Ice Cream Entrepreneurs Guide

Getting Started in the Ice Cream Business

by

Michael Greenwald

Dream Cones Inc.

www.dreamcones.com
service@dreamcones.com
170/1 Pahonyotin Soi 14, Bangkok 10400
+662 616-9951

SKU 885 871 900 0301

Greenwald, Michael 1942—

The Ice Cream Entrepreneur’s Guide (Getting started in the ice cream business)—1st edition August 2011
241 pp
1. Ice cream manufacture & sale
2. Gelato manufacture , marketing and sale
3. Ic cream business

©copyright 2011 Michael Greenwald. All Rights Reserved

Dream Cones Ltd. (Thailand) agent for Michael Greenwald
170/1 Pahonyotin Soi 14, Bangkok 10004
+662 616-9951 fax +662 616-9953

First Edition: August, 2011; August 2012

Version 2: September 2012

Although every effort has been made to be sure this eBook is free from error, it is sold with the understanding that the authors,
editors and publisher are not responsible for any errors or omissions that may have occurred or action taken by the purchaser or
anyone else as a result thereof. The author and publisher disclaim any liability whatsoever for information omitted or erroneously
included in this publication resulting in damage.

These electronic media files are protected by the 1998 Digital Millennium Copyright Act and the EU Copyright Directive. It is il-
legal to copy this work for the purpose of violating the rights of the copyright holder. Your copy of these files cannot be altered.

2
 No part of this book may be reproduced for commercial purposes by any means whatsoever without written permission from the
Publisher.

Introduction to the Ice Cream Business

Everyone loves ice cream—there’s lots of it around and many people dream of making
and selling it. It’s a great business and thousands of entrepreneurs are making money in
it right now. You can be one of them!

An ice cream kiosk or shop is easy to manage and if the location is right, the return on
investment is far greater than from stocks, bonds or bank interest and the cost is
far less than would be required to purchase a condo or other income property.
Net/gross profits normally run from 50-69% and net profit on goods is usually 100-
177%. Read more about that on page 33. It’s a wonderful business with a lot of room
for creative expression and after all, one expresses love for people thru food. And, busi-
ness is booming!

Ice cream is as popular as it has ever been, with Datamonitor forecasting global value sales that by 2014
will be 21% higher than in 2009. The message is that many consumers are trading up to premium vari-
ants where the unique selling points are a combination of indulgence and innovation.
http://www.arlafoodsingredients.com/news/new-team-brings-out-the-value-in-ice-cream/

Furthermore, during hard times, ice cream sales improve! This from Time Magazine:

While continued high unemployment is making economists nervous about the possibility of a double-dip
recession, there appears to be no recession in the business of double dips. Official tallies in the ice cream
business are hard to come by, but anecdotally, the ice cream market appears to be hot. Shop owners
around the U.S. say they are packing more cups and cones this summer than last. What's more, the
number of customers asking for a double dip, or two scoops, seems as high as ever.

3
 Lynda Utterback of the National Ice Cream Retailers Association says numerous members have told her
their sales are up 25% from a year ago. Dutch consumer-products firm Unilever, which sells ice cream
brands Ben & Jerry's, Breyer's, Good Humor and Klondike in supermarkets, reported that its first-quarter
ice cream and beverage sales rose 7.4%. "Looks like people are turning to ice cream in a big way this
summer," says Harold Waxman, who owns industry newsletter Ice Cream Reporter. "When things are
hard, ice cream is a relatively inexpensive way to feel good."

http://www.time.com/time/business/article/0,8599,2005572,00.html

Having helped hundreds of people get into the ice cream business, we are constantly re-
minded about how different we see the road to success compared to new ice cream en-
trepreneurs. Almost always the first thing newcomers ask about is: “How do I make ice
cream and how much money can I make.” We think the right questions are: “Where is a
good location” and “How do I generate sales?”

If you think that by making and/or selling terrific ice cream the world will beat a path to
your door, get your bankruptcy documents ready now. The world is full of ice cream and
quality alone will not beat the competition. One thing is certain: if you sell a lot of ice
cream you will make money! What you really need to know is: how will you SELL your
product.

The Ice Cream Entrepreneur

How to Start and be Successful in the Ice Cream Business

Dream Cones is an international franchisor and most of our customers make and sell
premium gelato. But this book has been written for EVERYONE interested in the ice
cream business, whether you plan to make it or just be a reseller.

TABLE  OF  CONTENTS  

Books by Michael Greenwald
Front Matter
Introduction to the Ice Cream Business
Dream Cones Books
Forward

CHAPTER 1 Fundamentals of Starting Your Business

Business Plan Preliminary
Benefits of Franchising
Elements of a Good Business Plan
Parts of a Business Plan
Choosing a Corporate Entity
Chapter 2 What is Ice Cream?
Ice Cream Specialties
Other Frozen Desserts
Important terms
Chapter 3 Making Gelato

4
 Small Gelato factory
Gelato-Maker’s Product Line
Wholesaling and Distribution
Chapter 4 Opening a Retail Outlet
Location
Good Locations
Manufacturing in Your Shop or Kiosk
Retail Outlet Size
Shop Setup Cost
Pricing Your Products
Determining Profit
Leasing
Chapter 5 Your Product Line
Point-of-Sale Problems
Setup Cost
Pricing
Mobile Sales
Chapter 6 Marketing/Advertising

Forward
The reason why people respect successful entrepreneurs is because they know starting a
new business is risky and success is to be admired. And they also know that most new
businesses fail. There are many personal reasons why businesses fail but the main reason
is because the entrepreneur did not do his homework.

Businesses start off as dreams and dreams are always pleasant. But making the dream
become a reality requires research to make sure that what you want to do will make you
money. This is never easy. Start off by looking at the competition. If there is no competi-
tion, Why? If there is a lot of competition, is there room for more? Talk to people in the
business. Learn as much as you can. Then, make a business plan.

We talk a lot about a business plan in this book because it is the most effective tool to
prove to yourself (as well as others) that your ice cream business will be a success. If you
research the term “business plan” on the internet you will find hundreds of entries. The
reason is that knowledgeable people know how important a good plan is, and hopefully
by the time you have finished reading this book, you will too!

5
 CHAPTER  1  
Fundamentals of Starting
Your Business
Opening any new business requires some long-
range planning. A clear plan gives you a goal to
work toward. It is like having a road map for a
long trip. In this case the road map is a business
plan. Like a good road map, your plan needs to
include some things and omit others that are less
important and will make the map harder to follow.
This book is intended to provide a broad overview
of the ice cream business and start you thinking
about creating a business plan.

No matter what business you enter, it is important to know as much as possible about it
before you start. A really good way to learn a lot is to get a job in a shop or gelato factory
that makes/sells similar products. There is nothing like on-the-job experience! A wealth
of information about making ice cream can be found in the eBooks we offer.

Another excellent source of technical information about making ice cream is the website
of the University of Ugelph: http://www.foodsci.uoguelph.ca/dairyedu/

Since you are reading this introductory text, it may be too early to start thinking about cre-
ating a business plan, but this is a good time to start thinking about what is in a plan and
the information it will require.

Benefits of Franchising

Before we discuss a business plan, let’s talk about franchising and why it is beneficial. Be-
ing franchisors ourselves, going to all those franchise trade shows, we know better than
most how important a franchise can be.

6
A huge benefit of franchising is the improved chance of success. According to statis-
tics published by the US Small Business Administration (SBA), seven out of ten
new businesses survive at least two years and 51 percent survive at least five
years. This is a far cry from the older record that 50 percent of businesses fail in the
first year and 95 percent fail within five years. One of the main reasons is that more
and more owners open franchise operations.

• A recent survey of American franchisees found that over 80% were satisfied with
their franchise and knowing what they know after two years, they would take it
again.

Advantages of Franchising
Franchising has several powerful benefits, which is why so many people take them. The
first is that the franchisor is successful, which is one reason why you are considering
the franchise. This means they have avoided and/or made and survived many mistakes,
which they will be sure you don’t make. We firmly fall into the “made them all” category—
and we remember them ALL and will prevent you from making them! Second, they have
developed a brand identity, which is valuable.

Another very important benefit of a franchise is that you

get a very clear idea of cost before you invest. There
may be surprises later but nothing like the unpleasant
surprises that can occur during independent startups.

You get to meet the people who will support you

and decide if you like them. Last but certainly not least,
you get the training, support, marketing, branding in-
gredients and machinery you need without having to
experiment.

A franchise offers you name recognition and a well-known

product line. These are important in any business but even
more so with food. The reason is that people form powerful
food habits resulting in their consistently choosing one food
brand over another, usually for their entire lives. If they like a
certain brand selling near their home, they will inevitably buy
it anywhere they go, in preference to all others. So, the
power of the group works for the franchisee.

In addition, the franchisor provides collective advertising,

sometimes locally and sometimes nationally and also pro-
vides you with ads and promotional materials you can use.
They provide uniforms, branding graphics and lots of exper-
tise. This does not guarantee you will be a success, but it greatly increases your chances.
Whether or not you decide to franchise is a complex and personal decision but it is clear
that the chances of success favor the franchisee.

