Who doesn’t love ice cream? Ice cream is one of the most popular treats and wholesale snacks in the world.
Key Takeaway: Starting an ice cream business is a very lucrative and profitable idea for any business owner. However, it is important to know what you are doing before going into business.
For one, you need to understand what your customers want. There are several types of ice cream with different flavors and toppings. Which types do you plan to sell? Will you create a different flavor entirely?
Ice cream equipment, wholesale food packaging, pricing strategies, and ice cream marketing ideas - these are other things to consider when starting your ice cream business. Yes, it’s a lot!
However, you’re in luck. Let’s look at how to start your ice cream business.
How Profitable is an Ice Cream Business?
Before we continue, there’s always that one question every intending business owner asks before launching into any new business - “how much profit will I make from this business?”
Let’s find out!
- Consistent Demand: Ice cream enjoys year-round popularity. Whether it's the heat of summer or the chill of winter, people crave ice cream. This consistent demand ensures a steady stream of customers and revenue. A small ice cream shop, for instance, can expect to serve 100 to 300 customers daily, generating daily sales ranging from $200 to $600 or more.
- Versatility in Offerings: Diversifying your menu can boost profitability. Beyond scoops, consider offering sundaes, milkshakes, ice cream cakes, and other dessert options. A diverse menu can increase the average transaction value, leading to higher daily and monthly sales.
- Repeat Business and Customer Loyalty: Satisfied customers are likely to return for more. Building customer loyalty can lead to repeat business, and over time, this can constitute a significant portion of your revenue. On average, a loyal customer might visit your shop 3 to 5 times a month.
- Seasonal Promotions and Special Events: Leveraging holidays and special occasions can yield substantial profits. For example, a well-executed Valentine's Day promotion or a summer ice cream festival can generate a 20% to 50% increase in sales during the event period.
- Cost Control and Efficiency: Tight cost control measures can have a significant impact on profitability. Efficient inventory management, labor optimization, and minimizing waste can save you thousands of dollars annually. Reducing your cost of goods sold (COGS) from 30% to 25% can significantly boost your profit margins.
- Expansion Opportunities: As your business flourishes, consider expansion opportunities. Opening additional locations can multiply your revenue. A well-established ice cream shop might open a second or third branch within a few years, doubling or tripling its profits.
How to Start an Ice Cream Business
Now that you know just how much you can make from starting your ice cream business, let’s look at how to start your own ice cream business.
- Understand Ice Cream Market Trends
The first step to starting your ice cream business is to understand what is going on in the food and beverage industry and the ice cream market. No business owner, worth their salt, runs head-first into any business - researching the market comes first.
Let’s look at some real life examples of ice cream market trends.
According to a survey published in Food Insights in May 2021, 60% of the population of the region preferred healthy alternatives for popular food products, such as confectionery, desserts, and ice creams. To position their ice cream business to leverage this trend, Cold Stone Creamery launched its first vegan ice cream with almond milk and multiple add-ons across the country.
Beyond health considerations, another prominent trend is the ascent of plant-based alternatives. As plant-based diets and sustainability concerns gain momentum, the demand for wholesale dairy-free and vegan ice cream options has surged.
Now, you can only take advantage of these trends when you understand the market. Take your time to do your research - what you find will definitely set your business up for success.
- Research Your Target Market
Yes, you guessed it – more research!
Start by identifying your ideal customers. Are you catering to families, health-conscious individuals, or perhaps a niche market, like restaurant businesses, bakery businesses, or catering businesses, interested in gourmet or exotic wholesale ice cream flavors? Knowing your target demographic will guide many aspects of your business, from menu creation to ice cream marketing strategies.
It is important that you assess the competition in your chosen location. Who are your local competitors, and what are they offering? Identify gaps or opportunities where your ice cream business can stand out.
You can conduct surveys or focus groups to gather direct feedback from potential customers. Ask about their preferences, dietary restrictions, and expectations from an ice cream shop.
Once you know your target market, you can go ahead to the next step.
- Create a Business Plan
You have your market research and enough information about your target market, it’s time to write your eCommerce business plan. This essential document will encapsulate your vision, strategies, and financial projections, guiding your ice cream business toward its sweet destination.
The first step in creating a business plan is to clearly articulate your vision and mission. What is your “why”?
Your "why" is the driving force behind your ice cream venture. Why are you passionate about creating frozen delights? What sets your ice cream business apart in the crowded desert landscape?
Imagine your mission as the scoop of ice cream at the heart of your business cone, representing the essence of what you aim to achieve. It could be about spreading joy, serving the community, or redefining the ice cream experience.
Your business plan should have the following elements:
- Executive summary
- Business description
- Market analysis
- Product or service description
- Marketing and sales strategies
- Competitive analysis
- Management and organizational structure
- Financial projections
- Funding requirements
- Register Your Business
Registering your ice cream business is important.
Obtaining the necessary food safety permits and wholesale licenses is another critical aspect of registration. These permits can include a general business license, health department permits (if you're serving food), and any specific licenses related to selling ice cream or operating a food establishment.
One sure way to fail in any food business is to partner with unreliable wholesale businesses. From not getting your wholesale restaurant supplies and ice cream supplies on time to losing loyal customers and patrons, the consequences can be detrimental to your business.
Finding a reliable wholesale ice cream distributor will ensure that you get a consistent and steady supply of wholesale ice cream supplies. To begin, look for wholesale distributors that specialize in supplying bulk ice cream supplies, depending on the type of ice cream business you want to launch.
Make sure you review the distributor’s history and read up on them. Check their product offerings, delivery timeline, wholesale vs retail prices, wholesale food packaging materials, and minimum order quantities (MOQ).
Don't underestimate the importance of contingency plans. Even the most reliable distributors may encounter occasional challenges. Having backup suppliers or alternative solutions in place can help you mitigate disruptions to your business.
- Promote Your Ice Cream Business
Finally, once you’ve put everything together, it’s time to launch and promote your ice cream business. If you have a brick-and-mortar store, then you can host a grand opening event. This will allow potential customers to get a taste of your offerings, drop feedback about your decor and setup, and spread the word about your business.
However, it is important to consider eCommerce personalization. Every customer wants to be treated in a unique way and personalization offers you the opportunity to make this happen.
Don’t forget to run seasonal promotions and other customer retention campaigns. One thing with marketing to take note of is that marketing is not static. It is important to continue to experiment with new strategies and optimize old ones.
Frequently Asked Questions About How to Start an Ice Cream Business
Starting an ice cream business is relatively simple. As long as you’re selling a quality product and have enough customers, you should have a profitable business.
Let’s answer a few questions about starting an ice cream business.
What are the Raw Materials For Ice Cream?
The raw materials for ice cream are:
- Milk or cream
- Flavorings (vanilla extract, cocoa powder, or fruit puree)
- Inclusions (chocolate chips, wholesale nut butters, cookie dough)
How to be an Ice Cream Distributor?
To become an ice cream distributor, you typically need to establish partnerships with ice cream manufacturers or suppliers. You'll need the necessary licenses and permits, warehouse storage facilities, transportation, and a solid wholesale food distribution network.
What Equipment Do You Need to Make Ice Cream?
The equipment needed to make ice cream include:
- Ice cream machines
- Storage tanks
- Refrigeration units
- Flavor dispensers
What is the Cost of Goods Sold For an Ice Cream Shop?
The cost of goods sold (COGS) for an ice cream shop includes expenses related to ingredients (milk, cream, flavorings, inclusions, sugar), eCommerce packaging materials (cups, cones, lids), and any direct labor costs associated with production. COGS is a crucial sales metric for calculating profitability and managing costs in the ice cream business.