Micac docubook

Surprise and Delight

Mica Carroll-Munoz 1

ACKNOWLEDGEMENTS I would like to thank Freestyle Academy for the opportunity to create such a project and for providing me the tools to do so. Additionally I would like to thank the staff at Cream for their support and assistance with this project, it would not have been possible without them. And finally I would like to thank Angelica D’Augusta for being my partner throughout this entire process.

table of contents Preface......................................................................................7 Introduction............................................................................8 Chapter 1: Preheat to 375ยบ..................................................11 Chapter 2: Surprise and Delight........................................17 Chapter 3: Enjoy!.................................................................23 Conclusion............................................................................27 Works Cited..........................................................................29

Preface U

pon receiving the project outline for this book I knew that I wanted to write about a local organization or business that mattered to teens around me. I began brainstorming with my film partner, we kept gravitating towards a common theme: food. As a young person in Mountain View, much of when and where I interact with other youths is dictated by food choices. So, it only seemed natural to research a popular food vendor. Cream was the perfect choice. Not only are they a great location, but they provide an intriguing and entertaining look at franchising. hroughout the research and interview process for this book, I learned the importance of punctual communication and sticking to deadlines. My partner and I overcame many challenges with staying on deadlines. We also had a difficult time confirming our documentary location, which contributed to our deadline challenges. Overall this project has been a very valuable learning experience.

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Introduction I

magine a scorching hot California summer day, a small breeze blows off the bay temporarily alleviating the sun’s burn. You can feel your skin baking in the harsh light, your body slowly starting to overheat, your only solace in this moment is the thought of imminent chilled relief. You await the glorious hand, outstretching your own to meet it. Your eyes fill with joy as your fingers embrace the cold crinkly wrapper. One bite and you’ve been hooked.

This delicious chilly ice cream sandwich has

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made your infinitely better. This life changing experience resonates with many patrons of Cream. ream has recently emerged as the trendiest ice cream shop in town, providing delicious ice cream sandwiches to anyone and everyone around. They have defied the odds as a start up after the great recession. According to the huffington post, more than 170,000 small and new businesses closed from 20082010. Cream was able to build their business despite originally estab-

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lishing itself in an unstable and hostile economy. They persevered through challenges and were open to adaptability in order to succeed. ream has become a stellar example of growing a small business into a franchise.

They are a model for working through challenges to gain success and have maintained and fostered a large fan base by bringing their unique aesthetic to a positive and engaging atmosphere.

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Chapter 1: preheat to 375

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ou may be wondering to yourself about the title of this chapter, “What does business have to do with baking?”, the answer surprisingly, is more than you would think. A new business is like a cookie, it can be delicious and lucrative, but first you must preheat the oven. Establishing a new business is incredibly risky and not to mention, difficult: it requires the perfect plan and climate to become successful. he very first Cream was founded in 2010 in Berkeley, CA, smack dab in the middle of the bay area.

As business environments go, the San Francisco bay area is the mecca of new

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ideas, ventures, and startups. This atmosphere provided the perfect location for a modernized mom and pop ice cream shop. Jimmy Shamieh, founder and CEO of Cream, and his family decided to take mom’s homemade ice cream cookie sandwich recipe to the masses. This new venture was particularly risky given that the U.S. economy was very weak at the time, as the country was slowly working it’s way out of a recession.

This unfavorable climate only contributed to the factors working against the Shamieh’s, another one being that they were investing in the food industry. Food related ventures and restau-

rants are notorious for failing and being what many would call a “ money-pit”.

In a study published by the Cornell University School of Hotel Administration, researchers found that 60% of restaurant related businesses fail before the first year, and 80% do not last more than 5 years. So with the odd stacked against them, how was it that cream was able to prosper? Some say business is just luck.

