cold Stone, counted more than $1.1billion in annual sales, 3,000 franchisees and 4,600 outlets.

In 2015, Kahala plans to open about 100 Cold Stone Creamery stores in various countries.

Many of the master franchisees overseas are top retail companies, Jimenez said.

"Our most important decision is to select a world-class partner and in markets outside of the U.S.," Jimenez said.

"We really are looking for restaurant operators that are well-established, reputable companies in their markets to help represent the Cold Stone Creamery brand."

Chief Executive Officer Phan Duc Binh of MCRC Holdings Corp. in Vietnam, the company's latest franchisee, is looking forward to rapid expansion.

"It's about the quality of the product and the offerings. The company offers a unique way of serving people," Binh said. "I am also impressed with the team's high-level energy and very unique culture. That is the primary motivation why I came to Cold Stone."

Republic reporter Russ Wiles contributed to this article.

Kahala Brands

CEO: Micheal Serruya.

Headquarters: Scottsdale.

Employees at headquarters: 550.

Company brands: 15.

Cold Stone Creamery stores: 1,400 worldwide; 1,000 in U.S.

Brand stores: 3,200 locations worldwide, including Cold Stone Creamery.