7
Advantages of being independent
Obviously, the first one is that you do not pay a franchise fee or royalty. This can be a lot
of money. Sometimes it is a whole year of profit!

All franchisors charge a non-refundable franchise fee and a startup fee. A shop or small
desert restaurant fee of $25,000 is common. In some cases this is as much as the pro-
jected cost of the shop! Some charge an annual fee and/or demand a royalty, often 6%
of your net profit. 6% of net profit may be as much as 20% of the gross! In addition, you
have to buy their products and cannot switch around.

Being independent, you can select any products you wish and switch as you please. You
can personalize your service and products to meet local demands. You can name your
shop any way you wish, rather than “Dream Cones” or “Baskin Robins.”
ß
Dream Cones is different from franchisors such as Baskin-Robbins in that most of our
international franchisees make as well as sell ice cream. The product, gelato tastes
and looks significantly better than mass-produced ice cream—but it is slightly more ex-
pensive. It does best in upscale malls or areas where people with some money congre-
gate. We are not as well known as the largest franchisors and therefore charge much less
for startup. You don’t get the massive brand identity as Baskin, but you do get a lot for
your small investment. And, we do not charge a royalty fee or commission.

Whether you choose our franchise or another, franchising has a lot of advantages and
you should research the proposals of various franchisees before making a decision.

8
 The Elements of a Good Business Plan
Many potential ice cream entrepreneurs ask, "Do I really need a business plan?" My an-
swer to this question is always, "Yes."

A business plan is like a road map. It outlines where you are, where you want to go and
also gives you the directions you need to get there. It demands considerable research,
takes time to write, requires a lot of data and depends in part on projections. But despite
all of that, business plans are one of the most effective tools for starting a new business.

Like a good map, the business plan shows all the important locations on your trip but omits
a lot of details that would actually make using the map harder. It is a delicate balance be-
tween having the essentials but skipping the details that are time consuming and not ini-
tially essential.

One of the main benefits of a business plan is that it helps you discover new ideas, differ-
ent approaches and fresh perspectives. You often find products and approaches you
never considered before.

Your final plan may be considerably different than the original; it's a flexible tool that can
help you think creatively and come up with new ideas.

Choosing a Corporate Entity

Another early decision to make is about your corporate entity: what kind of legal structure
you should operate under. There are many types of business entities, or corporate struc-
tures you can consider to start your business and their nature varies from country to

9
country, but here are the most common ones:

Sole Proprietorship
Sole Proprietorship is owned and run by one individual and there is no legal distinction
between the owner and the business. The owner receives all profits and has unlimited re-
sponsibility for all losses and debts. The main disadvantage of a sole proprietorship is the
unlimited risk. If something bad happens, you are completely responsible for it and need
to protect yourself with insurance.

Limited Partnership
A limited partnership has at least one or more “limited” partners who do not to participate
in management and limit their loss exposure to their investment in the business. Every
limited partnership must have at least one personally liable general partner (someone who
takes all the risk) although the general partner can be a corporation or another limited
partnership to control the risk.

General Partnership:
Each partner has an equal voice in the management of the company, which can survive
the death or withdrawal of a partner if so specified. Of course the partners can make an
agreement about who has what responsibility and what part of the profit they get. But all
of the partners are liable for their own debits as well as debits or claims against the com-
pany. So, if the company is sued each partner is completely liable. The profits once dis-
bursed are declared as simple income on individual tax returns as in a sole
proprietorship.

A limited liability company (LLC)

An LLC is a flexible form of enterprise that blends elements of partnership and corporate
structures. An LLC is not a corporation. The primary characteristic an LLC shares with a
corporation is limited liability, and the primary characteristic it shares with a partnership is
pass-through income taxation. Each individual can just claim the profit as part of their per-
sonal income. This keeps the paperwork much simpler than a corporation. It is often more
flexible than a corporation and it is well-suited for companies with few owners.

Corporation (Inc.)
There are many different kinds of corporations but their main benefit is that liability is lim-
ited to the assets of the company unless gross or criminal negligence can be proved.
Shares of the company can be sold or divided among the principles and the company sur-
vives the death or withdrawal of any shareholders. Usually corporate officers are appoint-
ed/hired who run the company.

In a corporation, decisions are made by a board of directors, but some rights are reserved
for the shareholders. Taxation is fairly complicated with a lot of paperwork but this can ac-
tually be used to benefit the company and limit its taxes.

10
 CHAPTER  2  
What is Ice Cream?
Since you are considering going into the ice cream business you should know a bit about
what you are planning to sell. Commercial, mass produced ice cream began in the USA in
1929 with the invention of the continuous freezer but what we call ”homemade” ice
cream, meaning ice cream made in small batches, has been around for hundreds of
years. Stories about the origins of ice cream--in China, in Persia, in Asia, in Europe go
back into antiquity--but none of them have been substantiated.

Ice cream's origins are known to reach back as far as the second century B.C. We know
that Alexander the Great enjoyed snow and ice flavored with honey and nectar. Biblical
references also show that King Solomon was fond of iced drinks during harvesting. Dur-
ing the Roman Empire, Nero Claudius Caesar (A.D. 54-86) frequently sent runners into the
mountains for snow, which was then flavored with fruits and juices. Maybe that’s just as
well—there is no single truth—ice cream is multi-national—it belongs to us ALL!

“Ice cream” is actually a legal term in many countries, requiring a product that has a
minimum weight of at least 180-190gr/L (1.6 lb./gal.) and contains at least 10% butterfat.
If a frozen dessert does not meet these requirements it has to be called something else—
but not every country has this legislation. After cholesterol was discovered, ice cream
manufacturers wanted the butterfat requirement changed so that they could use more
vegetable fat, but the dairy associations blocked them.

11
Products that do not meet these specifications are classified as “frozen desserts.” In
the past this implied low quality and even today a lot of frozen desserts are cheap quality.
Some are given a brand name, such as “Tasty Freeze” to divert the consumer’s attention
from the quality. In other cases, expensive inclusions such as candy or cake have been
added, necessitating the need to reduce butterfat content or increasing air content.

In countries where this law does not exist, many ice cream manufacturers use a combina-
tion of butterfat and vegetable oils to achieve the desired level of fat. This reduces both
cost and health risks.

Butterfat an important part of ice cream, contributing to its texture, taste and aroma. It
plays an important role in bonding the dissimilar components of ice cream. There are
products that mimic butterfat but high butterfat (8-10%) still represents more than 78% of
the ice cream market.

Butterfat consists of many triglycerides (different types of fat), which solidify at widely dif-
ferent temperatures. When ice cream mix is frozen some of the triglycerides remain liquid
and some solidify, with every variation in between. This adds to complexity of taste,
which is exciting. Ice cream is in fact classified by its butterfat content:

Class Butterfat Milk Solids Sugars Solids

Gelato 6-8% 11-12% 10-15% 32-34%
Economy 10-12% 10-11% 14-17% 35-37%
Trade 11-12% 10-11% 14-17% 37-39%
Deluxe 13-14% 8-9% 13-17% 39-40%
Premium 14-16% 7-8% 13-17% 40-41%
Super Premium 18-20%` 6-8% 16-17% 42-44%

Premium and Super Premium: Today, top-end manufacturers like Haagen Dazs call
themselves “super premium manufacturers” but this no longer means they sell ice cream
with 20% butterfat. That much would make the ice cream too gluey. Today the term
”super premium” means that the ingredients are top-of-the-line and air is limited to 40-
50%.

Ice cream shops usually sell premium or super premium ice cream. The customers can
taste the difference and they expect quality. The quality of the ingredients and the amount
of air whipped into the product are factors that separate the best from the rest.

In addition to butterfat there are other things that make premium or super premium ice
cream superior. The machines that make it are more expensive and extrude it at a lower
temperature, yielding smaller ice crystals that make the product smoother. The flavors are
usually all-natural, made with fresh or frozen fruit, fruit pulp and fruit juice. A major com-
ponent of many flavors is vanilla. The vanilla in premium and super premium is all-
natural. The cheaper brands mix artificial vanilla with a little natural. Also, the solids in
premium ice cream are fortified with skim or buttermilk, not whey, which improves tex-
ture.

While Ben & Jerry and Haagen Dazs, Bryers, etcetera are internationally-known, quality
brands, there may be local manufacturers who produce equally good products. They
may not have the internationally-known name of Ben & Jerry or Haagen Dazs, but com-

12
munities always appreciate their own products and you may get more service, more free
promotion and the benefit of local pride by selling them.

Gelato: Although too low in butterfat content to le-

gally be called “ice cream” gelato is a premium form
of ice cream. It is actually heavier (more dense)
than commercial ice cream because it has more sol-
ids and less air. Most gelato is all-natural and made
with real fruit flavors and natural vanilla. For this
reason and the lavish amount of milk solids, gelato
is considered “super premium.”

The main composition difference between gelato

and commercial ice cream is that it contains about
20-35% less air, 15% less sugar and 60% less but-
terfat than premium ice cream. They are replaced
with milk solids. This makes gelato much healthier
and the flavors more intense but the smaller amount
of air results in more milk solids per scoop, hence
higher ingredient cost.

