MaggieMoo’s International

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MaggieMoo’s International

10025 Governor Warfield Parkway, Suite 301
Columbia, Maryland 21044-3330
U.S.A .
Telephone: (410) 740-2100
Toll Free: (800) 949-8114
Fax: (410) 740-1500
Web site: http://www.maggiemoos.com

Wholly Owned Subsidiary of NexCen Brands, Inc.
Founded: 1989 as MaggieMoo’s Creamery
Employees: 50
NAIC: 722213 Snack and Nonalcoholic Beverage Bars; 533110 Lessors of Nonfinancial Intangible Assets (Except Copyrighted Works)

METRO KANSAS CITY BEGINNINGS

1996–2003: THE SHAROFF ERA OF LEADERSHIP

2003: BEGINNING OF JAMESON ERA

2007: ACQUIRED BY NEXCEN BRANDS

PRINCIPAL COMPETITORS

METRO KANSAS CITY BEGINNINGS

Of the three major chains specializing in hand-mixed, superpremium ice cream, MaggieMoo’s was the last to be founded. Marble Slab Creamery, the pioneer, debuted in 1983, while Cold Stone Creamery, by far the largest of the three in the early 21st century, was founded in 1988. The founders of MaggieMoo’s, husband-and-wife partners Juel and Katherine Tillery, spent five years researching and developing the concept before opening the first MaggieMoo’s Creamery in March 1989 in Overland Park, Kansas, a suburb within the Kansas City metropolitan area. Juel Tillery was a former McDonald’s restaurant manager who had also spent more than eight years as an independent restaurant consultant, while Katherine Tillery had earned a business degree in college and had, according to a September 1991 article in the Wichita (Kans.) Eagle, “learned about the food business through ‘osmosis’ from her husband.” It was Katherine who had selected the MaggieMoo’s moniker, calling it “fun, descriptive, and memorable.”

The couple’s first and subsequent creameries encompassed about 1,500 square feet and featured a black-and-white color scheme and checkerboard floor. The outlets offered more than 30 flavors of rich, all-natural superpremium ice cream and about two dozen flavors of frozen yogurt, though not all flavors were available at all times. Aided by a local dairy equipment supplier, the Tillerys developed the recipes at home at night and on weekends. All the ice cream and yogurt, along with waffle cones, brownies, and cookies, were made fresh daily right on the premises of the creameries. Patrons were able to select from several varieties of waffle cones, including some hand-dipped in homemade chocolate, and could also choose “mix-ins” to be added into the ice cream. Employees used a small scoop and a spade to fold the added ingredients into the ice cream on a frozen slab of granite and then scoop the mixture into a waffle cone. Using a cold slab kept the ice cream hard as the extras were blended in, and the kneading forced air out, keeping the finished scoop rich and creamy. Customers could select from a variety of mixins, including candy, nuts, and fresh fruit. Also on the menu were sundaes, shakes, and ice cream cakes.

The first creamery was so successful that the Tillerys began franchising earlier than they had first planned, although they kept to a very modest rate of growth. By the fall of 1991, four MaggieMoo’s were operating in the Kansas City area, with one more in Wichita. Five years later, the chain consisted of 15 franchised outlets and one company-owned store. Most of these were located in either Kansas or Missouri, with other units in Atlanta; Des Moines, Iowa; and Lincoln, Nebraska.

1996–2003: THE SHAROFF ERA OF LEADERSHIP

By this time, however, franchisees had grown dissatisfied with what they perceived as a lack of support from the Tillerys. The founders had developed a superior brand of ice cream, but they spent very little on marketing and were slow to introduce new products to keep the concept fresh. Franchisees came to believe that they were getting next to nothing in return for their 5 percent royalty fee. When some of the franchisees stopped paying the royalty fee and another group of franchisees threatened a lawsuit, the Tillerys elected to sell out. They sold the chain in November 1996 to Richard J. Sharoff and a group of financial backers for an undisclosed sum. Sharoff operated the chain under the newly formed MaggieMoo’s International, LLC, and he moved the headquarters to Columbia, Maryland.

