Co-Branding: Cold Stone Creamery and Tim Hortons Join Forces
The opportunity to add each other's products to their menus was too good to pass up, officials from the two chains say.
By David Farkas, Senior Editor -- Chain Leader, 2/13/2009 8:35:00 AM
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| The Tim Hortons/Cold Stone Creamery test store in Rhode Island produced "incredible" results, claim officials from both companies. |
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Franchisees usually get a break when they voluntarily turn guinea pig. Take Jeff Curran, a Cold Stone Creamery franchisee in Columbus, Ohio, who added Tim Hortons doughnuts and coffee to his store near the Ohio State University campus on February 7. In return, the Scottsdale, Ariz.-based franchisor trimmed his 9 percent royalty payment.
"We get a little bit of a benefit for being the test store," says Curran, who operates three other Cold Stone Creamery units in Greater Columbus. He won't say how much of a break he is getting.
The franchisor launched a co-brand test with Hamilton, Ont.-based coffee-and-doughnut chain last fall at two Rhode Island Tim Hortons units. Officials from both companies were surprised with results.
"It was an incredible success," boasts Lee Knowlton, chief operating officer for Kahala Corp., which franchises 1,450 Cold Stone Creamery units worldwide.
Each chain expects reconfigure 50 existing units in the United States in 2009, in Ohio, Michigan, New York and Rhode Island.
Daypart Added
The addition of ice cream gives Tim Hortons an afternoon and evening daypart, while coffee and baked goods add morning business to Cold Stone Creamery. About 500 of Tim Hortons' 3,294 restaurants are in the United States.
Knowlton, who says a Cold Stone Creamery unit averages $7,000 in weekly sales, won't reveal how much sales climbed in the test units after Tim Hortons added ice cream. Curran won't estimate potential revenues at his unit. "It difficult to put any numbers to it," he says.
Sam Sibert, a Seattle-based Yum Brands franchisee who operates 17 "two-in-one" units in the Pacific Northwest and North Carolina, expects a 25 percent to 30 percent increase in sales from co-branded units. "That's what we anticipate, but it can vary depending on location," offers Sibert, who also franchises 67 single units in the same markets. Citing real estate costs, Sibert says he is only opening co-branded restaurants.
Equipment Purchased
In the Cold Stone stores, extra equipment is required to accommodate Tim Hortons. Curran has purchased an oven, glazer and coffee equipment and replaced countertops to accommodate racks for coffee cups. The retrofit absorbs 20 percent of the 1,300-square-foot Cold Stone Creamery footprint, Knowlton says. Neither he nor Curran will say what the dollar investment is for the changeover, which is done in two nights while the store is closed.
Curran concedes he wasn't aware of Tim Hortons' products despite living in Columbus, where there are dozens of units. (Columbus-based Wendy's owned the chain before divesting of it in an IPO in 2005.) "I didn't even know they had a breakfast sandwich," he admits. Now he is selling them.
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"Knowlton, who says a Cold Stone Creamery unit averages $7,000 in weekly sales"
That CAN'T be true. Cold Stones are closing left and right. The average store doing $364,000? Really??? the Wall Street Journal just put them at #2 in the country as delinquent on SBA loans. Buyer beware!
Tom Phillips - 2009-28-2 11:44:00 MST -
CAN SOMEONE RESPOND WITH WHAT CO-BRANDED CONCEPTS MR. SIBERT IS OPERATING IN THE SEATTLE MARKET(S)????
I WOULD BE INTERESTED IN LOOKING INTO THESE.
K. DOAN - 2009-18-2 11:59:00 MST -
How, as an operator of a QSR concept, especially in Columbus, Ohio, could Mr. Curran not be aware of Tim Horton's and their product line? For a person that owns and operates three treat based locations, I find this comment absurd. I wish him luck with his co-brand effort.
R.P. - 2009-18-2 05:32:00 MST
Tim Hortons Opens on Naval Station Norfolk
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