In Heart Smarts Guts and Luck: What it Takes to be an Entrepreneur and Build a Great Business (from now on referred to as HSGL) by Anthony K. Tjan, Richard J. Harrington, and Tsu-Yan Hsieh, the authors argue 11

that luck is one of the main factors in success. “ Whether it is serendipitous timing, a chance encounter...luck will always play a role in the business journey.”(101) The cream founders had the right plan but a tricky climate, they took that risk and fortunately a little bit of luck helped them on their way. tarting out, Cream faced a large financial challenge, how would they possibly fund this new venture.

In addition to a dedication to their product one of the Shamieh’s main motives for the business was always financial, “[starting cream] was a financial necessity at the time, that was the path that was necessary at the time..” They began it as an effort to better their family’s financial situation. While the authors

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of HSGL claim that “Purpose should always come before company, product, and profit..”(16) Cream was initially a financial decision but it also grew with much of the passion and purpose that is discussed in HSGL. They were able to overcome initial financial challenges, “The biggest challenge from the start was financial, because we had to scrape our savings, went to family and friends to raise capital…” said Jimmy Shamieh.

They had challenges that were financial but also in day to day operations of the store. Cream’s inception was a family decision made mainly from a financial standpoint, the authors of HSGL would not be in favor of a business beginning in this fashion, was it the best reason to start a business?, probably not. How-

ever the family did develop the values that encompass the “purpose” that HSGL speaks of. In the end they worked it out and managed to be goldilocks, they got it just right. ow a new company faces challenges is a large indicator of their possible success and longevity. Cream was faced with many challenges along the way, to begin with, had to break into a new market with the establishment of their first Berkeley store.

This is no easy task according to Ivy Business Journal “ A big challenge is the need to adopt strategies well suited to these new markets.” Among the many challenges that come with a new market, Cream chose to face this one head on by customizing certain aspects of the store to ap-

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peal to customers in certain regions. “We try to get each community to be specific, so we encourage franchisees to support their local softball team or volleyball team. So...in Berkeley they have [uniforms that are] yel- low and navy because of the Cal Bears.” says Cream marketing manager Helen Gutier- rez. Cream works specifically towards making the customer feel comfortable in any of their stores, they are doing so by increasing familiarity with regional concepts that they implement in certain stores. Another challenge they face is creating processes for producing the product, and increasing the efficiency of these processes within each Cream. As Palo Alto Cream manager Bill Caldwell describes it, “...The crew goes through these growing pains, so we’re constantly working with the crew and making sure they’re on board and understanding the changes that are gostreamline process ing on in order to and make a better product.” They are very conscious of the process required to produce their product and work very hard at improving them. This attention to detail and adaptability are just some of the many factors that have contributed to Cream’s prosperity. Overall the hard work and determination they exhibited in order to overcome certain c h a l l e n g e s was instrumental in their accomplishments. These qualities derived straight from their original three principles for success.

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“ Cream was really the brainchild of our family about 25 years ago when my wife would bake cookies at home... my wife would try to make homemade ice cream. So she bought one of those rinky dink machines at one of the stores and she tried the ice cream. And because she used the premium products to produce the ice cream, our kids just loved it.

And they were ingenious and that they put the ice cream in between the big freshly baked cookies and that was an instant hit.� -Jimmy Shamieh, Cream CEO 15

“We wanted our product to be top notch, we wanted the best ingredients... second, we wanted it to be affordable to families.

Third principle, treat everyone with courtesy and respect� -Jimmy Shamieh

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Chapter 2: recipe for success

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n order to understand Cream’s business structure, one must first understand a basic franchise structure. The Small Business Development Corporation of Western Australia defines it as “Practice of using another firm’s successful business model. A business owner [a franchisor] assigns independently owned outlets [a franchisee] the right to market and distribute their products or services.” From each franchisee, the franchisor receives an initial capital fee and ongoing royalty fees.

This differs from a typical business expansion model where the original business owns all of it’s locations and earns all the profit.

