How ‘Bout a Stone Cold Bowl of Reality?

by sean on July 26th, 2007

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

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