Questions

What are average profit margins in Ice Cream store business?

Looking to bring an Ice Cream Cafe concept from Europe to the States and would like to have better idea of ROI and how to come up with best name and brand logo.

5answers

Hi!

I am owner of an ice crean chain with 45 stores in Chile. We have stores in shopping centers, streets and also karts that you can put in events and parks.

The average cost margin of ice cream (depends on the amount of materials you use in producing the ice cream) is around 40%. This is italian gelatto where you serve the ice cream without a specific measurement so your costs can vary due to the size of each portion you serve.

About the brand you should focus on your unique value proposition and what kind of ice cream you are selling. We import the pastry from Italy and the fruits and milk from our country. Your ROI depends on your sales price and costs. If you focus on high market ice cream you can charge high and keep costs down.


Answered 7 years ago

I can't speak to the details ice cream margins, but when it comes to your branding and identity I can help. Dessert foods can be a tricky area in today's more health-focused world. So as mentioned before you have to figure out and promote what makes you special. Not this will depend on where in the market you plan on focusing: artisanal, organic, traditional, speciality, etc.; what your brand experience (beyond your core ice cream product) will be; and what price range you plan on placing your product in. Traditional ice cream shops both large and small have suffered in the changing food landscape where people's appetites have shifted (just look at Baskin Robbins issues)--so while a solid brand strategy and execution is important, it is only as strong as the product experience it embodies. Feel free to drop me a line if you have any further questions...


Answered 5 years ago

One thing you need to remember is that running any source of "food" business is a LOT tougher than running a retail business.

Why? Because you can't let your stock "sit"... if you dont sell your, I don't know, motor oil, then you just wait until the next week to sell it.

If you don't sell your food, it is a complete loss and you throw it away.

The moral of the story: Make sure you aren't getting in over your head or going about things the wrong way.

Feel free to set up a call for more information.


Answered 7 years ago

"It Depends."

Some coffee shop / cafès are experimenting with this in the US now. Some of them are making it on-site and other are sourcing it from various suppliers. Obviously making it on-site requires a great deal of upfront investment which many SMB owners cannot justify. The trade off is a plush 1500%+ markup on the finished product.
In my experience, those who outsource it and do their due diligence can estimate a 400%-700% markup.


Answered 6 years ago

If it's a global brand, people would anyway get to know the real price (thanks to Google).

If it's a niche concept, it depends on how you want to position it. "Sales is changing perceptions". If you create a hype on the branding and promotional activities in a suburb location, people feel its over priced. If you under value the product in a high lifestyle location, you cannot meet your sales numbers. You need to look at the surrounding factors that influence price; since price is not an isolated factor.

When you do a business model, price is generally calculated after the backward integration is done.

My suggestion is, do a pilot in 3 types of markets at 3 different price points. Closely watch the response and the pattern, you will be a winner :)


Answered 4 years ago

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