Another difference between gelato and commercial ice cream is the factory cost, which is
huge. However, once the commercial factory is set up and running, manufacturing costs
are very low, output is high and few workers are required to run it, whereas a gelato fac-
tory is more like a commercial kitchen and has a higher overhead.

“Continuous” manufacturing: The most common type of ice cream sold today is made
commercially using the “continuous” manufacturing process. This consists of feeding
a steady stream of liquid ”mix” and highly pressurized air into a freezing chamber where it
is frozen under high pressure to about -6 to -12°C, then scraped off the freezing cylinder
before being extruded “downstream” as they say, into other machines that shape, form
and package the product. Read more about the continuous process in our eBook, Gelato
Maker’s Guide.

After being extruded from the continuous freezer, the ice cream may be mixed with “in-
clusions” such as nuts or fruit bits from a hopper or extruded in various forms. Then the
ice cream is blast frozen and packed.

13
 Ice Cream Specialties
Ice cream can be made into many products that
broaden your product line and boost sales. Cer-
tainly among these are ice cream cakes, rolls
and sandwiches. Soft serve is another type of
specialty but if you do not want to sell it, a soft
serve machine can be used to make milkshakes
and frozen yoghurt.

Ice cream cakes and rolls

are very popular and they represent an im-
portant part of your takeout product line. Peo-
ple buy cones and sundaes to eat on-the-spot
but they buy ice cream cakes and rolls to take
home. These products plus cookies, cakes, pastry, candy and even light food supple-
ment your eat-on-the-spot sales and adds to your bottom line. Over time you develop a
nice market for these products which may end up representing 20% of your total sales.

If you make your own ice cream, cakes, rolls and ice cream-on-a-stick are easy to make.
If not, most large ice cream manufacturers sell them. In both cases it is wise to learn how
to use a pastry sleeve to write on ice cream cakes, so you can create specialized mes-
sages such as “Happy Birthday Cheryl.”

Ice cream cakes and rolls can be placed in a display

freezer along with tub ice cream but usually they are
marketed in an upright freezer. In order to sell them
you will require a sturdy box, possibly insulated and
most vendors also keep a stock of dry ice so the
product does not melt.

← Our luscious ice cream sandwiches

The problem customers have with an ice cream cake is that it is so large that the custom-
er would have to empty most of the freezer of their home refrigerator to keep it. This is the
reason why dry ice is so important. Just a half-kilo (a pound) of dry ice will keep an ice
cream cake frozen 4-6 hours.

Having your own baking department means having a 1 or 2 deck oven, a mixer, a food
processor and some decorating equipment. Of course it also means having a baker full
or part time. An alternative is to find someone who loves to bake who can make baked
goods for you in their home. This saves you space, machinery investment, salary and
bookkeeping expenses.

Products made at home are purchased by the piece and you can usually order in the late
afternoon for delivery the next morning. If you are offering cakes you will want to develop
a photo catalogue showing what you sell. If you are franchising your franchisor usually
has this for you.

14
 Other Frozen Desserts

Sorbets
and sherbets are two other frozen desserts made without milk. Sorbets are often called
“fruit ices” as they contain fruit, fruit pulp, fruit juice, sugars, vegetable fibers and stabi-
lizer/emulsifiers. They are tart and much more intensely flavored than ice cream and very
refreshing.

Sherbets
are similar in composition to ice cream but contain only 2% vegetable fat and no milk.
They are less tart than sorbets and more smooth but more intensely flavored than ice
cream.

Soy ice cream

is a frozen dessert similar to ice cream made without milk products. Our Soy-So Deli-
cious!® frozen dessert is made with soy protein which has no flavor. The product tastes
the same as gelato. Soy desserts are preferred by lactose-intolerant customers, vegetar-
ians and vegans. This is a small market but almost no-one caters to it, so it can be very
lucrative, attracting lifetime customers.

Sugar-free products
During the 20th century sugar-free products often tasted terrible. Today, most countries
(except the USA) offer maltitol-sweetened desserts. Maltitol tastes just like table sugar
and has no aftertaste. It is a sweetener made from starch that has 40% less calories than
table sugar and does not raise blood glucose levels as much.

In the EU, “sugar-free” products that contain fruit, which has some natural sugar in it
must be called “no-sugar added” instead of “sugar-free.”

Frozen Yoghurt
is a cultured milk product made from the action of bacteria on the lactose in the milk,
producing lactic and acetic acid and carbon dioxide. These and several other compo-
nents give yoghurt its characteristic fresh taste and smell. Most companies that sell it al-
so make it. Whereas most ice cream has 31-38% solids, natural yoghurt is about 12-15%
solids. This makes it very tasty as a kind of light custard but much too light to have the
thickness, creaminess and intense taste of either soft serve or hard ice cream.

Yoghurt comes and goes in importance but it is becoming popular again and this is a fad
you don’t want to miss. People mistakenly believe it is healthier than ice cream or pre-
vents aging, but there is no scientific evidence of this. Furthermore, “premium” yoghurts
contain added butterfat, thickeners and stabilizers and by the time you have added the
sweetener, it is not really any healthier than yoghurt flavored gelato. In fact most people
can’t tell the difference. Normally it is made in a specialized pasteurizer-ager.

Yoghurt can be flavored with syrup or ice cream flavoring. It can be frozen in a soft serve
machine and chopped fruit and fruit juice can be added making it into a smoothie. An

15
emulsifier/stabilizer can be added and it can be made into an ice cream like product in a
batch freezer.

Soft serve
is really nothing more than ice cream made in a specialized batch freezer. The drum and
dasher have been reshaped so that ice cream can be extruded directly from the machine
and sold. The mix is slightly different than gelato mix but not much. Milk shakes and soft-
ies such as yoghurt smoothies can also be made in a soft serve machine.

Soft serve is a very appealing product, espe-

cially for children (50% of sales) and adults
like it because of its low price and also you
get a lot for your money. Since it is served at
about -6°C (the same temperature as gelato
extruded from a typical batch freezer) the rela-
tive warmth makes it taste creamier and also
reduces the amount of sugar needed to make
it satisfying.

Soft serve has several big advantages over

hard ice cream: you do not need a display
freezer, a blast freezer or trained manufactur-
ing personnel. You can install the unit in the
morning and start selling by lunchtime. In ad-
dition to having no manufacturing costs aside
from buying the machine and mix, you also
have little overhead as the machines take up
little space. Finally, most machines run on
household current and are air cooled, so there
is no installation cost. Therefore, profit is
higher compared to hard ice cream.

QUALITY:
Almost everywhere soft serve is a low-end product sold at low price. The product is rare-
ly labeled “ice cream” mainly because it usually does not have sufficient butterfat to
qualify. In addition, non milk vegetable proteins exceed the ice cream maximums of most

16
governments regarding substitutes for milk solids. Last but not least, many ingredients
are artificial, especially the flavors.

Why is low-end so popular?

Soft serve manufacturers quickly learned that children represented about 50% of their
market. It was easier to target them with child-oriented advertising. Children are not so-
phisticated enough to taste quality. In addition, another reason the kids loved it was the
fun of making it. The parents liked it because you got a lot for your money and the price
is low.

Disadvantages of selling soft serve:

Fast food vendors such as McDonalds, Burger King, etc. quickly tapped into this huge
market and competed on the basis of price. This led to a relentless downward spiral of
profits until it reached the point where only the biggest players, with their huge traffic vol-
ume and economy of scale could compete. This spiral also pushed most of the soft serve
base manufacturers out of the business, leaving only the big guys, who made their own
and the Chinese, that made it with god-knows-what. Today, quality soft serve is making
a come-back because of the soft yoghurt trend. People are starting to open fancy soft
serve kiosks offering many flavors and often a self-serve topping bar.

Advantages of selling soft serve:

In the right place, where there is no competition from the Big Guys or at fairs or special
events soft serve can be a big winner, especially if combined with the right graphics and
marketing. Even in these places, however, the public is aware that soft serve is a low-end
product and they resist upward pricing.

Packaged ice cream

Packaged ice cream is another way to boost sales and becomes a steady part of your in-
come over time. Typical sizes are pints (liters) and half-gallons (2 liters). Even though you
offer scoop ice cream, small, 4 oz. cups are popular take-always and having an insulator
bag and dry ice encourages people to buy quantity. Gelato makers often sell 6-packs of
scoops. These look very attractive in the freezer.

Even though you are trying to sell premium or super premium ice cream at premium pric-
es it never hurts to have a sliding glass-chest freezer containing good-quality packaged
products that sell at lower prices.

Although most of your customers arrive understanding that your premium products are
priced above the low-end market, some economy conscious people, especially if they
have several children may resist the higher prices. Having less expensive alternatives can
save a sale.

Terms used in the ice cream industry:

Milk solids non-fat (MSNF): also called “serum solids.” These are the non-liquid, non fat
solids, as are found in powdered skim milk.
Base: All of the solids used to make ice cream, including milk solids, sugars, fats and
emulsifiers. Oils are considered “solids.”

17
Inclusions: any solids, such as nuts or candy bits added to the ice cream after it is made.
To calculate overrun: (finish volume-start volume/start volume) x 100.
Mix: ice cream base including the liquids.
Overrun: refers to the volume increase after the mix is made into ice cream. Overrun
consists mainly of air but also includes expansion in volume of water that has been con-
verted into ice.

