With the full brunt of summer weather just around the corner, at least one group of people has reason to rejoice: ice cream shop owners.

Memphians looking to beat the heat by indulging in a hot fudge sundae or munching on an ice cream cone, however, don’t have as many options as they used to – at least for the time being.

The ownership group of Cold Stone Creamery’s Memphis-area franchise has filed for Chapter 7 bankruptcy protection and closed its stores in the area.

Chapter 7 bankruptcy cases are considered the most forgiving type of bankruptcy because they allow debtors to wipe away most of what they owe.

Heavy debt load

One of the stores, at 1243 Ridgeway Road, reopened recently under different ownership, said Kate Guess, spokeswoman for Kahala Corp., the parent company of Cold Stone Creamery.

The second store, which was a tenant in the Avenue Carriage Crossing lifestyle center in Collierville, remains closed.

Eugene Douglass, the attorney who filed the bankruptcy petitions for Smith Ventures LLC and TAS Enterprises LLC, attributed the stores’ business failure to a combination of factors. They include a soft economy, the seasonality of the ice cream business and an insurmountable debt load. Bankruptcy petitions covering the two Cold Stone Creamery locations in Memphis were filed last week, according to The Daily News Online, www.memphisdailynews.com.

The last day of business for both ice cream stores under the ownership that filed bankruptcy was Dec. 31.

“The income stream just didn’t hold up to what their liabilities were,” Douglass said. “And they just couldn’t make it. Their revenue stayed fairly consistent. It just wasn’t sufficient enough to meet the debt load.

“I’m sure the economy didn’t help things, although I can’t say it’s because of the economic problems we’re having that that’s what caused them to fail. Because they did maintain pretty steady sales throughout the time they were open.”

Time for some introspection

The Cold Stone Creamery store in Collierville grossed almost $260,000 in sales in 2006 and a little more than $270,000 in 2007, according to the Chapter 7 filing. Gross sales for the Ridgeway store were about $251,000 in 2006 and 2007.

Corporate information from Cold Stone Creamery puts the average unit volume a little higher than those amounts, at more than $380,000 per year. The franchise fee is $42,000, and potential owners are told to plan on investing between $294,250 and $438,850 to develop, equip and stock their stores.

Guess said Cold Stone Creamery is evaluating its options for the Collierville store and hasn’t made a decision related to any new franchisee.

“When a franchisee chooses to leave the operation, whatever the reason may be, we have an area developer – which is sometimes an independent group or Cold Stone Creamery acting as area developers – evaluate the situation,” she said.

“We’ll evaluate the location, the (profit and loss) of the store, and then we’ll make a decision as to whether or not it makes sense to find a new franchisee or if the location appears to not be one that could be a profitable, successful operation for the next franchisee.”