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Ice cream businesses are probably the most visited shops by kids and adults alike. Understandably so as ice cream is one of the most popular desserts in the world. It’s been around since the 1500s as a treat for royalty in Europe. But thankfully, now anyone can get a scoop of rocky road whenever they want!
And people do!
In fact, the average American consumes 22 lbs of ice cream every year!
And if you’re like me, that number is probably a little on the low end. As a matter of fact, the ice cream industry produces more than 870 million gallons of ice cream every year — over a billion lbs if you count frozen treats like cakes, popsicles, and ice cream cookies (my favorite).
So much ice cream is consumed every year that the ice cream industry generated over $5 billion in 2014, and that number is climbing every year.
The fact remains that Americans love ice cream. Which makes opening an ice cream business a pretty sweet idea.
However, an appreciation for ice cream isn’t enough to qualify you to start an ice cream shop. There’s a lot of business aspects you need to understand before you scoop out your own niche in the ice cream industry.
But don’t freeze up now!
By the time you finish reading this post, you’ll have a clear idea of exactly what you need to do in order to make your love of soft serve into a freshly served reality.
Step 1: Learn How an Ice Cream Business Works
The best way to learn something is by doing, and that goes double for the ice cream business!
Honestly, you can read a book about ice cream shops and ice cream businesses, but until you work at one, you won’t fully understand what it means to welcome a customer or what the perfect consistency of ice cream should be when you serve it.
If you really want to understand the ice cream industry, you need to go work at an ice cream shop.
Get a feel for staffing, for ordering, for marketing, for inventory. The list goes on and on, and no one can teach you better than an industry veteran who’s been running her own shop for years.
While there are lots of ice cream franchises around, the majority of ice cream shops are mom and pop family owned shops which have a lifespan of decades, so it shouldn’t be hard to find a great shop to learn from.
You don’t need to go work for them for a long time. Of course, the more time you spend under a successful business owner, the more you learn on how to run your future shop the right way. So utilize the time you do spend with them wisely. Ask questions. Take on as many responsibilities as you can. Look for ways to make the business more efficient.
Really talk to customers!
Ask them why they shop at this store as opposed to others. What do they love about it? What would they improve?
Learn about the legal requirements of owning your own ice cream business. What permits do you need? What certifications does each employee have to have?
Figure out what equipment you’ll need (and how much it’ll cost)!
Everything you’re doing here is market research, so the more of it you do, the better. Ultimately, it will all boil down into understanding the ice cream business, and this will help you create a solid plan.
Step 2: Create a Plan
Why do ice cream businesses fail?
The truth is, ice cream businesses fail for the same reason as many other businesses – the lack of a plan.
Your plan is your road map. Invest sufficient time, effort, thought, and research into creating your business plan so that when you start an ice cream shop you don’t have to think about what to do at every turn.
This is when you decide what kind of ice cream business you want to be.
Independent ice cream parlor?
Specialty ice cream shop?
Maybe you prefer to have an ice cream truck or stand?
What kind of business entity will your ice cream business be?
Sole proprietorship, partnership, or a corporation?
By mapping out every decision, cost, and expectation ahead of time. As a result, you’d be saving yourself time and money down the road by allowing yourself to budget accordingly and price compare options. For example, if you know exactly how much you need of specific ice cream flavors and toppings, then when it comes time to order, you won’t panic and order too much ice cream. Moreover, you’ll know exactly how much to order because you will have already planned it out against your sales projections.
This is also the time to research your competition, define and understand your target market, and think about your design and style.
If you’re not sure where to start, Startup Jungle can help you create an expertly organized and professional business plan for your ice cream business.
Just email [email protected], and they’ll give you the help you need.
Step 3: Discover Earning Potential
How much money do ice cream businesses make?
Well, ice cream store workers make about $8.00 to $12.00 per hour. Management salaries run between $25,000 to $38,000 a year. These are costs you’ll have to factor into your business plan when figuring out your earning potential.
But as the owner, your earning potential depends on how your store does.
Are you a franchise or an independent shop?