Example: 3L mix becomes 4L of ice cream: 4-3=1; 1/3 x 100= 33% overrun. The mix is
expanded by 33%. The finished ice cream contains 25% air.

Display: Gelato is heavier than ice cream and its freezing point is a little lower than com-
mercial ice cream. Commercial ice cream can be kept hard at -15°C but gelato requires -
18°C. This may appear to be a small difference but it is important when buying a display
freezer. Many ice cream freezers only freeze to -15°C. Be sure you buy one cold enough
to keep your product hard!

CHAPTER  3  
Making Gelato

One thing is certain: if you decide to make ice cream rather than buy the finished product
for resale, it’s easy to make, so do not focus on this when you start thinking about enter-
ing the business.

Many of our customers exhaust themselves considering which machines to buy and EX-
ACTLY how much profit they can make per scoop. This is important before committing
money but it is the least important thing in the beginning.

Relax! You WILL learn how to make gelato, which is particularly easy using our ingredi-
ents but certainly not difficult no matter whose products you use. But selling great ice
cream and making great gelato is different from making money.

As with commercial ice cream, gelato starts its life as a base powder and a flavoring that
is somewhat similar to a thin jam. Flavors are sometimes called “paste.” Most shops buy

18
pre-packaged ingredients because of the machinery required and the large number of di-
verse components required to make the many bases and flavors required. In our factory
for example, we stock 250 components to make 5 different bases and 50 flavors.

The base comes as a powder and is mixed with water or milk. If water is used, the re-
quired milk is contained in the mix as milk powder. No matter what you heard, fresh and
powdered milk can produce the same quality product.

Traditional mixes require a pasteurizer and are made with fresh milk. The trend, especial-
ly in smaller operations, is away from using hot milk for several reasons: it requires a pas-
teurizer, which is expensive and takes up a lot of space. The milk has to be fresh and
requires refrigeration.

Many smaller manufacturers are buying mixes made with powdered milk to which boiling
water is added, achieving instant pasteurization. Cold mixes are also available. Cold
mixes are slightly more expensive than hot mixes but they offer considerable convenience
particularly in small spaces. They often include flavor and all one must do is add water
and mix.

Commercial bases are machine-made and packaged, untouched by human hands. Also,
the ingredients are manufactured at high temperatures and machine packed, so even the
components are very clean or almost sterile. Also, fresh milk gelato is usually made with
pasteurized/homogenized store-bought milk, so both the moral and legal requirement to
pasteurize has been met.

Since gelato is made fresh, stored at very low temperatures and sold quickly, it is unlikely
to develop contaminants from the ingredients. In fact, most contaminates if any come
from dirty hands while manufacturing, not from contaminated materials. For these rea-
sons the pasteurizer is disappearing in smaller operations. Larger manufacturers prefer a
pasteurizer because it mixes, drives a maximum amount of air into the product and then
keeps it cold until use.

Once the base is made into mix, it is chilled 3-4 hours, which makes it creamier. Then it
is ready to be made into ice cream.

Gelato is made in a “batch freezer,” which is a machine with a freeze chamber and a
powerful scraper motor. The mix is poured into the freeze chamber and the machine is
started.

At this point the flavor is usually added, unless it was already a part of the base. Fruit fla-
vors are delicate and should never be pasteurized as this may damage the flavor. They
have been previously pasteurized and also acidified with citrate, both of which retard the
development of bacteria.

A rotating scraper, called the “dasher” scrapes the hardened ice cream off the freeze
chamber walls and tumbles it, adding a small amount of air, which is essential. The fin-
ished product is extruded from the machine at about -6°C (-21°F) into a pan. It can be
swirled and decorated for sale by the scoop or put into a cup for bulk sale.

19
Once the gelato is made it is blast frozen as quickly as possible to at least -28°C. in order
to arrest ice crystal formation. It is then ready for sale.

Whether to make gelato or buy and sell commercial ice cream is an important decision.
Of course the first reason is that a manufacturing setup is expensive and the operators
require training. Gelato equipment to both make and sell gelato including ingredients can
cost between €15-30,000.

In addition to the cost of the manufacturing equipment, air conditioning, clean water, fac-
tory space, storage space, workers and delivery are required. Also, you will need a retail
outlet unless you stick exclusively to manufacturing and selling wholesale. Some opera-
tors make the gelato where they sell it, which makes management easier but may mean
added cost for the extra space.

Small Gelato Factory

The small factory on the next page was designed by us for one of our franchisees and is
in actual operation. It is in a ‘minimum” space and we suggest a larger one if you can get
it. The storage area is not shown.

This factory, with two 18 L

water cooled batch ma-
chines can produce about
900 L of gelato in about 9
hours.

In this factory the powdered

milk base is first mixed with
just-boiled water, chilled in
the upright freezer and then
poured into the batch ma-
chine. We always recom-
mend having two batch ma-
chines so you have a back-
up and also sometimes you
get big orders.

After the ice cream is made

it is stored in the blast freezer and later transferred to the top-opening freezers prior to
shipment. The shelves in the center store flavors most of which do not require refrigera-
tion after opening.

Product Line

Gelato comes out of the batch freezer at about -6°C (-21°F) and has the consistency of
soft serve. It can be extruded into tubs which are then decorated for sale as scoops or
transferred into cups or packages for bulk sale. If you are developing a wholesale line, a
larger container, usually pails, are filled.
20
 Gelato can be made into cakes and rolls. It can be
scooped into little balls that are first blast frozen and
then dipped in chocolate or other coatings.

Another popular product is ice cream on a stick. The-

se are made in molds and once blast frozen they are
removed and dipped in a coating. The coating, called
a “comfiture” is either a liquid at room temperature or
is melted in slightly warm water. It hardens when it
touches the ice cream but usually the product is hung
by a clothespin in the blast freezer to finish the hard-
ening process.

Wholesale
Wholesale is an important part of every ice cream
business. You sell for less but you also do not have to
invest in an outlet or staff. In many cases restaurants
or hotels that are interested in buying your product
will want a free freezer to store the product. If they are selling from a menu an inexpensive
chest freezer will do and you can use the freezer as a way of getting a 2-3 year contract.
You can even ask for a deposit on the freezer which helps reduce you out-of-pocket ex-
pense.

Display freezers where the restaurant or hotel sells by the scoop are much more expen-
sive than chest freezers and are usually too costly to give for free. But you can offer the
buyer a long-term lease and also a performance guarantee, which will help reduce out-of-
pocket expense.

Read a lot more about ice cream manufacture in The Gelato-Maker’s Guide.

Why do people make gelato?

Gelato is a superior product that tastes better, looks better and is healthier than commer-
cial ice cream. It is usually sold from highly decorated tubs, which make the product look
very alluring. The shops that sell it often also sell gourmet pastry, cookies, crepes, es-
presso, granita and light food. It is often sold in upscale malls or areas where people with
money go and in those areas the people know they will be paying more for whatever they
buy.

Also, there is a huge amount of commercial ice cream available everywhere and selling it
is very competitive. Profit is constrained by competition. Gelato is a niche with much
less competition, competing for a smaller market that is too small for most commercial
manufacturers to enter. Correspondingly, most ice cream vendors lack either the motiva-
tion or the expertise to sell a sophisticated product line, preferring to stick with mass
sales. This level of sophistication also eliminates many lower-end vendors.

21
Why do people sell commercial ice cream?

The mass-appeal of commercial ice cream is hard to deny. Many people, particularly the
less-affluent, grow up eating economy or trade quality ice cream and develop powerful
food habits for it. They actually don’t like quality ice cream! We once took our gelato to a
Thai funeral in a poor area. The people liked the chocolate and the strawberry but every-
thing else was left untouched. It was either “too strong,” “too tart” or “strange.” They had
spent a lifetime eating the artificially-flavored high-fat products like Walls and those are
what they preferred.

Buying commercial ice cream is simple. If you franchise you can advertise a brand name.
if not, you can shop around and in many cases the same brand-name manufacturers sell
the same quality ice cream in a plain package or use another name for it. So, you can get
some real bargains and better quality.

Cost-containment is important in any business but even more so when selling commer-
cial ice cream. This is because there is lots of competition for the ice cream dollar. Ice
cream is an impulse food. They see it, they want it. If your outlet is located away from
the competition you have a bit of latitude regarding sale price. But, if you are in a mall,
surrounded by competition selling economy or trade quality ice cream, price can be the
deciding factor for many of your potential customers.

CHAPTER  4  
Opening a Retail Outlet

22
 Location
There are four things that are essential in having a successful
ice cream outlet: location, location, location—and—I forget
the other one. Ice cream is an impulse food-you see it, you
want it. A “good” location has lots of foot traffic.

No matter what size outlet you open or what you sell, its loca-
tion is unquestionably the single most important decision you
can make. This decision is so critical that we consider a big
part of the benefit of franchising with us is the help we give
regarding location.

Many an ice cream business has failed because of poor choice. The difference between
a good location and a bad one may be just a few meters.

