How ‘Bout a Stone Cold Bowl of Reality?
July 26, 2007 by Sean Kelly
Filed under Business
Last week, in response to Kahala Cold Stone’s acquisition of the fledgling Cereality Cereal Cafe chain, I asked Can Kahala Cold Stone Put Some Reality in Cereality? The answer was swift and clear.
In “Cereality Growth Begins By Shutting Two of Seven Stores,” Restaurants & Institutions magazine’s Derek Gayle writes that:
On acquiring the seven-unit Cereality Cereal Bar & Café chain, one of the first moves franchising powerhouse Kahala-Cold Stone made was to close two stores, one in Chicago, the other in Evanston, Ill, a suburb north of the city.
The stated purpose is to transition from company-owned to franchise units but the two that have gone dark may not re-open in the same locations.
In the surreal land of Cereality, restaurant chains grow by closing units. (Imagine… they only have five more units to close to achieve 100% growth!)
In the land of Cereality, companies transition to becoming franchise chains by immediately closing their franchise training store (Evanston, IL), and their flagship store in a market they called “one of the best in the entire world” (Chicago).
In Cereality, new owners boldly announce their strategic decision to close stores that have already been closed for months, and take the reins from management who already departed the company.
In the surreal world of Cereality, trade magazines state the chain has “…proved the viability of a cereal-based restaurant concept” despite the fact that about half of the walk-in stores, 28% of the total units, failed.
When will reality set in?
Kahala Cold Stone CEO Doug Ducey states that they won’t be expanding by investing their money in corporate stores, but will instead allow franchisees to finance the growth of the concept. Why not build and operate company stores? As Ducey states in the article:
“As you reach the 30 to 50 mark in terms of stores, you get a good handle on what works and what needs to be fixed,” Ducey adds. “That’s when you can build dozens of stores and have a high probability of success with both the brand and franchisees.”
And what of the franchisees who will build the 25 to 45 Cereality Cereal Cafes before they “get a good handle on what works and what needs to be fixed”? They may have a big, cold bowl of Cold Stone Reality waiting for them…
Cereality Blogliography
July 23, 2007 Cereality Growth Begins By Shutting Two of Seven Stores (R&I)
July 17th, 2007 Can Kahala Cold Stone Put Some Reality in Cereality? (FranchisePick.Com)
July 13th, 2007 Reality, Surreality & Cereality (FranchisePick.Com)
July 12, 2007 The Cereality Acquisition: Big Ideas Live (R&I)
June 27th, 2007 Trendy Franchise Concept Gets Cereality Check, Closes Store(s) (FP)
Source articles:
May 23, 2007 Specialty Cereal Eatery Boxes Up Bowls, Spoons (Daily Northwestern)
March 28, 2006 New cereal-serving restaurant expects to bowl over Evanston (Daily Northwestern)
Company website: Cereality.Com
FranBest.com: Check out the best in franchising
TopNewFranchises.Com: America’s Next Top… Franchise
Franchise Marketing: franchise marketing, franchise public relations, franchise sales
Franchise & Marketing Newsletters: Affordable. Stylish. Free.
I wonder what the business arrangement is for the guinea pigs figuring out what works. In short, who should pay whom in that situation?
For the answer to that, read a couple of the posts under the iSold It, Snappy Auctions, eAuction Depot, or Auctioning4u categories listed on the right sidebar. The eBay drop-off store is another untested unproven concept that franchisees are test marketing for the franchisor, at a dear price.
Compared to these, being a ouija repairman is a great gig. btw, is that a franchise?
WHAT!
Am I to believe that over the pond you have shops selling breakfast cereal? in a bowl? with milk? like Starbuck’s for caffeine free health freaks?, do they charge extra for suger? I’d want two spoonfull’s…has the world gone stark staring bonkers?
Don’t answer that one I know it has!!!
This is yet another demonstration that Bob Purvin’s Book on Franchise Fraud written in 1993 should be read by every prospective franchisee.
Michael:
Is Purvin’s book in print? Where’s it available? Seems more relevant now than ever. Good time to update it?
Sean
You can still get it used from amazon,
http://www.amazon.com/Franchise-Fraud-Protect-Yourself-Before/dp/0471599476
But I would contact Bob directly at the aafd.org because I know the AAFD sells the cd for $10.
Would anybody like to buy into my new franchise….you will only need small premises, something like an airport/subway kiosk. We will be selling cd/dvd-rom’s with screen-savers of breakfast cereal, for people on diets to look at, for five minutes before they go to work. I thought we could call it “Ediballs – for busy professional fashion victims with more money than sense.”
Fees? I thought I’d sell each franchise for the bargain price of $100,000, no two kiosks to be sited less than 200 yards from each other?
Please, please, PLEASE….NO Shoving, form an orderly cue!
Laila Fields bet her house that a Cereality cereal cafe franchise would be a hit in Santa Cruz. FranchisePick.com readers are invited to bet on how soon she’ll realize what a bad, bad bet she made.
Place your vote on how long you think the Santa Cruz Cereality franchise will survive.
The Cereality Franchise Dead Pool: VOTE NOW!