So you want to start your own ice cream shop right? The ice cream industry is pretty lucrative in the United States simply because Americans love their frozen dessert! In fact, industry statistics show that ice cream and other frozen desserts had a combined total sales of $13.1 billion in 2019.
Many have dreamed about getting into the ice cream business and starting their very own ice cream shop! And who doesn't enjoy ice cream? But exactly how hard is it, and what do you need to know?
If you are interested in starting your own ice cream shop, there are a few things to sort out and consider before you take the plunge. Here we will explain 9 crucial steps to start an ice cream shop that you need to know!
1. Decide what kind of shop you want to have
The first question you need to ask yourself is “What kind of ice cream shop do I want to run and what kinds of products do I want to sell?” However, answering this question isn’t all that easy. You can't just sell what you love or you might not make any money. Some things to consider include:
What are your customers preferences?
Are you going to sell froyo, traditional ice cream, gelato, Italian ices, gelatis, or something else? There are tons of frozen treats that you could potentially sell. You will need to do some surveys and ask people what they prefer to know which one you should sell..
You could go around and scope out your competition. What are other ice cream shop owners offering and why? What can you learn from them?
Are you going to offer self serve at your ice cream stand?
Are you going to be self serve and charge by weight? Or are you going to have employees serve the ice cream and charge per scoop or cup size?
Many frozen yogurt shops are self serve, but establishing these larger brick and mortar stores for self serve can set you back hundreds of thousands in startup costs.
Do you want an ice cream truck, or a brick and mortar location?
The ice cream truck is having its moment and can be established with only a few thousand in start-up fees. Plus, you’re able to go anywhere! You can go directly to your customers.
What you gain in increased location flexibility, you lose in space for storage and more machines though, so choose carefully. The success of an ice cream shop largely depends on your location and how much foot traffic you get.
Do you want to join an ice cream shop franchise?
Franchising can quickly increase your early growth potential with an established name and systems, but it comes with a hefty price tag.
As such, you need to research potential franchises and make sure they’re right for your business. Many also say you need to own multiple franchise locations to make any good money.
2. Are you going to be seasonal or open year round?
It is no secret that the majority of sales for ice cream shops happen in summer. So should you close down in winter or stay open year round?
There are pros and cons to being open seasonal or year round, so this will depend on demand and your available resources. For example, if you only want to do this part time or as a side business until you can build up enough money to purchase a brick and mortar location for your own shop, then being seasonal with a truck might be the way to go.
If you are in a state that is warm year round like Florida, you could more easily go year round as sales won't decrease as much in winter, compared to somewhere like Washington state or New York.
If you are opening somewhere with really cold winters, then maybe going seasonal is the best option as you wouldn't waste paying employees when customers are few. Or you could pivot to a product that does well in winter, like hot chocolate, cookies, or other hot baked goods!
You will probably pay rent for the entire year still, so you will need to do the math to see if you'll make or lose money by having your ice cream shop open in winter. How many sales do you think you would make in winter? How many employees would you have working and how much do they get paid hourly? And how much would the cost be to run your machinery that day?
If your potential winter sales could bring in a profit, staying open year round might be the right option. If staying open during the winter is going to put you at a loss, you might want to consider seasonal operation.
3. Can I make any money from my ice cream shop?
According to Ice Cream University, a standard ice cream shop has a profit margin of about 25%. Which means that you’ll have to sell at least $4 worth of product for every $1 spent to break even.
So how many scoops, sundaes, and banana splits can you expect to sell during the average business day? These really depend on competition, foot traffic, your location, and uniqueness. You can give surveys to potential customers and use some estimations to come up with these numbers.
There are a variety of things you can do to make more money from your shop. Don't just sell normal soft serve like most ice cream shops, try artisanal ice cream, ice cream cakes, crazy shakes, cookies, or other frozen treats!
The real trick is to make your products have as much perceived value as possible. So fancier the confection, the higher perceived value, the more you can charge, and higher the margin! Believe it or not, there is a shop that sells fancy milkshakes for around $17! You just need to do something special that stands out, and then you will be able to charge more and make more money.
Another idea is to try and get commercial sales. Talk to schools or grocery stores and see if you can package your ice cream and sell it there. If you can get a large order, that can be a really nice margin.
4. Figure out your local government’s licensing laws
All 50 states and their local governments have their own rules when it comes to what licenses and permits you need to create a successful ice cream shop. This can vary by county, so make sure to sit down with a city official to ensure you are following all the necessary rules.
In some instances, this may include permits for food processing. Most states and counties require at least a home food processor’s license which requires an inspection, usually done by the state or county health department.
You will also need to get business insurance and probably a business bank account for your ice cream shop, so ask around in your area and see what the best option for you is.
