Ice cream is a treat that is enjoyed year-round all over the world. And for some entrepreneurs, opening an ice cream shop can seem like a rewarding and fun experience.
But foodservice businesses are notoriously difficult to turn a profit with, and surely an ice cream shop is no different, right?
Well, it may surprise you just how profitable an ice cream shop can be. If you are interested in opening your own ice cream shop, we’ve written up a guide on maximizing profits. Read on to learn more!
The Ingredients for Profit in Your Ice Cream Shop
Before we get into some hard numbers, it’s important to talk about the different factors that will make a successful ice cream shop.
1. What Kind of Ice Cream?
Ice cream comes in a variety of flavors and styles. Do you want to scoop it or sell pre-packaged items? Gelato, traditional, or frozen custard?
This is an important area to do some market research in before opening your business. If there is a successful gelato shop already in town, for example, consider offering more traditional American-style ice cream.
It’s also a good idea to do a quick survey of potential customers around town, to see what people are interested in spending money on.
If your shop has the space and the means, make sure to diversify your products. Besides offering scoops or cups of frozen yogurt, consider also offering things like shakes, sundaes, and ice cream cakes.
2. Mobile or Brick-And-Mortar?
The next you should consider when opening an ice cream business is what, exactly, it’s going to be.
Pop-up ice cream stands are a popular and low-cost way to market your business in high-traffic areas such as parks and shopping centers.
These are relatively cheap to start and maintain but come at the expense of space to store different types of products.
If you want to scale up the business while going even more mobile, consider running an ice cream truck. Food trucks remain perennially popular, and ice cream is no exception.
Trucks are no longer limited to pre-packaged options like we got when we were kids. Some ice cream trucks are full-blown ice cream parlors on wheels.
An ice cream truck is a great option if you want to hit high-traffic areas and also be able to take your business to events such as outdoor concerts and sporting events.
Both mobile options give you flexibility on when and where you are open for business.
Finally, we have brick-and-mortar ice cream shops. These are established retail locations that are open year-round.
Brick-and-mortar shops have a huge advantage over mobile options in that they offer a sit-down experience to customers. They also have more room, so you are able to offer more options such as frozen custard.
However, brick-and-mortar shops generally have much higher amounts of overhead in terms of rent, utilities, and other expenses.
3. Location, Location, Location
If you decide to operate a mobile ice cream shop, location is less of a concern. However, you still want to make sure you post up in high-traffic areas to maximize your visibility.
Make sure that you have the proper permits to operate your shop in a chosen location. Some places such as shopping malls and sporting venues require a vendor license in order to sell there.
If you are opening a brick-and-mortar ice cream shop, location is probably the single most important factor in your decision-making.
You want to be in a high-traffic area that sees a lot of car and pedestrian traffic. An ice cream shop tucked back in a quiet shopping center with a nail salon and an attorney’s office is likely to not see a lot of business.
Marketing is an important expense to consider when opening an ice cream shop.
First, you’ll need to decide on an identity for your brand. Are you going for a vintage Americana vibe or an upscale Italian gelato shop? Whatever you choose will drive your marketing.
Make sure that you are marketing efficiently. Taking out ads in the local paper is probably not as effective as running a good social media game.
Ice Cream Shop Profits
So now that we’ve established how to open a profitable ice cream shop, let’s talk about how those profits are made and what to expect.
The first consideration you need to make is your startup costs. Depending on your business model, these can vary.
Ice cream shops don’t require as many pieces of specialized cooking equipment as other food services. But those deep freezers and shake mixers can add up pretty quickly.
You can expect to spend an initial investment of at least $20,000 on equipment.
If you are operating a mobile shop or truck, you will have to factor those costs into the equation as well.
You will also need some form of POS system, regardless of your business model. This will allow you to take payments, as well as track your inventory and invoices/orders for supplies.
For a brick-and-mortar location, equipment is not the only thing you will have to purchase. You will also need to pay rent and utilities on the location, as well as furniture and decor.
Monthly expenses for any ice cream shop include supplies, payroll, marketing expenses, and upkeep costs on equipment and/or your building.
Remember that the cost of your supplies is an important factor in determining the cost to your customers. You want to make sure you are turning sufficient profit.
On average, an ice cream shop that sees good traffic and has a good pricing model can expect to make 30-60% profit margins.
This translates to anywhere from $100k to $600k annually. And most ice cream shops report breaking even around their third year in business.
Opening an Ice Cream Shop?
While opening an ice cream shop is a challenge, it can be a very rewarding and fun experience.
Just make sure that you are doing everything you can to maximize your profits, especially in the early years of the business.
If you are looking for the best frozen custard machines in the industry for your business, we’ve got you covered! Please contact us at any time at 877-356-6176.