Franchises have become an dependent owners as part increasingly popular choice of the franchise. Cream is among new entrepreneurs. also set apart by that fact According to Forbes maga- that they began as a family zine, in 2012 “The 45 largbusiness, but grew to beest franchise stocks gained come a franchise. Shamieh [stock value] at nearly twice explains that after having the rate of the Standard & success with the first store Poor’s 500 in 2012” Franit was not an easy decision chises have found a way to expand.“We sat around to thrive in both bustling the table and discussed as and struggling economies, a family where do we go which is much of the reafrom here.” Many people son as to why they’re such cringe upon hearing the a desirable choice for a words “family business” as business model. it is often associated with convoluted family dynamnlike many other franchises Cream is ics and failed ventures. The Family Business Institute organized in both claims that only 30% of a franchise and company family businesses continue owned models. Cream has some company owned beyond the first generation.

So how can family run stores but mostly their companies avoid this? The stores are owned by in-

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Their Franchise model is New York Times says that successful because they the key is communication seek to bring prosperity and adaptability. Cream not only to the company has much experience in owned stores, but to every this, “At the time, there individual involved. They were no ice cream sanddo so by taking a tradiwich stores... So we really tional franchising model had to work out the details of what that meant.” and tweaking it to fit their company’s needs. said Shamieh of their first year of operation. Cream ream’s expansion had to be flexible in order model is allowing to prosper. In addition to them to think big. the company owned store, As Mr.Shamieh says “ We they brought that attihope to be the next Startude to their franchisees. bucks. How do we do it?...

“When we research for By building a great comour products… we look pany.” Cream is going full at folks who could come speed ahead with their exup with as we go ...all of pansions. Their expansion our vendors seem to exis comparable to the early perience that positiveness, growth seen in large franand its not coincidence” chises such as Panera and Cream’s outward focus on Cinnabon. According to their franchisees and asthe International Franchise sociates is representative of Association (IFA) and their positive outward attiForbes magazine, much tude and company culture. of the rapid growth is due

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to product affordability, and social media presence. Cream currently has twelve open locations and another ten coming soon.

One of Cream’s goals with their new locations is to standardize many of their processes for an emphasis on continuity. Manager Mr.Caldwell says the key to this is, “Maintaining a path of communication back up with my team, keeping in contact with my corporate team, making sure we are keeping the brand established at the base, and making sure you’re implementing new changes.” The IFA agrees saying that “To attain continuity within a franchise system, training and support must be “in sync” and effective.” Much of Cream’s ability to franchise can be accredited to it’s healthy and open com-

munication between their cies are written down and corporate team, owners, established, having that store managers, and team written guideline helps the members. As Mr.Caldwell growth and streamlining said “now that we have of opening a new store.” more locations theres a lot Cream’s increase in orgaof communication, a lot nization and continuity of procedures and poliwill help it be more effi-

cient as it expands. Their future plans for expansion are ambitious, but feasible if they continue advancing as smoothly as they have already done so, and conserve their core values.

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Chapter 3: surprise and delight

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rom a Business standpoint, Cream’s has been remarkable in it’s ability to grow and expand rapidly. Cream’s structure enables the company to thrive, but what truly allows it to flourish is their culture.

When the Shamieh’s began their endeavor, they set out three principles for success.

“Number one, we wanted our product to be top notch, we wanted the best ingredients...Second, we wanted it to be affordable to families...

Third principle was to treat everyone with courtesy and respect. Fourth we wanted it to be a fun place to come to…” Through these principles that became founding the pillars of their company, Cream was able to estab-

lish incredibly strong relationships with their customers. A study published in the Germany Journal of Business Research, exploring product performance and customer interaction, found that, “The intensity of customer interaction in the first stages of the new product development process yields significant...effects on product success” Customer interaction not only with the product itself but with employees as well has shown to be incredibly successful in the prosperity of a new product. Cream guarantees a pleasant experience for their customers by training their team members to ensure it. “The most important thing when

interacting with customers is making sure they’re satisfied and happy when leaving the store.” Says team member Angelo. Cream strives to have a positive impact on all those it encounters. Palo Alto store manager Bill Caldwell explains their outlook on interacting with the surrounding community. “It’s one of those things where you have to make sure you’re working closely with the community to make sure that cream is a positive impact.” Cream maintains favorable associations with surrounding businesses and city administrators as well as with customers and employees. Here Angelo speaks of his experience as an employee. “When 21