Are you a high-end, specialty ice creamery making healthy, organic ice cream in-house or do you order your flavors in bulk from a distributor?
If you’re an independent store, you can set your prices and your margins as high as you’d like – but if your product doesn’t meet expectations, you won’t be in business long. However, if your offering does well, you can charge as much as you like for ice cream. Take a look at Lick Honest Ice Cream in Austin, TX. This small chain makes all seasonal and artisanal ice cream
Take a look at Lick Honest Ice Cream in Austin, TX. This small chain makes their seasonal and artisanal ice cream in-house using organic ingredients, allowing them to charge significantly more than traditional ice cream parlors. On top of that, they have distribution in place allowing them to sell their products throughout the state, and even deliver anywhere in the country.
If you’re a franchise on the other hand, then your margins are already set and you can check with the franchise for expectations. Cold Stone Creamery stores, for example, average about $358,000 a year in sales. After operating costs and franchise fees are taken out of that, a store owner can still expect to make a comfortable yearly salary.
The earning potential is there.
There’s an upward trend in disposable income as the economy continues to improve. That drives a higher demand for frozen treats. The ice cream industry in the U.S. brought in just over $5 billion in 2014, reports Statista, and that number is growing every year. They predict that global revenues will reach $74 billion annually by 2018.
For those who succeed, the ice cream business offers longevity not available in every industry. The IDFA states that most ice cream businesses are family-owned and have stayed in the business for over 50 years.
Step 4: Set a Budget
How much does it cost to open an ice cream shop?
That all depends on your business.
Will you have a mobile stand, truck, or a brick and mortar store? An ice cream stand will need $2,000 to $10,000 in startup funds. An ice cream truck will need only slightly more than that. And according to the National Ice Cream Retailers Association, a brick-and-mortar startup can run from $50,000 to over a million dollars for the store space alone. And of course, there are the costs for equipment and inventory, making starting an ice cream business fairly expensive.
But the good news is that there are lots of financing and small business loan options available to you!
Plus, there are ways to lower those costs.
For example, you can take over the lease payments of a closed location. But then you have to look at why that location closed, and if it’s worth it to take over the location.
If you’re building a store from scratch, your costs will be significantly more than taking over a location that’s already equipped to handle an ice cream store.
Equipment costs also vary greatly depending on what type of store you are.
A truck or trailer will have significantly less space, meaning smaller offerings and smaller equipment needs than a brick and mortar. Building a drive thru would cost significantly more.
It just depends on what type of business you want.
In no particular order, some costs to consider include:
- Serving/to-go containers
- Cash registers
- Franchising fees (if applicable)
- Website design
Because ice cream is food, there are tighter regulations and oversight than other businesses, such as a retail clothing boutique.
As such, running an ice cream store can be more expensive. So you want to keep costs down where possible.
Consider these to help keep costs down:
- Schedule appropriately
- Be aware of refrigeration doors left open
- Order flavors or ingredients wisely. Avoid stocking up on items and having to throw them out
- Order slightly used equipment instead of brand new equipment
- Shop around to find the best quality for the best prices
Step 5: Decide Which Products to Offer
This is where the fun comes in!
Deciding which products you want to carry determines what kind of store you want to be. Here’s the step where you figure out if you’re a high-end, artisanal shop, a frozen yogurt shop, a custard store, a creamery, a trailer, truck, or any other variation of ice cream business. Just dump out all your ideas and then pick out what most excites you.
A word of caution, though.
If you try being all things to all people, you may have the opportunity to draw in more people, but run the risk of equipping your store to do too much, making it less efficient and costing you revenue in lost time.
If you pick a specialty, such as hand-dipped adult milkshakes, you can offer a product a small group loves and build yourself a loyal following as a hand-dipped adult milkshake authority! And by doing so, you can charge significantly higher margins for your specialty product.
You’ll also want to think about what to charge for each product.
As with other food service businesses, your cost should generally run about 25 to 30 percent of the total charge customers pay, so that you also cover waste, samples, and overhead expenses.
