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Company hints at more chain buys, IPO
SCOTTSDALE, ARIZ. - Multi-concept franchisor Kahala Corp. and ice cream chain franchisor Cold Stone Creamery have merged to form what they describe as a "world-class brand-building company" that aims to add more chains to its portfolio and possibly go public.
The new entity created from the two Scottsdale-based companies is called Kahala-Cold Stone and includes 13 brands that the new firm estimates will generate $1,1 billion in annual systemwide sales from more than 4,600 retail locations owned by more than 3,000 franchisees in 15 countries.
Although the merger would enable cost savings from economies of scale in purchasing and added clout with real estate brokers and developers, the company indicated that brand acquisitions would likely be done with funding from financial partners despite initial media reports implying that Kahala-Cold Stone somehow was positioned to compete directly with deep-pocketed private-equity investors.
Kahala Corp.'s brands, which collectively notched an estimated $650 million in systemwide sales in 2006, include the 1,600-unit Blimpie sandwich chain, 300-unit Taco Time, 200-unit Surf City Squeeze, 80-unit Frullati Cafe & Bakery, 80-unit Samurai Sam's Teriyaki Grill, 50-unit Nrgize Lifestyle Cafe, 40-unit Great Steak & Potato Company, 35-unit Ranch l, 11-unit Rollerz, 10-unit Johnnies N.Y. Pizzeria, and the cobrand ice cream concept WaffLo.
Cold Stone Creamery's franchisees own and operate all but two of the nearly 1,400 outlets in the chain, which is known for ice cream treats that are customized with mixed-in confections. Cold Stone has been one of the industry's fastest-growing chains in recent years, rising from 100 branches in 2000 to 500 just three years later, when it awarded its 1,000th franchise. The 1,000th branch of the chain opened in 2005.