Baskin-Robbins Outruns Cold Stone Creamery

Last Updated Jul 29, 2009 2:56 PM EDT

In the last month Baskin-Robbins stated its intention to ramp up its store presence in many markets across the country. It's adding 30 stores to the Raleigh-Durham area of North Carolina, several stores around Phoenix, and another 35 to the Washington, D.C., area.

Baskin-Robbins currently operates about 2,700 locations in the United States. Executives are touting its new-store growth as a "good value" in a tight economy, they said in a press release early in the year about the chain's Houston expansion plans.

The push comes as once-hot competitor Cold Stone Creamery, which over the years expanded rapidly and went into high-profile locations, is facing challenges. The 1,400-unit chain, once one of the hottest expanding concepts around, closed stores last year, and franchisees reportedly weren't getting the returns they wanted.

Many pointed to the plummeting economy and the fact that not a lot of people were in the market for a $4 ice cream cone, even if Cold Stone's product is considered higher end than Baskin's. Plus, the chain did expand quite rapidly... maybe too much so.

However, Cold Stone, owned by Scottsdale, Ariz.-based Kahala, is tackling some new initiatives to drive growth. The firm recently hooked up with Canadian coffee and doughnut chain Tim Horton's, and the two are co-branding new locations together. It is also expanding internationally and launching new products such as cupcakes.

Baskin-Robbins is also branching out, almost directly in the face of Cold Stone, trying out a new and more upscale concept called Cafe 31. Additionally, the company is trying out BR Express, a store that can fit easily into a mall or a sporting venue.

The Baskin-Robbins face off with Cold Stone draws parallels with the highly publicized Starbucks and McDonald's feud in the coffee category. And like McDonald's, if Baskin-Robbins is thought of by the consumer as a more cost-efficient alternative, the bigger chain could gain even more ground on its rival.