Here’s a rough calculation:
- Average cost per 3-gallon tub of ice cream: $30
- Scoop size: 4 ounces
- Servings per container: 55
- Cost per scoop: $0.47
- Add $0.13 per scoop to cover additional costs (waste, samples, cups, spoons, cones): $0.60
- Multiply by 3.33 to 4.16 depending on the markup your market will support
Your price would then be $2.00-$2.50 per scoop.
But again, that’s for a standard ice cream shop. You can charge more (or less) depending on your ability to control costs based on your business model and efficiency.
Figure out what you can offer that nobody else can. Maybe it’s you, maybe it’s your service, maybe it’s your experience.
Whatever your unique selling point is, figure it out, write it down, and make it your store’s centerpiece, literally and figuratively.
Step 6: Decide on a Location
Where should you open an ice cream store?
As usual, that depends on your business model.
If you’re an ice cream truck, then you can just cruise around wherever there are large populations of kids in peak season like summer time. In addition, parks, sporting events, and residential neighborhoods are all prime locations.
If you’re opening a store, you want to make sure you’re in an area with lots of foot traffic, high visibility, lots of lighting, and easy access to get into and out of the parking lot and store.
You want to find a location that fits into your budget.
The National Ice Cream Retailers Association suggests finding a reputable real estate broker who specializes in commercial sales or leasing. They know of many projects that are up and coming and can help you plan accordingly.
If you’re not sure what to look for, identify a successful ice cream shop and analyze what makes their location such a great one.
Operating an ice cream parlor is a lot of work. Make it as easy as possible for yourself by choosing a location which helps attract customers.
Step 7: Find Suppliers
What equipment do you need to open an ice cream store?
According to the NICRA, you’ll need the following:
Channel letter sign, backlit Electronic Scale 4, 8, 12 or 16 hole/tray dipping cabinets Credit Card Machine Cake display freezer Wire Storage racks Self-serve Reach-in display freezer Stainless Steel prep tables Batch Freezer 5-quart mixer w/2 mixing bowls 1, 2, or 3 door hardening cabinet, or walk in hardening cabinet Cake Image print system Soda machine Reach-in / Walk-in cooler Waffle Cone Iron(s) Reach-in / Walk-in storage freezer w/shelves Commercial microwave Mop sink with faucet 3 Head Shake Mixer w/4 shake cups Dishwashing sink with double washboards (check w/health department for size) Fudge Warmer 2 hole Hand wash sink Cone Holder Inside Chairs Sandwich Prep cooler Inside tables and bases Soft Serve Machine(s) Replacement tabletops Bar Blender(s) Outside chairs Cold topping ice bin Outside tables Cash Register(s) Store art Fax Machine
But remember that your store might not need all this. So save yourself some money and only get the equipment you need.
That being said, make sure your business is up to code regarding all health and sanitation regulations!
Here are some suppliers to start with:
- KaTom Restaurant Supply
- Regional Distributors
- Webstaurant Store
- Frozen Dessert Supplies
Step 8: Promote Your Ice Cream Business
Without any customers, it doesn’t matter how great your ice cream is. Customers are the most important thing any business needs to succeed. So how do you promote your new business?
Well, there’s the old fashioned way and the modern technology way. You need to be doing both!
First, some visible signage up so people can easily see your shop as they pass by. Of course, you’ve got to use attractive, clean photos of your offerings so people know what to expect.
Stand on the sidewalk and hand out coupons and flyers to passersby.
Let people know that you’ve set up shop and that it’s open.
Do the same at local sporting events and parks.
Go where your target market is! People love a good coupon, and giving away a free scoop of ice cream is worth the $0.47 cost to bring in a new customer more so if they bring friends!
Take advantage of social media and digital marketing.
As far as digital marketing goes, make sure to pay attention to your website. Publish your menu online, along with daily and weekly schedules. Another great way is to create a Facebook page for your store. and make sure to respond promptly to inquiries and messages sent through it. By doing this, you’ll be clueing them into the type of customer service your shop has.