Sharoff was a former president of the bakery/café chain Vie de France, the former Maryland developer and franchisee for the Boston Market restaurant chain, and former executive at Sara Lee Corporation. Although the new owner retained the chain’s basic concept and its well-received ice cream recipes, he instituted numerous changes starting in 1997. Outlets began operating under a new name, MaggieMoo’s Ice Cream and Treateries, and the interiors of what the company called its “treateries” were overhauled, including the addition of bright visuals. Sharoff hired syndicated cartoonist Charlie Podrebarac, creator of the “Cowtown” comic strip, to design a new MaggieMoo character, and this “spokescow” was featured much more prominently in the stores and in marketing efforts. The focus on MaggieMoo pushed the chain in the direction of becoming geared more toward kids. Sharoff also made changes to the ice cream flavors offered, some of which began sporting bovine-themed names, such as Amooretto and Pina Cowlada, and added to the menu smoothies made from fresh fruit and yogurt or sorbet. In addition, an East Coast expansion commenced with the opening of a store near the Springfield Mall in Springfield, Virginia.

COMPANY PERSPECTIVES

MaggieMoo’s award-winning ice cream starts with the finest ingredients to make super premium ice cream fresh in the Treatery every day. By making our ice cream on premises, there is no “distribution stress” or ice crystal formulation. MaggieMoo’s is the only national retail chain to win five Blue Ribbon Awards from the National Ice Cream Retailer’s Association: Vanilla, Vanilla Bean, Chocolate, Dark Chocolate, and Strawberry.

Although the MaggieMoo’s chain certainly grew faster under Sharoff’s guidance than it had under the founders, the new owner’s initial goal of opening between 300 and 500 franchised outlets by the end of 2002 proved far too ambitious. By early 2001 the store count was approaching 50, with the units scattered across about 17 states. During this period, Sharoff also had to bring additional investors onboard to keep the company going, and he lost his controlling stake in the firm around 1999 though he remained president and CEO. In the spring of 2001, however, Sharoff teamed up with his cousin Stuart Olsten to reacquire a controlling interest in MaggieMoo’s International through their venture capital firm, Olsten Venture Partners. Olsten was the former chairman of Olsten Corporation, a publicly traded, multibillion-dollar staffing services company.

By 2003, as the firm concentrated mainly on affluent suburban areas for growth, MaggieMoo’s had opened its 100th store. Among other areas, it had expanded into Arizona, Texas, Chicago, and the New York City area, as the system spread to include more than 30 states. Franchise agreements were in place for another 240 units, including 30 alone for the Chicago metropolitan area, and the company had reached an agreement to open its first overseas outlets in Thailand. Systemwide sales for 2003 totaled nearly $30 million, about half the total of Marble Slab Creamery and well behind the $155 million that the surging leader of the category, Cold Stone Creamery, was generating.

2003: BEGINNING OF JAMESON ERA

In the summer of 2003 Sharoff stepped down from his position as president and CEO after a falling out with the board of directors about the firm’s strategy. The board, led by Olsten as chairman and majority owner, concluded that professional leadership was needed to guide the chain through its next level of growth. In December 2003 the board appointed Jonathan R. Jameson as MaggieMoo’s new president and CEO. Jameson had previously served as an executive at Denny’s Restaurant, Inc., and joined MaggieMoo’s from Panera Bread Company, where he had served as a senior vice-president and chief brand officer. Under its new leader, MaggieMoo’s set another ambitious goal, pushing the number of stores to 1,000 by 2007, while maintaining the chain’s reputation for quality and rolling out new products to further develop the concept. By this time, MaggieMoo’s had established its reputation for quality in part by winning a string of industry awards for its ice cream. In 2003 the National Ice Cream Retailers Association for the seventh consecutive year bestowed blue ribbons on MaggieMoo’s chocolate, dark chocolate, vanilla, and vanilla bean flavors of ice cream.

MaggieMoo’s was operating around 175 outlets by the end of 2005, a growth push highlighted by a move west into California, Washington, and Oregon. In addition to rolling out new ice cream flavors, MaggieMoo’s attempted to capitalize on a hot trend in the dessert sector—cupcakes—by introducing a new line of ice cream cupcakes in early 2006. The cupcakes could be custom ordered for birthday parties and special events and were also available in four- and six-pack containers.

