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Fri 8 Feb 2008 04:00 AM

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The dairy diaries

Cold Stone Creamery President Lee Knowlton explains his step-by-step guide to making Cold Stone the biggest ice cream brand on the planet.

Cold Stone Creamery President Lee Knowlton explains his step-by-step guide to making Cold Stone the biggest ice cream brand on the planet.

It is the singing that hits you first on nearing the Cold Stone Creamery store in Dubai's Festival City mall. The brightly-uniformed staff are in a group behind the till chanting (slightly off-key) personalised lyrics to the tune of a popular rock song and banging in time on the countertop.

I know a lot of US companies that have gone abroad and failed.

Meanwhile, the man I am here to meet, Lee Knowlton, President of holding company Kahala-Cold Stone, taps along on the edge of the table - he, for one, is making the most of the "Cold Stone Experience".

It is this interactive experience that Knowlton claims stands the company apart from its retail dairy competition and has been responsible for the mass proliferation of the brand's franchise stores.

Originally founded in 1988 in Arizona by Donald and Susan Sutherland the brand was originally a ‘mom & pop' specialist ice cream parlour until 1994, when current CEO Doug Ducey came on board.

The first franchise was opened the following year, the 100th five years later, the 500th by 2003 - when Knowlton took up his post - and the 1,000th store in 2005.

With the growth continuing exponentially and doubling every other year, 2007 saw the group overseeing 2,250 stores and opening up in the potentially highly lucrative Middle Eastern market this year with an initial investment of US$8.2m.

And the financial growth echoes the brand's global spread; Cold Stone's 2006 turnover was a colossal US$1.2bn.

"You have to have at least a taste before the interview so you can understand," laughs Knowlton, leading me to the counter so that I can watch my selection being prepared.

"If you want a second bite, I won't blame you."

To begin at the beginning; what is it that Knowlton believes will make Cold Stone stand out in what is a crowded market with well-established global brands such as Haagen Dazs and Baskin Robbins already in situ? To the untrained palate surely one premium ice cream is much the same as another, so how does Cold Stone explain and support its prodigious growth rate - and what makes customers want that ‘second bite'?

"It goes back to the founders, Don and Susan. They couldn't find a premium ice cream that was fresh and that you could add ingredients to; they couldn't find one that they liked."

"So, they started tinkering with recipes and came up with the one that we have now, which is super-premium with a high butterfat content and higher quality ingredients than your typical ice cream."

"Then they realised that everyone likes to choose what they eat, even in an ice cream, so they came up with the nuts, candies, syrups and the rest."

"Over time it morphed into this ice cream experience that you see today; freshly made, a lot of personalisation and we put a lot of time into the service aspect."

The service aspect present internationally throughout the Cold Stone franchises is something that Knowlton brings from his time at TGI Friday and Planet Hollywood; both known for their quirkiness and interactive customer service.

"It should be fun," Knowlton affirms, "people should be happy. So we have fun with the customers, singing, interacting with them, just so that they do leave with a smile."

"The whole thing is something a little bit different. Generally in many restaurants your service experience is limited to ‘what would you like' and ‘thank you for coming' - we try and do something different."
To separate the experience from that of the competition the company relies on the staff in each store to engage every customer.

Part of the interview process for potential new recruits is actually called an audition. Wannabe's are encouraged to sing, tell jokes, perform magic tricks - anything that shows an outgoing personality.

The great thing is the personalisation, we really listen to customers: In the US we even tried barbeque flavour believe it or not.

"I often say that you can't make people have fun; you have to have an environment where they want to, and can, have fun. We have to ensure that we hire great employees and that they can let their personalities off."

"When we go into the stores I'll sing, any of the office staff will sing - and we're all bad singers!"

The personalities that the process attracts can be seen in the stories that Knowlton has of staff from various branches going on to further careers in the spotlight.

The newcomer with the lead role in last year's musical cinema hit "Hairspray" was a former Cold Stone employee who sent in her store video, while a member of staff in Japan was offered a record deal after a music executive heard her sing in-store. She is now producing her first album.

"I think that when I was at TGI, from '83 to '94, that was the kind of heyday of the atmosphere, the interaction with the customer. TGI is known for great service, and I try to keep reinforcing that: In the US, 87% of customers who visit us will come back."

