Cold Stone Creamery Hits a "Hot" Spot with Japan

As seen in the June 12th issue of FORTUNE Magazine.

When Baskin-Robbins offered free scoops of ice cream for two hours on Japan's Ice Cream Day last month, 700,000 customers showed up at its 750 stores.  But the hottest new thing in ice-cream-crazed Japan these days is Cold Stone Creamery, which has opened five stores in the past seven months and has lines around the block around the clock.

Cold Stone, known for its "mix-in" strategy - 12 to 16 base flavors can be combined with any of 30 add-ins - plans to open 150 stores in Japan by 2010, an aggressive expansion strategy for a company with only 1,300 scoop shops worldwide.

"Japanese people really appreciate quality and freshness," says Lee Knowlton, Cold Stone's senior vice president of international development, "and that's Cold Stone's wheelhouse."

Business, so far, is booming.  The stores are attracting 1,000 customers a day, who spend $35,000 a week.  "That's fantastic," says Malcolm Stogo, an ice cream industry consultant.  The lure:  Beyond flavor favorites like green tea and azuki bean, Cold Stone is serving up its own creations, such as blushing Mango Cloud (mango ice cream with mango-strawberry whipped cream) and Joy Nut Club (coconut ice cream with almonds, coconut, and Oreo cookies).  Ice cream is made onsite daily and served by staff who sing and dance.