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“When I started working here, I didnt help out on the line, I was just a baker, because I wasn’t good at talking to people, so eventually they shifted me over to actually deal with customers, so I actually got better at talking to people and learning how to deal with that... I think they really helped me with my people skills.” -Angelo, Team member

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I started working here, I didn’t help out on the line, I was just a baker because I wasn’t very good at talking to people. So eventually they [management] shifted me over to actually deal with customers...I actually got better at talking to people and learning how to deal with customers...they really helped me with my people skills.” Angelo was able to grow personally because of the comfortable work atmosphere that Cream provided. The positivity that consistently radiates from cream, is what makes up the “Cream Experience”, as Jimmy Shamieh puts it, “To us what cream really stands for is all of those four principles coming together to create an experience...We’ve been blessed that this experience has resonated with a lot of people who come to 24

our stores.”

With Cream’s rise in popularity, arose a new question. Once you’ve established relationships with customers, how do you maintain them? Cream does so through strategic and innovative marketing strategies. In every Cream they have an intense focus on maintaining brand continuity.

The Franchising World magazine believes that “The relationship between a brand and its consumer is front and center for multi-unit franchisees.”

Marketing Manager Gutierrez comments on Cream’s branding strategies. “You’re going to see the same logos the same uniforms, the way we train our employees, the brand culture is all really similar, it’s something we are ready to grow and scale.”

By establishing a consistent

brand image with customers early on , they are able to build on that relationship and easily market to customers. Cream recently underwent certain rebranding changes, “[we’re] taking our classic concept and making it something that is more iconic and recognizable.

So something that we can move forward with when we move nationally and internationally” They made changes such as “...simplifying the logo a little bit...refining our mission and our goals and honing in on everything that makes cream really great” Says Gutierrez. She elaborates on their strategies saying, “We have brand platforms and we take those and...we say ‘How does this apply.’ ...One is to bring surprise and delight to every customer, every time, and so this is shown

through our messaging or ...there’s a social media post or how we introduce new flavors.” Cream connects their brand to their customers in different mediums by having a large social media presence. hey frequently post secret flavors or offers on multiple social media sites and interact with users by having online contests. They also display a live feed of customer’s twitter and instagram posts about Cream in each of their stores. As

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Jimmy Shamieh says, “Social media is a great medium but also a reflection of the business itself. If your business sucks then social media can expose that. Because Cream is so great, social media has exploded…”

Being able to interact with customers on social media allows Cream to interact with existing customers in the unique and positive ways that they so often do.

By doing so, they are also able to market to an entirely new set of potential customers. Cream is effective

in their use of social media because they choose to focus on the facets of their company in which they are unique. By showing off these aspects through social media and branding continuity, they are able to convey their four principles of success. The relationships that Cream builds with their customers is only strengthened by their creative marketing, their customers always leave with only one thought on their minds “I love Cream!”

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Conclusion C

ream has proven itself as an ice cream powerhouse. They began with delicious recipes for not only business success but for their delicious product. This strategy brought many customers through their doors, but what kept them coming back were their interactions. Cream’s focus on a positive and inclusive atmosphere has garnered the public’s approval and interest, turning it into arguably the trendiest ice cream shop around. Additionally Cream’s is able to maintain positive relationships with it’s customers through the atmosphere they retain in the community and on social media. In these respects Cream has demonstrated itself as being a model for success. Despite being a company that has a franchising model focused on profit, they are still able to positively impact the community around them, bringing surprise and delight, one cookie at a time.

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Works Cited Angelo. Personal Interview. 10 April 2015.

