Ice cream is a universally loved treat, providing, a cool, creamy respite from the heat of summer. In addition, it’s also an enticing business option for the budding entrepreneur. Ice cream is an $11 billion industry and is essentially recession-proof because of its low price point. In addition, you get the satisfaction of putting smiles on people’s faces each day.
However, a lot of considerations need to be made before jumping into such a proposition. Even though ice cream is a fun industry to join, like any business, it’s not easy. It also will take a considerable investment just to get started. This article is designed to give you some ideas to consider before you get started.
Developing Your Ice Cream Shop Concept
The first thing you need to decide on opening a shop is the concept. Having a plan of what type of service you want to provide will give you the greatest chance of being successful. There are three areas to focus on when deciding a concept: product type, business type, and whether to be independent or buy a franchise.
Deciding on what type of product you want to sell is crucial to guiding what type of concept you will present. While you can definitely offer more than one type of frozen dessert, keep in mind that it means more equipment and supplies will be needed in order to accommodate each type. Here are three of the most popular types to choose from.
Traditional, Hand-Scooped Ice Cream – The original way to enjoy ice cream is hand-scooped. Ice cream served this way allows you to control how much of the product is distributed per serving using ice cream scoops. This will also allow you to calculate how much product can be scooped from one three-gallon tub, which will make it easier for you to determine how much to charge per scoop.
Soft-Serve/Frozen Yogurt – When it comes to profit margin, a little bit of soft-serve goes a long way. Air is whipped into the ice cream base to create light, airy treats that can be sold at a high mark-up. Soft-serve and frozen yogurt have a lot of flexibility, as they can be sold either by the serving, or by weight, if providing a self-serve option to your customers. They are also great for adding “mixers” with candy and other toppings included.
Gelato – Maybe you want to bring an Italian flair to your ice cream business. In that case, gelato is the way to go. Contrary to popular belief, gelato contains less fat and sugar, due to using more milk than cream. Gelato is going to likely have a more upfront cost associated with it if you make it from scratch, due to needing specific gelato-making equipment. Also, gelato mixes and ingredients will typically be higher in price as well, due to a higher quality of ingredients.
Make no bones about it, starting a business from the ground up is going to take an investment. Selecting what type of business you want to run will give you an idea of how much that initial investment will be.
Ice Cream Stand or Truck– If you’re looking to dip your toes into the ice cream business, an ice cream stand or truck is a perfect low–investment option. You can start an ice cream truck or stand for less than a $10,000 investment. The main benefit of having an ice cream stand is that you can get it up and running faster than a brick-and-mortar shop. A stand can have a relatively small rental rate in areas such as mall kiosks, beach fronts, and in other highly populated areas. With a truck, the biggest benefit is that you can move your business to wherever the customers are on a given day. Additionally, you can keep operations seasonal without having to pay a ton in rent during the soft winter months.
Brick-and-Mortar Shop – If you want to dive right into operating your own ice cream shop, brick-and-mortar might be the way to go. Brick-and-mortar shops give you more room to operate, with plenty of room for storage, prep, serving, and dining, if you so choose. The costs of opening a brick-and-mortar location can vary from $50,000 to $1 million or more for a stand-alone business. Doing your research ahead of time will help you be prepared for how much to budget for possible construction. There are also opportunities out there to take over existing leases from a closed location. However, you should dig into why that business failed to make sure the reason wasn’t the location.
Independent or Franchise
While the idea of starting your business from scratch is enticing to some, for others, their motivation is to run a business with an already established brand behind it. Opening a franchise has the benefit of name recognition and a built-in customer base. However, most franchises require a hefty start-up cost, as well as franchise and royalty fees. Franchise fees range between $10,000 and $50,000. Franchisors also have strict requirements before granting a franchise. Requirements may include a minimum net worth and liquid assets, as well as years of experience in the industry. Remember, franchisors won’t just deliver the keys to their business to anybody. Going independent gives you more freedom and flexibility to create your own vision, but you will have to build your business from the ground up and rely on word-of-mouth to increase your customer base.
Making or Sourcing Your Ice Cream
Once you’ve decided on a concept, you need to determine whether you will be making your own ice cream or sourcing it from a vendor. There are pros and cons to either option, which are highlighted below:
Making Your Own Ice Cream
- Creativity to design your own unique flavors
- Complete control of ingredients going into your ice cream
- Ability to advertise your ice cream as homemade or artisinal, as that is a popular trend in ice cream
- Greater profit margin than sourcing, as you’re avoiding going through a middleman and any mark-ups involved with that process
- More space will be needed as more equipment is required to make your own ice cream
- Be prepared to spend more time in your shop, as there will be considerable prep time required to make your ice cream
Sourcing Your Ice Cream from a Third Party
- Great if space is an issue for your business
- Eliminate prep time making ice cream – only focus on selling it
- Pick and choose which flavors to bring in with little fuss
- Can mix and match vendors
- Higher cost compared to making your own ice cream
- At the mercy of the vendor for flavor availability – may require advance planning to make sure you have certain seasonal flavors in time
Finding the Best Location for Your Ice Cream Shop
If you decide to go with a brick-and-mortar shop, you will need to figure out the best location to house your business. You want to be where the people are, so areas with high foot traffic, lighting, and visibility should be preferred over areas that are a little more off the beaten path.
Finding a qualified and knowledgeable commercial real estate agent can help make this process easier and give you the best chance of starting out successfully.
Preparing for the Winter Months
Of course, the most profitable time for an ice cream shop is in the warmer months. If your business will be in a region with cold weather, you need to be prepared for the probability of soft profits during the winter months. Let’s face it, going in for a cone during a polar vortex isn’t the most enticing idea in the world! If you’re going to open a brick-and-mortar business, that means still paying rent during this time.
Have a plan to combat this time of year. Ideas can be as simple as running lean, keeping on only a couple of employees to run the shop until spring. You could also diversify your menu by offering hot options, such as soup (sounds much better in that polar vortex!). Adding coffee is another great idea to keep people coming in! Another idea is to focus on selling pre-packed pints and quarts to-go. While people might not be keen on coming to your shop for a scoop in cold weather, that doesn’t mean they might not want something to enjoy in the warmth and comfort of their own home!
There are many other things to consider before opening an ice cream shop, including local regulations, permits, setting up your business with the IRS, etc. Resources such as the Small Business Administration are great for giving helpful tips and counseling to get started on your dream as a business owner.
Cody Bell is a content specialist with Central Restaurant Products. With over 7 years of experience in the foodservice industry, Cody has developed knowledge on topics from all aspects of commercial foodservice, from the front of the house to back of the house. He is a NAFEM Certified Foodservice Professional. In his free time, Cody likes to spend time with his wife and puppy.