"In the hospitality industry overall, service is still that elusive missing ingredient."

"A lot of companies talk about it but I think it's really hard to execute, so that's what we concentrate on."

Indeed one of Knowlton's business mentors is TGI's Michael Stewart, whose methods embody this aspect of centering the meal around the experience: "He understood that everyone is different, everyone has their own style and different things that motivate them so you can't manage everyone in the same way - you just have to guide them in the right direction and empower them."

Knowlton believes that the key to finding the right staff is finding the right local partner - in the Gulf, Cold Stone has teamed up with the Apparel Group for the UAE stores and the planned roll outs in Kuwait, Qatar, Bahrain and Saudi Arabia.

The search for a group that meets Cold Stone's criteria is one that occupies most of Knowlton's role as the company's international head: "It's a huge decision to make; it's a deal for the next 10 or 20 years so you really have to make the right choice."

"I know a lot of US companies that gone abroad and failed, simply because they've picked the wrong local partner."

"They've just accepted a cheque from the first person that came along. It's about having the patience to make the right decision."

One example of this philosophy in action is the fact that, though the group is expanding globally, Cold Stone has yet to find a suitable candidate to manage the franchises in its continental neighbour, Canada.

"People keep asking me why we don't have stores up there yet."

"I've been looking for two and a half years now and I still haven't been able to find the right one; it's about not going with the second or third choice."
The experience is not the only thing attracting customers however, the product has to be good too. Cold Stone sells its produce on the basis that all the ice cream is produced fresh in store, differentiating it from the competition, an interesting claim, especially as the brand is only just launching in the region.

"We're importing the base mix from the US," Knowlton clarifies, "so we know that that's the same level of quality, there's no taste difference."

"We might make the mix locally but that would be after a year or two - and we'd work very closely with the local manufacturer."

That base mix is then turned into the ice cream in machines at the stores, where the fresh ingredients are added to make the different flavours, leaving it much creamier than the brands that import the hard-packed ready made product from the factory months in advance.

Cold Stone also does not alter the basic make- up of the product on offer, although different flavour offerings are put on for individual markets: "For this market we just came up with a couple more fruit flavours and sorbets."

"We'll see if people like one particular flavour and then we'll concentrate on making that. The great thing is the personalisation, we really listen to customers: In the US we even tried barbeque flavour believe it or not." And how did that go down with customers? "Well, you either loved it or you hated," admits Knowlton, keeping conspicuously silent on which side he himself fell on.

Flavours aside the food consumer market has had to adapt in the last decade to the public awareness of obesity and the trend towards low-fat products.

Despite being seemingly on the front line of this setback Knowlton claims that Cold Stone has managed not to be affected by it: "Well, we do have a ‘sinless' line that's a non-sugar, non-fat ice cream that we created a couple of years ago, but by the time we'd brought it out people didn't really seem that bothered by it any more," he admits, "although bizarrely it is now one of our top three sellers in Korea, which no-one saw coming!

But fortunately I think for us, people think of ice cream as an indulgence, a feel-good. So they don't have this attitude of ‘I want lo-fat this and that', they want to treat themselves."

This ability to meet the public desire to treat themselves is both what pushes the company's growth and what underlines Knowlton's pride in being with the group.

"I want Cold Stone to grow," he says. "In the next three to five years we see the international markets exceeding US growth. We're looking at over 100 new stores this year and then for that to double each year for the next five years; we're looking at Peru, Canada, and England."

"Personally I love to travel, see new cultures and I'm the type of person that needs to be proud of the company and what they represent; I can't work for a company I'm not passionate about."

"Here it's easy, especially when part of your mission statement is ‘we want to make people happy around the world.' I just have to make sure that I eat it in moderation and exercise regularly!"

Name: Lee Knowlton

Title: President Kahala-Cold Stone

Length of time in position: 5 years

Core values: Honesty is very important. Doing the right thing too; and the right thing can be different things to different people but I try to balance it from all perspectives and try to do what I think is the right thing overall.

Best piece of advice: Stay patient and pick the right partner. There were a couple of examples of different groups from different countries that came to Arizona with cheques but we held off. Picking the right partner is critical.

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