Also, take advantage of Yelp and offer check in and review bonuses, and utilize Facebook Ads and Google Adwords to be featured locally in searches.
And when summer rolls around, if your budget allows it you can always explore radio and television ads, too!
But think all of this out ahead of time and have a plan of action for your marketing and promotions!
Step 9: Create a Staffing Plan
Just like any other business, you can’t do everything on your own.
You’ll either be in such a rush that you’ll make mistakes, or take so long that customers will leave. Either way, your service, reviews, and customer loyalty will all suffer as a result.
Hiring reliable, enthusiastic employees will help make sure your ice cream store succeeds.
If you’re exploring the franchise option, most offer training both at their headquarters and in your store.
If you’re leaning towards an independent business, you’ll have to create a training plan so all your employees are consistent in all their actions.
Create a system of procedures for how to do everything properly.
From how much a scoop of ice cream weighs, to how long to blend a shake, to how much of each topping goes onto an ice cream cone.
This ensures consistency so that customers always have the same great experience!
You have to make sure you have great employees and there’s a way of doing that. First, figure out what traits you’re looking for. Next, decide how many employees you’d need and where to find them. Finally, figure out how you want your interview process to look like, how you’re going to train them, and how you’d schedule them.
Coming up with a staffing plan ahead of time will save you considerable time and effort down the road.
Step 10: Decide on a Style/Design
Deciding on a style for your ice cream store can be a challenge.
You want to represent your personality, but not scare away any clients who may not share your passion for neon everything. The best suggestion I can offer would be to talk to your ideal customers and see what they like!
Instead of guessing, just ask. No doubt you have friends who love ice cream. So start with them.
As for a logo, I went to 99designs. For as little as $99, designers compete for the prize with their designs giving you a pool of high-quality concepts to choose from for a reasonable price.
You can also meet with equipment suppliers and ask their opinion. At the same time, you can look at other stores you love for inspiration. But make sure to focus on an efficient workflow for employees, as well as adequate flow pattern for customers.
If you’re struggling with a name, here are some ideas for inspiration:
Sweet Scoops Creamy Delights Ice Cream Artisan I Scream Sprinkle’s and Sundaes Sweet Retreat Chill ‘n Swirl The Ice Cream Bar The Golden Spoon Sweet Rose Creamery Ice Cream Fantasies Double Scoops Frozen Delights Creamery AmeriCream Purely Lickable Cold Dreams
Step 11: Create an Accounting Plan
Having an accounting plan is not a “nice to have” option. It’s a must have.
As a business, your taxes will always come under scrutiny. So it’s critical to have every dollar accounted for and everything in order.
More so, you’ll be able to project your sales more easily with proper tracking, in addition to knowing if you are on track to stick to your budget. You’ll also be able to tell if anything is missing from your store, making an accounting plan part of your store’s security measures.
Here’s a list of accounting software we have seen:
Step 12: Get Into the Ice Cream Business Community
If you’re joining a franchise, you’ll have franchise showcases and updates to follow, as you’re buying into a community.
If you’re an independent shop, you should absolutely join the National Ice Cream Retailers Association.
This gives you such a huge boost in running your business because you’ll be surrounded by a support group who wants to see you succeed. You’ll meet other ice cream retailers and also sometimes suppliers of cones, toppings, nuts, flavorings, and equipment.
The NICRA offers benefits to its members, including, but not limited to, monthly bulletins, participation in an annual convention, ice cream quality testing, insurance programs, and scholarship opportunities
You never know where your big break may come from, so stay active in the community and always be networking!
The Bottom Line
Opening (and running) an ice cream business is a lot of work.
But if you do it right, it’s not only rewarding, it’s a lot of fun.
What’s more is you get to be your own boss and brighten people’s lives on a daily business!
In any case, we do hope that you put this guide to use.
Finally, if you enjoyed these tips and would like to get more content like this, please remember to download your copy of our 21 point business startup checklist. It is a simple yet in-depth checklist we’ve put together for you to help you get started toward your startup goal.