The National Restaurant Association (NRA) predicted that sales at quick-service restaurants would rise to $134.2 billion in 2005. Sales exceeded expectations, ending the year at $136.5 billion. According to the NRA, traffic at quick-serve restaurants was up 2 percent in 2005, and the segment added jobs at a rate of 3.3 percent. The NRA forecasts quick-serve sales of $142.4 billion in 2006, a gain of more than 5 percent.
Who profited most from these perky industry figures? The unofficial QSR 50 2005 MVP has an envious record that helps us pinpoint many of the year’s key trends. Moving up an astonishing seven slots, from its major-league debut at number 50 last year to its current toehold at number 43, is Cold Stone Creamery.
Cold Stone is a privately held franchise operation based in Scottsdale, Arizona. In 2005 the company added about 330 stores, for a total of 1,212. The company has already sold nearly 1,000 more franchises, about 300 of which are expected to open in 2006. Systemwide sales totaled $408 million in 2005, up 44 percent from the previous year, with $405,000 in annualized average unit volume (AUV).
That’s Cold Stone’s scorecard. But why have customers kicked it up seven notches—more than any other player in the Top 50—and what can other quick-serves learn from this grand slam?
The first trend at work here is a consumer demand for little luxuries—everyday indulgences that reflect and shore up Americans’ collective belief that browlifts and Botox are not just for trophy wives anymore. It’s no accident that Cold Stone represents the treat segment. Rewarding oneself with a plum purchase is a way for middle-class Americans to taste a bit of opulence—to take a 10-minute vacation, as the company’s CEO Doug Ducey puts it.
While Cold Stone polishes its image as the L’Oreal of the snack segment—the “Because I’m worth it” way to satisfy a sweet tooth—rival Baskin-Robbins struggles not to become as passé as a Toni home perm. The company has fallen three notches as it searches for an alternative to what brand manager Ken Kimmel calls the “theater” of competitors such as Cold Stone.
Like other mature brands, Baskin-Robbins is subjecting aging stores to extreme makeovers and introducing edgier new products, such as its Bold Breezes iced beverages. Company execs hope that in-your-face flavor profiles and a more expressive spaces interior design will up the brand’s hipness quotient and attract the Myspace generation. Perhaps because it wants to appeal to customers whose only income is an allowance, the company is bucking the extravagance trend by keeping its price point, like that of its new line of frozen custards, squarely within the value range.