We had a friend who called and was excited because he thought he had found the per-
fect location for an ice cream kiosk. It was on the first floor of a mall (very good), right in
front of the door (very good) and at a main walkway intersection (very good). But when we
got there we immediately told him “Don’t do it!” Why?

Everything he told us was true but he omitted a few things. The big one was he didn’t tell
me about the column. It was a large column. It hid the kiosk from the people entering
and also the people approaching from the left on the main walkway. And, to the left of the
column on the main walkway was a kiosk with a big sign that further hid his location from
that direction.

The people approaching from the right had to pass a long line of confection and dessert
stands that were the competition. They were in larger spaces, sold a wider product line
and had better opportunities to market. Last but not least, the walkway where my friend
would go was a dead end. He ignored my advice. He lasted two months.

Location tips to remember:

• Is the location busy at peak hours, lunchtime, dinner and evenings? If the location
is not really busy at these times, you cannot prosper.
• Car traffic is nice, but foot traffic is more important.
• If you are counting on car traffic, make sure that your location is easily visible from
the street for not less than 4 seconds at 40kph (enough time to see your sign), is
easy to access after drivers see it and it has good parking.
• Success in an open-air mall depends on how close you are to high-volume outlets
like a supermarket.
• Visit the site on different days at different times, particularly peaks (lunch, dinner,
evenings) to see how consistent the traffic is.
• Competition: How many dessert/ice cream shops are located nearby. Competition
in a mall is inevitable, but having competition in the same area as you will dilute
sales. Locating your shop near a brand name like Ben & Jerry’s is death. If an ice
23
 cream shop is on one side of the mall and doing well, chances are that you will do
well on the other side, providing of course that your side has equal foot traffic
• • Visibility. Will everyone who walks close by know that there is ice cream there?

Good Locations
Indoor Malls (in the right spot), airport departure lounge, zoo’s, convention centers,
amusement parks, high-traffic open-air malls, near a cinema, near a superstore, train sta-
tion, beach area, sports arena. Strip malls if located near a high-traffic store.

Location in a mall: Enclosed malls are better for year round traffic and people often stroll
around in malls for amusement, making them perfect customers for impulse sales. Also,
they are open in the evenings and this has seasonal advantages, particularly in temperate
climates. In winter people in malls buy ice cream whereas in strip malls ice cream sales
fall off dramatically in winter. In general, it’s better to pay more rent and be in an en-
closed mall than to pay less and be in a strip mall.

We always urge our startups to try and open a kiosk in a mall. Upscale malls can be
good because people know prices are higher in them. But be careful. If the upscale mall
is super upscale and has little foot traffic you have a problem. This mall may be good for
selling diamonds but ice cream needs loads of passers-bye.

Another good reason to start with a kiosk is that it is a cheap startup and a mall is prime
territory if the location in it is right. If you don’t do well in your first location you may be
able to move. If everything in your first mall fails you can load the kiosk onto a truck and
move. In malls, the first floor is prime space for gelato, near entrances, escalators and
main walkway intersections are best. Food courts are usually not great be3cause mo9st
people go in their to eat a meal. Mall ice cream is a sort of between meals impulse food.

Non-Mall Locations:

If you open on a street where most of the shops close at day’s end, it is likely that the
street will be deserted at night, robbing you of one of your most lucrative periods. What
happens on the weekends? Do most of the shops in your area close on Sundays? If so,
you will probably be dead on Sundays, which should be one of your busiest days. Check
out the action at night. Is yours an area where people promenade? Is there something
nice to walk around, like a park, river or view? If the location has foot traffic, count it. Do
not assume anything.

If you live in a temperate zone, what happens to business when it gets cold? Do you
have a supplementary product you can sell when ice cream sales drop off?

If there is little foot traffic passing your location, can it be seen easily from the street? Is it
easy to pull off and park to make a purchase? Drivers have to get your marketing mes-
sage in 2 seconds, no more. That is how long it takes to pass your location at 40
km/hour.

Do not fall in love with beautiful places. The beauty is only useful if all the other elements
of your requirements fit. People often lease beautiful places only to find that the beauty
does not turn into profits.

24
Selling gelato: Since gelato is an artisan product, made by hand, it does best in highly
targeted locations where people can afford gourmet cuisine. Areas surrounded by office
buildings, banks and close to upscale shopping are good. Since a shop is larger than a
kiosk it must attract more customers and that means offering a wider variety of products.
Time and again, small shops offering a light food menu, cookies, cakes and ice cream are
solid winners. In most cases simple food with a good sauce and nice presentation makes
people happy. This is a particularly good formula for airports.

Manufacturing in your Shop or Kiosk

Before getting into a discussion of the various shop sizes and their merits, let’s talk about
making ice cream in your retail outlet. Of course the first question is whether to make it
or buy finished ice cream, which was previously discussed.

There are advantages and disadvantages in making gelato in your shop as opposed to
making it elsewhere.

Advantages:
Making ice cream in your shop centralizes your operation, reduces transportation cost,
optimizes staff and if the manufacturing can be done where customers can see it this is a
form of marketing that is very compelling.

Furthermore, sales are not continuous during the day and there will be time, especially in
the morning, when staff have enough time to make ice cream, so labor costs can be dis-
counted.

In addition, many shops have either a back room, a kitchen area or enough space in the
retail area to accommodate the necessary equipment, which consists of a batch and
blast freezer plus a working table and refrigerator. So, factory manufacturing cost, usually
30-35% the cost of ingredients, can be discounted.

Disadvantages:
Even the smallest manufacturing operation takes 3-5 additional s.m. (32-53 s.f.) of space
and retail space is expensive. If you are starting off small, instead of a 9 s.m. space you
will probably need a 14-15 s.m. space, adding 66% to your rent. In fact, if you go to that
expense you might as well consider an 18 s.m. space, where you can sell a much wider
product line. Read more about that later on.

It is often possible for the small startup to make ice cream in a spare room, garage or
even kitchen, where overhead is low and then transport it when you go to the shop. In
addition, in most places kiosk and shop space is standardized and 9-10 s.m. is common
but 13-15 s.m. is not.

25
 Retail Outlet Size
Matching Your Money to Your Dreams
The ice cream business is a lot of fun and can be very profitable but before plunging in, it
is important to match your business goals to your investment capital. Regardless of what
you decide it is important to have a cash reserve of about 25% of the startup cost or
enough to keep the operation going for at least 4-6 months, so that you do not run out of
money before the business becomes profitable.

Clearly, the least expensive way to start is with an ice cream cart and the most expensive
is to open a full-size factory with outlets. Let’s summarize your choices:

The Kiosk
The simplest, least expensive retail outlet is a kiosk, which is almost invariably opened in
a mall, which is also one of the best places to start a small ice cream outlet. They are ex-
tremely easy to manage with just weekly visits. Employee theft and shrinkage is easy to
spot. The space is small but the air conditioning is free because the mal supplies it.

A kiosk is your biggest bang for the buck. The ice cream is made elsewhere or you buy
commercial. It requires much less investment than a shop and if the location turns out to
be not good, you can move. You can open 2-3 kiosks for the cost of a single shop and
that increases your exposure. All of the machines in a kiosk are hard assets and if things
don’t work out you can sell them.

This is a 9 s.m. kiosk showing a 180 cm display freezer and cash counter. This freezer has a lower reserve
bay for 15 tubs. Behind it is a cabinet/counter with a cone maker. The 3-seat counter to the right
takes up a bit more space.

26
Kiosk up to 9 s.m. (97 s.f.) Photo above

Our standard 9 s.m. kiosk is shown ABOVE. The basic equipment required is:

display freezer cash counter

cash register cabinet-work counter (or under-counter fridge)
storage freezer mixer for cone batter

The cost of the entire setup is less than $20,000. Of course you can also have a slush
machine, coffee machine and a crepe maker.

About the smallest kiosk is a 9 s.m., usually 3x3 m. (9.8’ x 9.8’) allowing room for a 160
cm 16-flavor display case, a 60 cm cash counter and 60 cm for entry.

In this space you can sell soft serve, gelato in tubs or commercial packages products
such as ice cream sandwiches, pre-made cones and also have enough room on a rear
counter to make milk shakes, slush and coffee.

If the rear counter is replaced with an under-counter refrigerator you could store milk for
shakes, fruit for sundaes and soft drinks in it. If you get the under-counter fridge, you will
need a wall cabinet for storage.

The 15 s.m. (161 s.f.) kiosk or small shop:

The next size kiosk is like the one shown above. It requires 15 s.m. of space (3m x 5m). It
is slightly less portable than the 9 s.m. model but it has the capacity to offer many more
products than the smaller kiosk including:

ice cream light food

ice cream cakes and rolls crepes
cakes slush drinks
pastry milk shakes
coffee and much more
soft drinks

However the ice cream is made elsewhere. This kiosk without the equipment costs about
€7,000. The equipment costs €9,000-€23,000 depending on what you want.

27
The 21 s.m. (226 s.f.) kiosk or small shop (3m x 7m) :
By stretching this kiosk 2 meters, adding 6 s.m. bringing the floor space to 21 s.m. you
can add a batch machine and blast freezer and make ice cream.

