By JASON BOOTH
One of L.A.’s best-known companies is undertaking a $200 million overhaul to align itself with changing consumer tastes.
Baskin-Robbins U.S.A. Co., based in Glendale, is upgrading its entire chain of 4,600 franchise ice cream shops around the world.
While the “31 Flavors” of ice cream that made the company a household name will still be available, the emphasis of the remodeled stores is on beverages.
The goal is to compete against newer beverage-based stores such as Starbucks Coffee and Jamba Juice, says Don Skeoch, Baskin-Robbins vice president of marketing.
“The bottom line is that ice cream, though still popular, is not a growth industry,” he said.
The conventional stores were designed for takeout ice cream. The new layout is designed to entice people to spend more time in the shop, and to buy more products.
The harsh fluorescent lighting typical of the traditional shops will be replaced with ambient halogen bulbs. Comfortable restaurant-style chairs will replace the utilitarian plastic seats. The typical white, pink and blue color scheme will be replaced with more epicurean shades, such as French vanilla, caramel, chocolate and blackberry.
Baskin-Robbins, which is owned by U.K.-based conglomerate Allied-Domecq, has seen its sales grow at an anemic 2 percent to 4 percent in each of the last four years.
A prototype of the new style opened in the San Gabriel Valley city of Monterey Park in August. Another eight have opened since then. The company said it intends to open 100 new Stores of the Future by the end of 1998. Baskin-Robbins currently has around 2,600 stores in the U.S. and about 2,000 overseas.
Beverages are the keys to the new concept. Drinks such as fruit smoothies and iced coffee account for around 40 percent of the Monterey Park store’s sales, compared with only 15 percent for a conventional Baskin-Robbins shop.
When customers enter the redesigned shops, they don’t see the traditional array of ice cream tubs but a “beverage center,” where drinks are prepared to order. The next most visible area displays cakes and other “celebration” desserts. Least prominent is the ice cream tub area.
For most existing franchise shops, conversion to the new style will involve a complete remodel and possibly a change of address. The franchise owner of each shop will be obliged to come up with the $40,000 to $100,000 needed for the conversion. Because the new design requires more space, Baskin-Robbins is urging its smaller franchises to move to larger sites.
The response from franchisees is mixed.
While many agree that the Store of the Future concept could boost profits, others are hesitant to proceed with the costly and time-consuming upgrades.
“The problem is that the company cannot decide what direction it wants to go. Every once in a while they get an idea and everyone has to pay for it,” said one Westside franchisee who asked to remain anonymous. He said he remodeled his shop two years ago and is now concerned that Baskin-Robbins will require further remodeling when his lease comes up for renewal.
Frozen yogurt, which Baskin-Robbins launched in the early 1990s, was cited as a costly disappointment by some franchisees.
Baskin-Robbins takes only a 4 percent slice of each store’s revenues, plus a $2,500 transfer fee each time a store changes hands. It claims that most of the money it raises from its franchisees is spent on advertising. The company plans to spend $60 million on advertising over the next two years to promote the Store of the Future concept, a double-digit increase over the last two years.
Janice Creger, owner of Heavenly Desserts in Pasadena, is a former Baskin-Robbins franchisee who opted to drop out of the system in October when the company demanded she move to a larger location to facilitate an upgrade of one of her two shops.
“My (existing) shop was not big enough to handle the remodeling and I was not interested in moving from a location I had been in for 24 years,” she said. She added that she was told to set aside up to $50,000 for the remodeling.
Skeoch is confident that the success of the new stores will eventually soothe the worries of franchisees.
“When a retailer asks its franchisee store owner to make a significant investment, it is understandable that a certain percentage will have concerns,” he conceded. “But given the success we’ve seen since the roll-out of our new design, we are confident that the majority of store owners will agree that the Store of the Future will provide greater profitability.”