Susan and Donald Sutherland, who lived in Tempe Arizona with their five daughters, thought they might like to start an ice cream business. They talked to a friend, bought some equipment – and 20 years later, Cold Stone Creamery is a $ 500 m. empire with 1,400 franchised stores across the United States.  

What is their secret?

They asked, as Harvard Business School professor Ted Levitt counseled, what business are we in? Ice cream?  No. Fun. Entertainment. Cold Stone personnel let customers design their own ice cream, choosing the ‘base’ ice cream flavor (French vanilla, pumpkin) and combining it with a huge variety of things like raspberries, M&M’s, Oreo cookies, etc. The ice cream is mixed with the flavorings on a cold granite slab. No two servings are the same. 

When a customer gives a small tip to the Cold Stone personnel, they get a mini-performance: A spirited song and dance by the ice cream servers. According to Wikipedia: “In the spirit of joviality, and to encourage customers to give tips, Cold Stone instructs employees to sing a Cold Stone song, usually to the tune of recognizable melodies such as “Take Me Out to the Ball Game” or “Bingo,” when a customer places money in the tip jar. Lyrics include short, catchy phrases, such as, “This is our Cold Stone song, it isn’t very long.””

Like other franchises, Cold Stone strives to provide similar service at every store by supplying instructional material and training videos to franchise owners. The founders have intuitively applied the principles outlined by B. Joseph Pine in his book The Experience Economy. Cold Stone customers get, with their ice cream, a memorable experience. Chances are, they come back for more.

The Sutherland’s five daughters all grew up in the business. When the Sutherlands began to franchise it, they were opposed – they liked the “Mom and Pop” business they grew up in. But recently on the Oprah Show, they seemed to be enjoying the success and attention the booming franchise generates. 

Cold Stone Creamery is now the sixth-best-selling brand of ice cream in the U.S. and now operates stores in Japan, Taiwan, South Korea, Puerto Rico, Indonesia, Guam, China, and Mexico. The company was also named the 11th fastest-growing franchise by Entrepreneur Magazine in January 2006.

Not everything is rosy. Richard Gibson recently wrote an article about Cold Stone in The Wall Street Journal, about how not to run a growing franchise.