Ice cream is the most liked dessert by both kids and adults. A study shows that the U.S. ice cream parlor industry produces more than 1 billion gallons of ice creams generating revenue of around $5.6 billion, and it is growing every year.
A report shows that the global ice cream market will grow at a compound annual growth rate (CAGR) of 4.2% over the next eight years. Factors such as the rising demand for innovative flavors and impulse ice creams are anticipated to drive market growth.
If you also want to leverage the goodness of the ice cream industry, consider opening an ice cream parlor by following ten simple steps.
1. Perform market research
Analyze customers’ preferences in your area before deciding the kind of ice cream parlor you want to run. Next, determine if you should buy or make your own ice cream. If you do make your own ice cream, then consider answering a few questions:
- How much ice cream should you produce daily?
- What is the local competition?
- Can you make enough, or do you need to purchase it from another ice cream shop?
- Which ice cream maker to buy?
- Are you going to be self-serve or have employees serve the ice cream?
2. Plan and register your ice cream parlor
Look at competing parlors in your area and find a way to make yours different. Offer something special and unique, and then advertise it. Choose the right name for your parlor and ensure that your shop is well-planned, properly registered, and legally compliant.
Ask your friends and family for initial investments, or you can also secure a business loan or line of credit from any bank. Using a dedicated business bank account and credit card will help you apply for business loans and keep your personal and business expenses separate.
3. Select an ideal location
The success of an ice cream parlor largely depends on its location. Choose a space that attracts a lot of foot traffic and isn’t too close to your competitors. Your storefront should have good visibility to attract customers from off the street.
You may need 800-1100 square feet of space for your ice cream parlor. You may purchase a retail shop or rent one for your parlor.
4. Purchase necessary equipment and supplies
Once you find a location, procure the necessary equipment. Many shop owners report an initial investment of $25,000, while some spend around $50,000 for purchasing equipment. However, you can start lean and buy used equipment.
You may need a host of equipment for your ice cream parlor, including blenders, an ice cream-making machine, refrigeration and storage equipment. Ensure that you have enough space to store and refrigerate all your frozen dessert items that your ice cream shop will sell.
5. Select the menu
There are thousands of ice creams that you could potentially sell. A survey shows chocolate is the most liked flavor among ice creams. You can encourage your customers to come again by providing quality products and an enjoyable experience every time.
You can serve ice cream by a scoop in cups and cones. Many parlors offer a variety of toppings, specialty sundaes, shakes, and smoothies, to gain loyal repeat customers.
6. Set prices
Ice cream sales can be seasonal in primarily cold regions or places with chilly winters. So most of your revenue from an ice cream parlor will be generated during the summer, whereas in winter, it will be less.
The price you charge for an ice cream scoop can largely depend upon the quality and variety you sell and the location of your parlor.
The annual gross profit of an ice cream parlor ranges between $20,000 to $50,000, but with proper planning, you can make significantly more than that.
7. Manage your inventory
Initial inventory costs of an ice cream parlor may vary from $5,000 to $6,000 per month, depending upon the items you sell. You will need an additional $4000 to 5000 per month for advertising, labor costs, and energy bills.
Recording various expenses and income of your ice cream parlor is necessary to track your profit margins. You can store your financial transactions and track stock details using free inventory management software like Orderific.
Automated inventory management through Orderific can help you plan what to reorder and when.
8. Get the necessary permits, licenses and insurance
Store owners should obtain state permits and licenses to start an ice cream parlor. You will also need a food service license from the local health department that will require you to pass a health inspection of the food items.
An ice cream parlor should have business insurance depending on the parlor’s location, store value, and staff strength. It will protect your business and employees against accidental damage to your premises and equipment due to events like fire.
9. Create a website and market your parlor
To promote your ice cream parlor, host an opening day event where prospective customers can come in and taste your offerings. Offer coupons and discounts for new customers and first-time visitors.
Create a website for your ice cream parlor. Promote your special items on your social media pages. Create a digital menu and link it to your website to help customers get discounts and sign up for loyalty programs.
10. Invest In POS System
Invest in a reliable and efficient POS system to digitalize the order and payment process. It will help you achieve system-based ordering, loyalty program integration, track inventory, menu management and real-time analytics and reports.
How can you make your ice cream parlor more profitable?
According to a study, an ice cream parlor can achieve a profit margin of about 25%. If your ice cream parlor can successfully fulfill customers’ cravings for delicious ice cream, you stand the best chance of becoming profitable.
The success of an ice cream parlor depends on its competition, foot traffic, location, and uniqueness. Here are a few strategies you can implement to improve the annual profits of your ice cream parlor:
- Participate in local events
- Sell ice cream cakes, milkshakes or cookies to let customers order combos for special occasions.
- Sell your product in local grocery stores and restaurants.
- You could sell products that do well in winter, like hot chocolate, cookies, or other hot-baked items.
Orderific enables you to set up a digital menu, website, loyalty programs and payment process for your ice cream parlor. It also lets you manage your inventory and market your parlor for free. It is an easy-to-use free web-based service that does not require heavy software downloads.
Before opening an ice cream parlor, plan ahead, should you close down in winter or stay open year round. Do the math to check whether you’ll make or lose money by having your ice cream shop operational in winter. If staying open during the winter is not profitable, you might consider a seasonal operation.