The 27 s.m. (290 s.f.) kiosk or small shop:

By adding 2 more s.m. to the length you can add side seating, bringing the seat capacity
to 12.

Large Shop w light food 30-60 s.m. (322-645 s.f.)

Now we are talking about a shop the size of a small Dairy Queen with the capacity to be a
full-size dessert shop and also a light food restaurant with a broad line of desserts and
light food.

Shop Setup Cost

THE FOLLOWING LIST IS JUST AN EXAMPLE

USD Euros
Rent $1890 €1,323
Rental deposit 3 months $5,670 3,970
Utilities (Deposit) $900 630
Interior decor $12,000 8,400
Minor repairs/improvements $1000 700
Plumbing $1500 1,050
Product Inventory $4,500 3,150
Advertising $500 350
Miscellaneous supplies $750 525
Insurance Premium $400 280
Signage $2200 1,540
Deposits/Licenses $1500 1,050
Architectural & Legal $2500 1,750
$35,310 €24,718

Machinery & Equipment

Display Freezers $8000 7,300
Upright Glass Door Freezer $2200 1,540
Pastry Case $875 612
Storage Freezers $500 350
Under counter Fridge $1400 980
Waffle Cone Maker $550 385
Hot Fudge Warmer $350 245
Shake Mixer & hardware $670 468
Cash Register $300 210
Uniforms $300 210
Cash reserve $12,000 8,400
$29,845 €19,001
Total $65,155 €43,718

28
 Pricing Your Products

If you are located in an upscale area you should be able to charge about 12% more than
elsewhere. Of course a big factor is how much ice cream is in a scoop but again, the
competition will set the standard. But scoop size varies tremendously. In America a 4-
ounce (112 gr.) scoop is normal but in Thailand a 2.5 ounce (70 gr.) scoop is typical. Us-
ing the American example:

THESE PRICES ARE JUST FOR EXAMPLE

USD Euros USD
Ice cream costs 4 oz scoop $0.50 €0.35
Shrinkage 0.10 0.07
Spoon, cup, napkin 0.10 0.07
TOTAL COST $0.70 0.49

SALE PRICE $3.50 €2.45 $2.75

COST .70 0.49 .70
gross profit $2.80 €1.96 $2.05

Cost of goods $0.70/$2.80 25%

It is always wise to price your products toward the top-end of the pricing range. In the
beginning you can offer grand opening discounts and eventually you can lower prices if
the market demands it—but raising prices is always taboo. Customers get angry at in-
creases whereas they are always happy with reductions.

Leasing
It’s easy to understand that the cost of rent is probably the second largest expense you
will have after cost of goods. Many a tenant has been driven out of business because the
rent was too high but this can also be because sales were too low! Furthermore, rent can
be high because the landlord is gouging you or because the location is hot. Of course it
was not hot for the last guy, which is why the spot is up for rent!

A rough rule-of-thumb states that rent should be about 10-15% of projected sales. In the
gelato business, we always recommend upscale locations—which have upscale rents. If
you are selling an upscale quality ice cream you need an upscale customer base and lots
of passers bye. If you see that the competition gets about 3% of the foot traffic (it may
be less), you can anticipate about the same.

So, if the sale-to-passers-bye is 3%, then if 10,000 people pass by your location during
the day you will get 300 customers. If the rent is $1,840 Euros/month and you are making
a gross profit of $2.80/scoop, you will need to sell 657 scoops/month to pay the rent.
You are projecting selling 300 scoops per day @$2.80 each gross profit= $840 x
30=$25.200/month. 1,840/25,200=7% or selling 150 scoops/day is 14% so this rent is
OK.

29
Of course you may be selling more than ice cream and your income per customer should
be higher because about 20% of your customers will buy something in addition to ice
cream and you will probably also sell some sundaes and takeout as well.

Getting a good lease is extremely important but most landlords have a prepared lease
that benefits them and they don’t like to change it. Finding a good location is so im-
portant that when one is found you are highly motivated to rent it but that does not mean
you should sign without examining it thoroughly. Sometimes landlords will allow modifi-
cations if they are not major ones and these small changes can help you immensely.

Escape clause: First among these is the escape clause. Woe unto the tenant who
signs a long lease without an escape clause and then finds out his shop is not profitable!
This is especially true if your company entity is not an LLC or incorporated, limiting your
liability but even if it is, the landlord can sue. Furthermore, the landlord is not highly moti-
vated to find a new tenant if you are paying the rent. At the very least, the landlord will
keep your rent security and deposits.

An escape clause simply states that you are allowed to terminate the lease within a speci-
fied period, usually 90 days, upon earlier notice, say within 60 days.

Liability: Landlords are motivated to pass as much liability on to the tenants as they can.
Logically your liability should be limited to areas of your responsibility, such as
health/safety of the product, risk from defective furniture and fittings you installed and
hazard-accidents such as customers falling on wet floors. But sometimes landlords like
to pass all liability to the tenant such as the roof falling in and heaven help you if you fail
to notice this and do not provide adequate insurance to cover.

Product Line: The product line you plan to sell may change after you begin operations.
This is particularly true of food businesses. You may think that because you specified
you are selling ice cream that this implies “light food.” It does not! And the guy down the
mall who is selling light food will be sure to have a chat with the mandlor4d if later on you
decide to broaden your product line. So it is wise to specify a product line as broad as
possible.

Length of Lease: Sometimes landlords try to specify a month-to-month lease and re-
ally it is better to just walk away from these. The landlord may tell you this is just a form
of insurance against rowdy or unreasonable tenants but it is in fact a sword over your
head hung by a thread. You may say to yourself that you have a kiosk that is easily
moved, but the customers you have will be lost. And the business interruption and uncer-
tainty of where you will go is significant.

A long lease benefits the tenant but not the landlord. It locks in rent increases and locks
out new prospective tenants the landlord might prefer. A 1-year lease is a minimum and it
should come with several options to renew. To know where you are on this subject, just
assume the landlord will kick you out when the lease expires and see where that idea
takes you.

30
 Escalator Clause: Don’t be afraid to ask for an escalator lease, with the first month
free, then half the rent for the next few months, then full rent beginning in month four.
Usually landlords laugh at this but sometimes they will compromise by giving you the first
month or two free. At least it shows that you are thinking.

Location Guarantee: This means you won’t wake up one morning and find a Dairy
Queen next to you.

CHAPTER  5  
Your Product Line
The product line is important in any business but even more so when selling commercial
ice cream. Operations that just sell scoops often fail if they have to compete with com-
petitors who also sell light food.

To illustrate my point, take a look at what Dairy Queen offers:

Standard Soft Drinks

Malt Drinks
Special Beverages
Shakes
Deserts 5 types
Soft Serve 2 Types
Ice Cream 6 flavors
Sundaes about 30 flavors

And that’s not all. Here’s the food:

Food Item Grilled Chicken Salad

Ultimate Burger Crispy Chicken Salad
Deluxe Double Cheeseburger Grilled Chicken Caesar Salad
Deluxe Cheesburger Crispy Chicken Caesar Salad
Double Cheeseburger Fish Sandwich
Cheeseburger Chili Cheese Dog
Double Burger Chili Dog
Single Burger Hot Dog
Chicken Basket Burrito
Chicken Snack Corndog
Grilled Chicken Sandwich French Fries
Crispy Chicken Sandwich Onion Rings

DQ originally started as a custard-out-the-window operation but now has a huge

product line, snappy graphics, a lot of equipment with a big investment, their own
training school, marketing division, international advertising and nice uniforms. This
proves that expanding product line is important for success.

31
 Ice Cream Point-of-Sale Problems
Sandiness: Sandiness is caused by lactose precipitating out of the ice
cream, forming little crystals. It is usually the result of the manufacturer using
too much whey in the mix. The problem may not be apparent either when the
ice cream is made or delivered. I can occur days or weeks later.

Lactose is the least soluble of all the sugars in ice cream. As the ice cream
sits, more and more liquid water becomes ice and finally the remaining con-
centration of liquefied lactose becomes too great to remain dissolved and it
precipitates. This problem is a manufacturing defect and the ice cream
should be returned.

The most common defects are the result of handling after the ice cream is
received:

Heat Shock: This problem is the result of warm air hitting the ice cream
when it is in a display case. This causes the surface of the ice cream to
slightly melt and then freeze, resulting in surface ice crystal formation and if it
happens again and again, it can result in an ice glaze and flavor deterioration
of the product. If the problem is not too extensive the ice cream can be
mixed up with a spatula to distribute the damaged surface.

Coarseness: The next step after heat shock is when the entire product de-
velops large ice crystals, usually caused by loss of power and the ice cream
rises above -16°C. This is the temperature where about 60% of the water
becomes semi-liquid, or like a slurry, allowing water molecules to migrate to
the ice crystals, increasing their size. When power is restored and the ice
cream re-freezes, large ice crystals form which are unpleasant. The only way
to fix this problem is to allow the ice cream to melt completely and reprocess
it.

32
 Mobile Sales

Route Sales
In the U.S. ice cream route sales drivers earn about $34,000 USD. This is
slightly less than the median US income whereas route drivers that sell food,
such as lunches, do better earning about $46,000.