5. Are you going to buy or make your own ice cream?
Once you have an idea about your customers preferences and what kind of ice cream shop you want to run, the next step is determining if you plan on making your own ice cream or buying it.
While making your own ice cream can be time-consuming and requires expertise in chemistry, machinery and other areas, it will save you considerably on overhead costs. You can also test your ice cream and change to be just how you like it.
It’s also a lot of fun and adds value to your business and brand! Just make sure if you do make your own ice cream that you check in with your local health department. Some key questions to consider:
How much ice cream do I plan on selling?
What is the local competition like?
Can I produce enough in house or will I need to purchase it from another ice cream shop?
Are you willing to spend the time making ice cream?
Where will I find a good ice cream maker?
So it really boils down to what your customers prefer and if you want to have a higher margin by making your own ice cream, or more time by buying ice cream.
6. Fill the store with the necessary equipment and supplies
No ice cream shop can run without the necessary equipment! The 3 major pieces of ice cream equipment you may need are an ice cream making machine (if you are making your own ice cream), refrigeration/storage, and cups/spoons.
Ice Cream Making Machine: These can be pretty pricy depending on the capacity of the machine. Be sure to ask yourself: how much ice cream do I want to produce? How much can my store hold? How much freezer space do I have in the back of the shop?
Refrigeration: All your frozen dessert items need to be refrigerated until they are served, so it’s important to invest in a variety of refrigeration equipment like fridges, freezers, and display cases. Make sure you have enough space to store all the product that your ice cream shop will need.
Cups/Spoons: Will you use cones or cups to serve your ice cream? If you are serving in cones, do you want to make your own cones? What color of cups do you want, and what designs? You will need ice cream spoons that won't break, and also tasting spoons for samples.
You will also need a host of other equipment, including blenders and scoopers.
Click on the above links to get some of these supplies now.
7. Find the right employees
Your employees can make or break your ice cream parlor! According to Statista, the U.S. Frozen Yogurt industry employs roughly 16,040 people across the nation. A lot of these employees work part-time and on the weekends, like students and retirees. But you’ll also need to hire managers and people to oversee food safety. If you get a traditional brick and mortar ice cream stand compared to an ice cream truck, that will also change how many employees you need.
Questions to ask yourself are: How many people am I planning on hiring? How many hours will they need to work? And how much will I pay them? How much do other companies pay in the area? What is the average amount of time that they might work for my shop before leaving? Am I going to work alongside your employees in your own ice cream parlor or will you need to hire managers?
Remember, this is a business and your first priority should always be ensuring that your store is profitable! While it’s important to keep customer satisfaction as a top priority, this will be difficult if you can’t afford to pay your employees or buy inventory. Just make sure you hire employees that love ice cream!
8. How to market your ice cream shop
Once you’ve opened your shop, it’s time to focus on marketing! How will people find out that you even exist? It is time to make a marketing strategy to attract customers as this can make or break your business.
Some simple questions to ask yourself about marketing your ice cream shop are: How will I advertise my store? Where is my target customer base located? How much am I willing to spend on marketing each month? Can my store stand out in the crowd? How do other ice cream businesses market their brands?
It’s unlikely that your store will be the only one in town. Take time to do a thorough analysis of your competition.
How many ice cream shops are in the area?
And how do they market themselves?
How much can I spend on marketing to compete with them?
Look at competing shops and see how you can make yours different. Try your own unique flavors and advertise that! Try hosting events or game nights at your shop.
One effective way to stand out from the crowd is to offer coupons and discounts for new customers! If people already have a relationship with another shop, then you want them to try yours. Anything to get your ideal customer to just try your shop once, and then they will keep coming back for more! This is a great way to get repeat customers.
Another way to get more cus omers and advertise your ice cream business is by spreading flyers, posters, coupons, and adding it to local business directories online. You could boost a post and run an ad on Facebook or Instagram to make sure potential customers know you exist and will come in.
Whatever you do for marketing, just make sure you don't blend in to the crowd! Offer something special, different, and unique about your shop, and then advertise that so everyone knows! Make sure you do something special for your ice cream shops opening day too!
9. How much money do you need to start an ice cream shop?
One of the most important things to consider before opening your ice cream shop is how much money you have in the bank and the costs involved. With such an expensive industry you’ll need thousands of dollars just for the initial investment.
Asking your friends and family for investments can work in some cases, but mostly it’s best to secure a business loan or line of credit from your bank. Unfortunately, many banks won’t give out loans for this industry, but some will; it’s best to ask your bank for their terms and conditions before you apply.
Don’t get discouraged if you don’t get a loan or can't raise enough money. You can always find creative ways to save; starting small and buying used equipment can help you get a cheaper start. Starting an ice cream shop is expensive, but with enough hard work and dedication your dream can become a reality!
With these tips in mind, you are well on your way to creating a successful ice cream business!