Later in 2006 MaggieMoo’s entered the Denver metro area for the first time as part of the company’s new master developer program. This program was launched the previous year to expedite expansion in targeted markets, with the first such master developer selected to lead the push into the Seattle and Portland areas. In Colorado, MaggieMoo’s named Sharon Adams, who had a background in executive marketing and sales, its master developer for the Denver area with a goal of opening more than 20 outlets within five years. As a master developer, Adams was charged with identifying qualified franchisees and assisting them in the process of site selection and opening and managing a MaggieMoo’s store. Also in 2006, MaggieMoo’s International entered into a licensing agreement with HMSHost Corporation, a subsidiary of the Milan, Italy-based foodservice and restaurant operator Autogrill S.p.A., to establish Maggie-Moo’s locations at airports and travel plazas. The first such unit was located at Fort Myers International Airport in Florida.

KEY DATES

1989:: Juel and Katherine Tillery open the first MaggieMoo’s Creamery, in Overland Park, Kansas.
1996:: Richard J. Sharoff acquires the 16-unit MaggieMoo’s chain, which he operates under the newly formed MaggieMoo’s International,LLC; headquarters are shifted to Columbia, Maryland.
1997:: Among numerous changes instituted by the new owner, a newly designed MaggieMoo “spokescow” is introduced; East Coast expansion begins.
2003:: Jonathan R. Jameson is brought onboard to serve as president and CEO.
2007:: MaggieMoo’s, comprising more than 180 units in 36 states, is sold to NexCen Brands, Inc., for $16.1 million.

2007: ACQUIRED BY NEXCEN BRANDS

While the growth rate at MaggieMoo’s had picked up since the hiring of Jameson, the pace was nowhere near that needed to reach the 1,000-unit goal. By the end of 2006, the chain included more than 180 outlets in 36 states with an additional 150 stores under development. In February 2007 Olsten and the other owners sold the company to NexCen Brands, Inc., for $16.1 million, including $10.8 million in cash and approximately $5.3 million in NexCen stock. The sellers of MaggieMoo’s were also entitled to earn up to an additional $2 million if certain performance targets for 2007 were met. NexCen simultaneously purchased Marble Slab Creamery, the second largest ice cream chain specializing in the hand-mixed superpremium category, with more than 350 units and systemwide sales of approximately $90 million. Based in New York City, NexCen evolved out of Aether Systems, Inc., one of the once high-flying casualties of the dot-com bust. In 2006 NexCen began focusing on brand management, seeking to acquire and manage consumer brands in industries in which intellectual property plays a central role. The company purchased franchise-based footwear retailer Athlete’s Foot Brands, LLC, that year and clothing designer Bill Blass Holding Co., Inc., early in 2007. Its acquisitions of MaggieMoo’s and Marble Slab were its first within the quick-service restaurant sector.

NexCen’s executives had no immediate plans to change either chain, although they saw some synergies between the two brands in operational areas, such as back-office functions. They envisioned MaggieMoo’s and Marble Slab both continuing their plans of expansion as the two concepts had established their own niches within the hand-mixed, superpremium category: MaggieMoo’s was “more for kids,” while Marble Slab was positioned as more “adult and sophisticated.” For MaggieMoo’s, its new ownership was likely to mean a bigger marketing push and an increased emphasis on overseas expansion. NexCen planned to leverage the international franchise network of Athlete’s Foot, which extended to 40 countries, to the benefit of its newly acquired ice cream chains. The parent company also envisioned capitalizing on the MaggieMoo mascot, by extending the character into such things as children’s clothing, toys, kid’s music, and other products. As such plans were gestating, MaggieMoo’s moved forward with several new product introductions in 2007, including Maggie-O’s, an ice cream sandwich that paired Oreo cookies with MaggieMoo’s Udderly Cream ice cream; a new Buttered Popcorn flavor of ice cream; and Zoomers, a new line of low-fat, lactose-free smoothies made from fresh ice cream and fruit.

David E. Salamie

PRINCIPAL COMPETITORS

Cold Stone Creamery; Marble Slab Creamery, Inc.; International Dairy Queen, Inc.; Baskin-Robbins; Friendly Ice Cream Corporation; Ben & Jerry’s Homemade Inc.; Carvel Corporation; Bruster’s Real Ice Cream, Inc.; Dippin’ Dots, Incorporated; W. H. Braum, Inc.