This is the main reason why route ice cream sales have greatly declined in
the US but in developing countries there are enough people looking for any
kind on income to support this industry. You just don’t want to be one of
them—you want one or more of them to work for you.

Seasonal or Special Events

Prime territory of special events are fairs, flea markets, music festivals and
night markets. The foot traffic is intense and if you have an attractive stand
and a good product, my how the money rolls in! But, don’t get me wrong.
Working the fairs is no romp in the park! It is a tough, tough business, very
stressful and full of unexpected problems that grinds up people. Only the fit-
test survive.

Getting started isn’t easy. You need to learn about local laws and apply to
many different festivals. One of the hardest parts of vending food is getting
your first break at a festival or fair. You’ll need to convince the organizers that
you should be vending food at their event. After all, their choice of vendors
makes or breaks their effort! You’ll need a convincing application in order to
become a food vendor and this is where being a franchisee (such as ours)

33
can be a big help—because the franchisor is a larger, successful operator
and therefore so are you.

In order to gain acceptance, having a good-looking or unique stand or outlet

is important. If you have a stand, trailer or vending truck you will need good
photos of it. If you have no setup, you should consider making one in Pho-
toshop or hiring a professional to do a rendering. It does no good to plan if
you cannot convince the organizer to let you in!

If you are making your own

ice cream, vegetarian or
vegan events are a prime
source. Not many compa-
nies make a prime vegan
or vegetarian ice cream
such as our Soy-So Deli-
cious! Also, offering a
Light Line of sugar-free,
healthy products is both
unique and appealing. As
they used to say, “you got-
ta be a jive cat and look
hip or they gonna give
you the cold shoulder.”

34
Research the specific fair or festival carefully. Think of ways that your prod-
ucts fit in. Find out what paperwork you will need. You may need a license
for vending food. Most festivals have a list of the licenses, insurance and
permits they require. You will have to present them with your food vendor
application. Find out about insurance requirements, if health permits are
needed for your workers, if you need to be a registered company and if so,
what docs you must present.

In most of these places visitors know and accept that prices are higher. The
number of passers-bye is intense which is ideal for ice cream and dessert
sales. Big competitors such as McDonalds and Burger King rarely set up at
these places and frequently they are barred because the fairs specialize in
letting smaller operators flourish.

These events, being time-limited are high pressure. A machine failure is a

disaster. Two to three times the number of workers are required and the
hours are long—but oh Lord, how the money rolls in!

Some vendors set up in temporary buildings or tents. The advantage of this

is that they cost much less than a vending van or trailer. But of course a tent
or temporary building is much less mobile and in the summer, tick tock, tick
tock, time is money. You need to start planning for the summer schedule as
early as possible so that you can move quickly from one event to another.
Don’t start planning later than Christmas! People who plan well often make
enough money in the summer to live the whole year.

Vendors at fairs sell either food or desserts. The dessert vendors usually sell
a mix of ice cream, soft serve, cotton candy, hot fudge sundaes, milk shakes,
slush drinks and soft drinks. In addition to the big decisions about what to
sell you must decide on a refrigeration source.

35
Obviously plugging into an external power source is ideal, leaving you with
only the problem of how to deliver frozen products to the trailer, which is
usually done by packing the products into urethane fish boxes and adding
dry ice.

Generators are important for long hauls but it is uneconomical to buy a really
big generator and try to run the entire operation from it because so much
power is required and the generator must be run continuously during the
event. Normally a chest freezer is added beneath a work counter and this is
where frozen products are stored during trips. If the haul is less than 18
hours, dry ice will do the job.

Ice Cream Carts-Ice cream carts usually sell low-end ice cream at low
prices and if you are pushing, peddling or driving the cart, it’s a hard way to
make a small amount of money although you, too can sometimes gain entry
to local fairs and events. But if you have a good source of inexpensive ice
cream (not gelato) and enough capital to buy a number of carts, plus the
business and organizational skills to organize licenses and permits, lease
space (sometimes) plan routes, resupply, replace absent workers and a calm
when things go wrong, it can be quite lucrative.

36
 CHAPTER  6  
Marketing/Advertising
First of all, always keep in mind that ice cream is an entertainment, not a
food. People do not eat ice cream because they are hungry. They eat it for
fun. Part of the fun is just plain eating it, part is how it looks, how your shop
or outlet looks, how your sales staff look and how they treat the customer,
how your promotions look and the emotions they generate- in fact there are
many subtle entertainment elements involved in making a sale.

No matter what size outlet you open or what you plan to sell, it is important
to develop a marketing plan and factor its costs into your startup plans. I am
sure you have noticed that successful food companies such as McDonalds
or Baskin Robbins are never far from the public eye. A combination of mass
media advertising and an unending flow of specials, discount cards, buy-
one-get-one-free and other promotions pop up almost daily. Of course you
cannot match their marketing budget but their promotions are an indicator
that the Big Guys think they work. Good marketing will work for you.

Of course you cannot do the type of marketing McDonalds does because

they have many outlets and so much more to spend. You have to be more
creative and concentrate on promoting to your target market, which are the
people closest to your outlet. McDonalds may have many stores in your area
and wants the whole city to know what they have to offer. You probably
have just one or two shops and it is the people in the immediate surrounding
area who are your potential customers.

Of course marketing can start right at your shop or kiosk. It can consist of
buy-3-get-one-free cards, flavor of the month, discount cards, promotion
flags or other advertising placed in the surrounding area, target campaigns at

37
office buildings, schools or right in your mall. This is a big subject and very
important. When you are budgeting the cost of your startup, be sure to allow
at least 20% of the gross startup cost for marketing! This essential subject is
covered in much more detail in our eBooks, Ice Cream Dream and in Gelato
Maker’s Guide.

ABOUT OUR FRANCHISE

Advantages of Franchising

Entrepreneurs can get into business three ways. One way is to

buy an existing business. Another is to franchise; the third way is
to start from scratch. But it is never easy to start from scratch,
especially a technical business such as ice cream manufacture.

Franchising has some of the advantages of buying a successful

business—You get brand identity, uniforms, a product line, ma-
chinery, technical support, training, menus, layout design, lease
negotiation, advertising and point-of-sale software—some of the
many things you would get if you bought a business. This repre-
sents a huge savings of effort and time.

As a franchisee, you get the help of experts

who have been in the business a long time.
You also get to meet the people who will
support you and decide if you have confi-
dence in them.

Last but certainly not least, you get the

training and machinery you need without
having to experiment.

Another very important benefit of a fran-

chise is that you get a very clear idea of cost before you invest.
There may be surprises later but nothing like the unpleasant sur-
prises that can occur during independent startups.

38
 The Dream Cones Franchise
Dream Cones is different
from franchisors in that
most of our international
franchisees make as well
as sell ice cream.

When you franchise with

Swensen or Baskin you
get the power of their
name—but you gotta
pay! Usually they want $30,000 USD up front and 6-8% annually
of your net. That might be as much as 18% of your gross! We are
not as well known—yet--and therefore charge much less. You
don’t get the massive brand identity as Baskin, but you do get a
lot for your small franchise fee. And, we do not charge an annual
royalty or commission.

What you get from Dream Cones

What you get:

Location selection assistance Perspectives and renderings
Lease assistance Exterior façade design
Shop design Exterior sign design
Lighting and electrical plans

We provide and train you to use:

Display freezers Cake cases
Batch freezers Coffee machines
Blast freezers Cone bakers
Pasteurizers Stainless kitchen equipment

We supply:
Uniforms Promotional graphics
Paper cups Advertising
Napkins Website design
Business cards Promotional campaigns
Discount cards On-going technical support
Brochures

You can see, you get a lot for very little money!

39
Shop franchises
All shop franchisees are obliged to buy or machinery and ingredients for the
life of the Agreement, five years, and put up a performance guarantee, which
is refundable if you do not renew the contract, providing of course that you
have lived up to the terms of the Agreement.

Terms:
You are free to sell food and other products we do not offer and we can help
you set up a kitchen and provide food menus, recipes and training to make
food if you wish. You are obliged to use our name on the facade and show
only our marks and colors on the display cases holding our products. If you
are planning to open a restaurant you can name it as you wish but if you are
selling mainly desserts and light food, the shop must be named “Dream
Cones” and use our marks and logos.

Building a factory requires the owner to also open at least three retail outlets,
to provide retail capacity for the factory. Area rights give the franchisee the
right to take on sub-franchisees, charge them a franchise fee and perfor-
mance guarantee but the sub-franchisee is also obliged to sign an Agree-
ment with us for which there is no charge.

Designing and supervising the construction of this operation takes consider-

ably more effort on our part and also obliges us to visit your location sever-
al times and also be present for at least 10 days during the startup, to
supervise installation, training and startup manufacturing. We usually pro-
vide a startup gelato chef for the first month or two, until your own gelato
chef is competent.

Terms:
Full area rights as specified excluding existing shops already operating in
your area if any. 5-year renewable Agreement.

Join the Family!

We treat our franchisees like family. Your success is our success. We don’t
make much from the franchise fee and rely on selling you ingredients over
many years. If you do well, we do well.

