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Ones to Watch | By Sabrina Davis

The Cereal Bowl

When Kenneth and Josh Rader were kids, their dad always looked for the newest flavor on the cereal aisle. “He’s always been a big kid, and cereal has always been big in our family,” Kenneth says. So, maybe the Rader parents should have been prepared when their twin sons decided to use their six years of business education, undergraduate and graduate, to sell cereal.

“It really started as a joke, sort of,” says Kenneth Rader, president and CEO of Miami-based The Cereal Bowl. “I was an undergrad at Syracuse University, and hung out at Starbucks a lot. I said to a friend one day, ‘Wouldn’t it be awesome if this were a cereal Starbucks.’ We laughed about it and I e-mailed my brother at the University of Miami. He thought it was a great idea.”

That was about seven years ago, and quickly the joke grew into a business plan that won awards in college competitions. Over the following years the brothers and their third partner, childhood friend Michael Glassman, planned the concept, acquired financing, and prepared to open their first store, all while finishing graduate school. The Cereal Bowl opened in Miami in February 2006 in a strategic spot that draws college students, business people, and families.

Customers can create their own cereal combinations choosing among 35 cereals and 50 toppings, or choose a signature Cereal Bowl blend like Give Me S’more (Golden Grahams, Coco Puffs, Graham Bites, Marshmallows, and Chocolate Milk Crystals) or Ruby Nut’s About You (Honey Nut Cheerios, Grape Nuts, Walnuts, Almonds, Pecans, and Cinnamon).

Hot cereal combinations made with oatmeal range from nutritious to ultra indulgent. The Cereal Bowl also offers yogurt parfaits, granola bars, Rice Krispies Treats, and its version of a smoothie, the Oatie, made with sorbet and oatmeal.

“We’ve tried to appeal to a broad range of people, not just college students craving enormous amounts of sugar before class,” Rader says. He delights in knowing the second most popular menu item is the Bananaberry Bomb Oatie.

“We want to appeal to everyone, but we’ve worked to stick to our identity as a cereal store. So, when we decided to offer smoothies, we didn’t want to just have smoothies, or we’d be competing with Jamba Juice and the like. We wanted to create something unique to The Cereal Bowl. Adding oatmeal just made sense and, they are extremely healthy. They are under 300 calories and have just 24 grams of sugar,” Rader says. “With our parfaits made with yogurt, nutritious cereals, and granola bars, many first-time customers are surprised that we are almost a health-food establishment.”

Many of the morning business customers choose a healthy breakfast to go—a smoothie and a granola bar, or a cereal combination packaged in a bowl with a lid and a half pint of milk (whole, 2%, skim, or soy). However, afternoon and evening customers tend to prefer sweet treats, of which there are plenty.

The dessert line includes parfaits, shakes, indulgent Oaties, the popular Freeze N’ Flakes cereal, and topping-infused frozen yogurt treats.

Other concoctions might be on the horizon, but Rader says his team has learned to pace the introduction of new products to allow consumers time to absorb the ideas and try them. That’s just one lesson learned over the past two years while The Cereal Bowl team has focused on learning the restaurant business, perfecting their first concept, preparing for future growth, and warding off a few legal challenges.

Cereality opened in late 2003 and had seven locations when Kahala-Cold Stone acquired it this year. When Cereality challenged that The Cereal Bowl had copied its business methods, Rader’s team was able to show its business plan predated Cereality’s opening. The Cereal Bowl team has been careful to differentiate and protect its concept legally with patents.

The Cereal Bowl
CEO: Kenneth Rader
HQ: Miami
Year started: 2006
Annual Sales: Not disclosed
Total units: 1
Franchise units: 0

With important lessons learned, The Cereal Bowl has redesigned its Miami prototype, introduced a new Web site, and prepared the concept for franchise growth.

Rader expects solid profits, along with ease of operation—there is no cooking, just warming hot cereal on a burner—to help sell franchises. Cereal combos range in price from $2.89 to $3.89, and most customers spend around $4. There are roughly 350 customers on busy weekdays (6 a.m. to 10 p.m.) and about 100 to 150 more on weekend days (8 a.m. to midnight).

The Cereal Bowl’s first franchise is scheduled to open within six to eight weeks. Given the competitive cereal environment, Rader doesn’t want to share details other than it will be in a mid-Atlantic state. Other 2008 plans include a prototype company-owned kiosk location at the University of South Florida and two other franchise stores. “We’d like to double our 2008 numbers in 2009,” Rader says. And from there, he thinks the concept could grow to 200 stores, although not aggressively.