Cold Stone Creamery Franchise Costs $360K (+ 2023 Profits)

Are you considering opening a new Cold Stone Creamery franchise? With 1,300 restaurant, no wonder it’s one of the most popular ice cream franchises in the US.

But before you go ahead and invest in a new franchise ice cream franchise like Cold Stone, you may want to know how profitable the business really is. Indeed, even though the startup costs are relatively low ($360,000), you will have to make enough profits to recoup your investment.

In this article we’ll look at how much you can realistically make with a Cold Stone Creamery shop, how much it costs, and whether you should invest as a franchisee. Let’s find out!

Key stats

Franchise fee	$27,000
Royalty fee	6.00%
Marketing fee	3.00%
Investment (mid-point)	$373,000
Average sales	$592,000
Sales to investment ratio	5.0x
Payback period	[franchise_value_investment_payback]
Minimum net worth	$250,000
Minimum liquid capital	$100,000

What is Cold Stone Creamery?

Cold Stone Creamery is a leading American chain of ice cream parlors.

Headquartered in Scottsdale, Arizona, the chain was founded in 1988 by Donald and Susan Sutherland.

The brand serves premium ice cream made-to-order at the restaurant. In addition, it offers ice cream-related products such as ice cream cakes, pies, cookie sandwiches, smoothies, shakes, and iced or blended coffee drinks.

Cold Stone Creamery began its franchising journey in 1994. It is operated and franchised by Kahala Brands.

Currently, the brand has more than 1,300 locations in the US and 20 other countries.

Cold Stone Creamery franchises pros and cons

Pros

• Franchise training: The franchisor offers the franchisees a comprehensive 120 hours of initial training to get a good overview of the business and industry. The training covers store operations, customer service insights, financial management, and products. The training also helps franchisees master the store opening steps, food handling, sanitation, back-office practices, equipment handling, and inventory management.
• Solid operational support: The brand offers its franchisees extensive support ranging from site selection to restaurant design and construction. Franchisees are advised on the best grand opening plans by a highly experienced and qualified team of experts, allowing them to incur fewer costs and begin on a profitable note. 
• Strong marketing support: Cold Stone Creamery has an incredible in-house marketing team to help franchisees with their regional marketing plans, social media, digital advertising, and promotional campaigns. Franchisees can build awareness of their local stores and publicize their products by leveraging the strong brand identity and experienced marketing strategy of the parent company to improve revenues and profit margins.
• Growth opportunity: The brand has grown for the last 35 years with multiple locations in and outside the US. Their development initiative seeks to grow the brand domestically and internationally, giving interested franchisees great opportunities to enter new markets.
• Multi-unit stores: The brand offers franchisees locations of every size, from multi-story locations to smaller kiosks. It gives them flexibility in operating within their budget and expanding with time.
• Menu variety: The brand boasts a diverse and quality menu that appeals to customers of all types. For instance, the brand has 10–12 ice cream varieties and keeps working on new flavors and trends. It also offers seasonal favorites as well as tailored flavors for certain specific regions, such as Irish cream or cinnamon buns.

Cons

• No exclusive territory: Cold Stone Creamery does not offer the franchisee an exclusive territory for their restaurants. Franchisees face competition from franchises granted by the franchisor or from other competitive channels it controls.
• No absentee ownership: The brand does not offer passive investment business opportunities. Franchisees are required to be actively involved in the operations of the restaurants.
• No financing: Cold Stone creamery does not offer direct or indirect financing to its franchisees. In addition, it does not guarantee any lease, note, or obligation of any lender.

How much does a Cold Stone Creamery franchise cost?

You would invest around $360,000 to open a new Cold Stone Creamery franchise.

This number is the average for both traditional and non-traditional locations. Indeed, the investment cost varies based on the format of restaurant you choose:

• Traditional locations: Cold Stone Creamery bakeries located in malls, shopping centers, outlet malls and streetside locations
• Non-traditional locations: bakeries located in airports, colleges, casinos, convenience stores, military bases, train stations, etc.

In addition to the initial franchise fee ($8,000 – $27,000), the investment cost you would pay covers leasehold improvement, equipment, opening inventory, architectural fees, exterior signage, grand opening advertising, permits and licenses, working capital for the first 3 months, etc.

Type of Expenditure	Traditional	Non-traditional
Initial franchise fee	$12,000 – $27,000	$8,000 – $20,000
Formation costs	$259,875 – $514,775	$18,700 – $419,275
Marketing fees	$10,000	$5,000
Operating costs	$28,500 – $30,500	$21,500 – $30,500
Total	$310,375 – $602,775	$53,200 – $474,775

What is a the turnover of a Cold Stone Creamery franchise?

On average, a Cold Stone Creamery franchise makes $585,000 in sales annually. This number is the median annual sales of the 875 franchised restaurants operating in 2022. 

Here’s the year to year median sales evolution of Cold Stone Creamery franchises. The sales number is growing over the year:

Source: Franchise Disclosure Document 2023

How profitable is a Cold Stone Creamery franchise?

We estimate that a Cold Stone Creamery franchise makes $94,000 in profits per year on average. This represents a 16% EBITDA margin. 

Profit and loss	Amount	% Sales
Sales	$584,934	100%
COGS	$(146,234)	25%
Gross Profit	$438,701	75%
Labor	$(169,631)	29%
Marketing and royalty costs	$(52,644)	9%
Occupancy	$(52,644)	9%
Other OpEx	$(70,192)	12%
EBITDA	$93,589	16%

Is a Cold Stone Creamery franchise a good investment?

We estimate that a Cold Stone Creamery franchise has a 4 years payback. This means you would have to wait (only) 4 years so you could reimburse your initial investment of $360,000.

Make no mistake: from a financial standpoint, this is a great investment. To estimate this investment payback, we simply compared the $360,000 initial investment to the expected profits which we estimated above.

Disclaimer

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