You can learn a great deal about the ice cream business and see photos of
many of our shops and marketing graphics by downloading our free eBook,
Ice Cream Entrepreneur and purchasing Ice Cream Dream, Gelato Maker’s

40
Guide and Startup and Stay Up in Ice Cream, Ice Cream Business Startup Kit
available as a download from our website.

We also recommend you start your ice cream adventure by purchasing our
Ice Cream Business Startup Kit which provides essential information for the
startup ice cream entrepreneur plus you get both of our eBooks, Ice Cream
Dream and Gelato Maker’s Guide. Next take our 10-day training course
which includes daily lectures by Dr. Greenwald and daily hands-on factory
training with close supervision. The course is very intensive and you will
work hard. The course also takes you on excursions to various dessert
shops in Bangkok. During the course you can decide if we are right for you
and discuss your needs with our experts. If you do not want to franchise
you will have learned a lot and we can still offer you machinery and ingredi-
ents if you wish.

Books by Michael Greenwald:

The Cruising Chef Cookbook
Rated 5-stars by Amazon.com at
http://www.amazon.com/Cruising-Chef-Cookbook-Michael Green-
wald/dp/0939837463/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1221650035&sr=8-1

A cookbook for sailors written by long distance sailor Michael

Greenwald.

“Having just begun sailing, cruising and cooking aboard our sailing vessel,
I wanted an up-to-date good reference manual. I found this book quite by
chance. I consider this to be an essential item for the "chef" aboard ship.
Every tip imaginable is included. The recipes are simple to prepare, yet el-
egant and tasty. To my surprise it also contains a section on what to do
with certain food obtained "on the hoof" in 3rd world countries. I will buy
this book for friends as a Bon Voyage present. A "must-have" book in the galley! The sailing sto-
ries scattered about the book are also good reading.”
Customer review: Christine Carr, Amazon.com

Survivor
Captain Greenwald’s (US Merchant Marine
(RET), US Army Medical Corps (RET)) other
book, Survivor, is a series of gripping tales of
sea survival wrapped in a text about surviving
boat and ship disasters. Made famous by the
author’s appearance on the Oprah Winfrey
show, this text was carried aboard every US
Merchant Marine flag vessel for many years.
Richly illustrated with hundreds of photos,
graphics and drawings. His 28 years of blue

41
 water experience and his understanding of
danger shines thru. 600pp [out of print but
we have a few copies left-€34 EURO by air
mail-call us]

Ice Cream Entrepreneur’s Guide will give you a broad overview of the ice cream business
and develop a successful business strategy. The subjects covered in this book are ex-
panded in our other books:

Ice Cream Dream $19.95

How to Start Your Own Ice Cream Shop pp 175
SKU 885 871 900 0302

Everyone loves ice

cream
—and many people dream of selling it. It’s a wonderful business with a lot of room for
creative expression and after all, one expresses love for people thru food. Your believe
that?

Now, let me tell you the truth. The ice cream business is tough and competitive because
there’s lots of money to be made in it and your competition wants to make damn sure you
don’t make any of it. It you think having a nice-looking place and making great sundaes is
going to get you to Fat Cat Street, get your bankruptcy papers ready now.

Making money in ice cream is a tough business. People do not buy the best ice cream—
they buy the best-marketed ice cream! Learn about marketing, using mailing lists, dis-
count cards and special promotions. Learn how to create an inviting facade, the right dé-
cor and interior colors, creating signature dishes that your customers will adore.

Ice Cream Dream is a treasure house of essential information with loads of interesting
photos and graphics that can help turn the difficulties of a startup into a much easier ride.

I have helped people all over the world open ice cream businesses and I can vastly im-
prove your chance of success. You can buy any other book but there is just no chance you
will ever find a combination of solid tips and sound advice like you can find in Ice Cream
Dream and if you are not delighted I will give you your money back.
Here’s what you get in Ice Cream Dream:
• WHAT IS ICE CREAM? • DOING YOUR HOMEWORK

42
 • PARTNERSHIP, LEGAL STRUCTURE • LAYOUT AND TECHNICAL
• BUYING AN EXISTING BUSINESS • MENUS AND PRICING
• RIGHT-SIZE BUSINESSS FOR YOU • YOUR STAFF
• GETTING STARTED • MARKETING AND
• PERSONAL QUALITIES YOU NEED ADVERTISING
• PRODUCT SELECTION • BOOKKEEPING
• EQUIPMENT • HEALTH SAFETY
• FACAD • SELLING TO TOURISTS
• DESSERT SPECIALTIES
• DECOR
This book is entirely oriented to helping the potential ice cream entrepreneur open a retail
outlet and be successful. Interesting stories and valuable tips from an expert with fran-
chise outlets all over the world. Just the tips on location selection alone are worth the
small price of this book!

Gelato-Makers Guide $24.95

Manufacturing and selling ice cream
(previous edition titled Startup and Stay Up in Ice Cream)
SKU 885 871 900 0300

A master, authoritative text about the manufacture and sale

of ice cream, the major text of the ice cream industry, years
in the making, with hundreds of photos, charts and graphs.
Just the Table of Contents alone is seven pages long!

Having spent ten years making and selling gelato, developed

all of the flavors and bases used in the industry and built ice
cream factories all over the world, there aren’t many people
with more experience and expertise than Dr. Greenwald.

Everything you need to know including machinery selection, factory layout, pasteurizing,
making gelato, sherbets, sorbets, sugar-free and soy frozen desserts, making ice cream
cakes and specialties, health/safety, delivery, display, marketing—so much is packed into
this eText! Dozens of photos, charts and graphs. Boy, do you ever get your money’s
worth with this book! Comes with many free recipes and formulas.

But don’t think Gelato Maker’s Guide is just technical and dull. It has dozens of interesting
stories and anecdotes plus chapters devoted to retail sales, marketing, selecting refrigera-
tion equipment and getting your ice cream business up, running and MAKING MONEY!
There are no other books on the market as complete as Gelato Maker’s Guide!

Below is a list of the chapters in the Guide but the chapter titles alone do not reveal the
depth and insights you get on each subject:

Chapter 1: Every Level of Sin Chapter 7 Flavors

Chapter 2 Composition of Ice Cream Chapter 8 Stabilizers & Emulsifiers
Chapter 3 Batch Freezers Chapter 9 Bases
Chapter 4 Continuous Freezers Chapter 10 Health, Sanitation and Safety
Chapter 5 Soft Serve Chapter 11 Freezers
Chapter 6 Pasteurizers Chapter 12 Packaging
2
Chapter 13 Decorating Chapter 18 Vegan Specialties
Chapter 14: Opening a Gelato Business Chapter 19 How a Gelato Factory Operates
Chapter 15: Sorbets, Sherbets, Ice Drinks Chapter 20 Wholesaling Ice Cream
Chapter 16 Ice Cream Specialties Chapter 21 Marketing & Advertising
Chapter 17 Semifreddo Chapter 22 Formulae & Miscellaneous

50
Ice Cream Business Startup Kit
SKU 885 871 900 0305
The Kit has been complied from more than a decade of experience in the ice cream busi-
ness—you could spend WEEKS searching the internet for the same information and not
find it!

The kit contains an entire chapter about how to create a business plan, your roadmap to
success. The plan is so important because we know that many small business fail because
the entrepreneur did not have a clear vision of the road to success. There are many busi-
ness plan forms and software available on the market but none are as complete, targeted
to the ice cream business and clearly explained as ours OR YOUR MONEY BACK! YOU
MUST BE SATISFIED!

Most of all, the Startup Kit contains solid advice about what is REALLY important in any
business—being happy, providing value, creating customer loyalty, developing attitudes
and approaches that make your customers return again and again—stuff you just cannot
put in a list. You might end up spending $65,000 to build a dessert restaurant—why not
spend just a few bucks up front to make sure you start off right!

In addition to covering a lot of subjects not discussed in the other books, the Startup Kit
expands your knowledge of critical areas such as catering, throwing parties, business legal
structure and leasing. Just the leasing chapter alone contains tips that could save you
THOUSANDS OF EUROS. Here’s what is in the guide text:

1 GETTING STARTED 8 STARTUP COSTS

2 MAKING THE RIGHT CHOICES 9 YOUR STAFF
3 NAMING AND BRANDING 10 MARKETING
4 FINANCING YOUR STARTUP 11 DISTRIBUTION
5 LEGAL STRUCTURE 12 CATERING
6 LEASING 13 BOOKKEEPING
7 YOUR BUSINESS PLAN

Our ICE CREAM BUSINESS STARTUP KIT will pay for itself many times over in direct-
ing you along the path of success and SAVING YOU MONEY! In addition, you get ABBSO-
LUTELY FREE our wonderful retail shop startup book, Ice Cream Dream PLUS our Grand
Master of gelato manufacturing books, Gelato Maker’s Guide. These two books togeth-
er are worth $32 USD so for just a little bit more you get the entire Startup Kit, plus the
many free PDF files, with sample business plans, spread sheets and other important mate-
rial!

44
The Dream Cones franchise is much less expensive than buying an existing
business or franchising with a name brand. Our franchise is almost like tak-
ing on an experienced partner—except you don’t have to split the profits!

Our franchise network is growing so quickly! Join the family! Become a

Dream Cones Franchisee!

Chef Michael
 
 

45