July 13, 2007

Icecream, Steak, Potato & Cereal in that kiosk

The newly merged owners of Cold Stone Creamery and the Great Steak & Potato Co. have added Chicago's Cereality Cereal Bar & Cafe to their mix. The Cereality cafes have a food order kiosk (Stealth by KIOSK) that takes the custom cereal order.

Cereal with that steak?
FOOD | Chicago breakfast cafe sold; 'a natural fit' with new owners

July 13, 2007
BY CHERYL V. JACKSON [email protected]

The newly merged owners of Cold Stone Creamery and the Great Steak & Potato Co. have added Chicago's Cereality Cereal Bar & Cafe to their mix.

Scottsdale, Ariz.-based Kahala-Cold Stone on Thursday announced it bought the restaurant concept that serves cereal, with flavored milk and toppings, for about four bucks a bowl. The companies would not disclose terms of the deal.

Cereality was a media darling when it opened its first cafe on the campus of Arizona State University, then one in downtown Chicago before moving its operations to the Windy City, expanding to Evanston and getting into the Newark airport. Inquiries about franchising were in the thousands -- and that's the route the company decided to take, moving to shed company-owned stores.

Cereality focuses on signature blends of cold and hot cereals with toppings and a variety of orginal recip cereal-based snack foods.
(John H. White/Sun-Times file)

In May, Cereality founders David Roth and Rick Bacher announced they'd stepped down from their management posts at the company to start a consultancy business, and the company quietly closed Chicago area locations and its 15-employee headquarters.

"We always had an idea to get the brand to the point where it had worldwide recognition and then hand it over to a strategic partner that could build on the brand," said Roth, who hooked up the deal after meeting with then Cold Stone Creamery CEO and current Kahala-Cold Stone chief Doug Ducey in January. "Doug and I had this kinship right away.

"They run a scoop shop based on customizing your ice cream. It was kind of a natural fit."

The acquisition is the first for the newly formed Kahala-Cold Stone, the result of the May merger of Blimpie subs and the Great Steak owner Kahala Corp. and Cold Stone Creamery.

Cold Stone Creamery sales grew 16 percent to $471 million last year, according to Chicago-based research consultancy Technomic Inc.

Cereality, in which Roth and Bacher remain shareholders, now has seven locations, including Arizona State University; Philadelphia and State College, Pa.; Charleston, S.C.; three kiosks at Newark Liberty International Airport and a kiosk coming to JFK.

Plans to open a kiosk at O'Hare International Airport this year were scrapped because of the switch to the franchisee/licensing model. With the Scottsdale acquisition, the Evanston facility was no longer needed as the training ground for which it was designed.

Managers expect Cereality franchisees to be running in Chicago soon, possibly co-branded with sister concepts.

Those wondering whether the hefty price kept the cafes from expanding needn't ,said Stan Synkoski, chief operating officer of Cereality Franchising Corp., owner of the Cereality brand.

"Our pricing is not an issue, and has never been," he said.

Still, the cereal restaurant concept might have needed a boost to help it afford rent outside of breakfast time, said Ron Paul, president of Technomic.

"The idea of having some kind of dual brand so they can afford the lunch day part makes sense," Paul said. "They needed another way to build their business throughout the rest of the day."

Posted by staff at July 13, 2007 10:59 AM