Bronson, James W., James B. Faircloth, and Jacob M. Chacko. “Toward a Strategic Model of the Franchise Form of Business Organization.” University of North Dakota, 1999. Web. 5 Apr. 2015.

Caldwell, Bill. Personal Interview. 10 April 2015.

“Family Buisness Forum Facts.” Family Buisness Forum. University of North Carolina Asheville, 16 Sept. 2014. Web. 5 Apr. 2015.

Feloni, Richard. “Food Network Chef Robert Irvine Shares The Top 5 Reasons Restaurants Fail.” Business Insider. Business Insider, Inc, 25 Feb. 2014. Web. 6 Apr. 2015.

“Financial Models.” Franchise Growth Partners. International Franchise Association, 2011. Web. 5 Apr. 2015.

Gardella, Adriana. “Family Businesses Learn to Adapt to Keep Thriving.” The New York Times. The New York Times, 4 Apr. 2012. Web. 5 Apr. 2015.

Gruner, Kjell E., and Christian Homburg. “Does Customer Interaction Enhance New Product Success?” Elsevier, 2000. Web. 17 Apr. 2015.

Gutierrez, Helen. Personal Interview. 3 March 2015.

Hudson, Marianne. “Startup Bubble? Savvy Angels Help Entrepreneurs Avoid Burning Cash.” Forbes. Forbes Magazine, 30 Oct. 2014.

Web. 4 Apr. 2015.

Kavoussi, Bonnie. “Recession Killed 170,000 Small Businesses Between 2008 And 2010: Report.” The Huffington Post. TheHuffingtonPost. com, 25 July 2012. Web. 7 Apr. 2015.

Kessler, Glenn. “Do Nine out of 10 New Businesses Fail, as Rand Paul Claims?” Washington Post. The Washington Post, 27 Jan. 2014. Web. 5 Apr. 2015.

Kocyigit, Orhan, Christian M. Ringle. “The Impact of Brand Confusion on Sustainable Brand Satisfaction and Private Label Proneness: A Subtle Decay of Brand Equity.” Journal of Brand Management. McMillan Publishers, 1 Dec. 2011. Web. 5 Apr. 2015.

Miller, Kerry. “The Restaurant-Failure Myth.” Bloomberg.com. Bloomberg, 16 Apr. 2007. Web. 6 Apr. 2015.

“Multi-Unit Franchise Owners Instill Brand Culture Using Continuity | Franchising World Magazine.” Franchising World Magazine.

Franchising World Magazine, 13 Feb. 2015. Web. 17 Apr. 2015.

Parsa, H. G., John T. Self, David Njite, and Tiffany King. “Why Restaurants Fail.” Why Restaurants Fail. Cornell University School of Hotel Administration, 1 Aug. 2005. Web. 20 Apr. 2015.

Rafsky, Steven M. “The Benefits of System-Wide Continuity.” The Benefits of System-Wide Continuity. Franchising World Magazine, 1 Feb. 2008. Web. 5 Apr. 2015.

Shamieh, Jimmy. Personal Interview. 3 March 2015.

Tice, Carol. “The Unstoppable Business Model That’s Beating the S&P 500.” Forbes. Forbes Magazine, 20 Jan. 2013. Web. 5 Apr. 2015.

Tjan, Anthony K., and Richard J. Harrington. Heart, Smarts, Guts, and Luck: What It Takes to Be an Entrepreneur and Build a Great Business. Boston: Harvard Business Review, 2012. Print.

“United States Census Bureau.” Firm Characteristics Data Tables. United States Census, 25 Sept. 2014. Web. 6 Apr. 2015.

Wunker, Stephen. “Ivey Business Journal.” Ivey Business Journal. Ivey Business Journal, 1 Dec. 2011. Web. 5 Apr. 2015.

“Smallbusiness.wa.gov.au.” Franchising Your Business. Government of Australia Small Business Development Corporation, 2015. Web. 5 Apr. 2015.

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