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The Scoop on Kahala Cold Stone
In May, two mid-level restaurant players merged and became one big company with $1.1 billion in annual sales. What does the future hold for Cold Stone, Blimpie, and the 3,000 Kahala Cold Stone franchisees?
Kahala and Cold Stone Creamery merged to form Kahala Cold Stone.

Times have been sweet for Cold Stone Creamery. The premium ice cream company claims to be the fastest-growing brand from 2003 to 2005 in the quick-service business and started 2007 with a relatively happy franchisee community, 1,400 stores, and $500 million in sales from the year before.

Then in May, Cold Stone took the next step by merging with Kahala, creating a $1.1-billion company. In the same month, Cold Stone opened its first stores in China, announced a test of a co-branding partnership with The Original SoupMan, and launched its first national integrated advertising campaign—including a television spot that reminded many viewers of Paris Hilton’s recent troubles and received “good timing” praise from ad execs.

So what’s next for the burgeoning brand?

Doug Ducey, Cold Stone’s chief executive officer, says an initial public offering is a “realistic option…. that we’ll explore in the future. What’s important today is putting these teams together, creating the [Kahala Cold Stone] culture.”

That’s a culture industry analysts say is beneficial for both parties. “It provides greater cross selling opps. through co-branding,” says Darren Tristano, vice president for Technomic. “Kahala also provides a good franchising framework.”

If you look at the portfolio, you could basically build an entire food court with all the brands in Kahala Cold Stone.”

The 13 brands under Kahala Cold Stone include Blimpie, The Great Steak & Potato Co., Ranch 1, and Taco Time. With Cold Stone as the flagship brand, the new holding company now has 4,600 stores, 3,000 franchisees, and is in 15 countries.

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