Nothing is more fulfilling than being your own boss and doing what you love. However, there’s a lot that goes into opening an ice cream shop smoothly, and we want to see you succeed. So, here’s everything you should know about opening an ice cream shop to set you up for success.
Did you know that ice cream shops these days sell more than just traditional ice cream? Now, you can find various frozen treats, including soft serve, gelato, custard, sorbet, frozen yogurt, premium ice cream, and organic ice cream – typically served in an ice cream cup or a freshly made waffle cone. On top of having a variety of ice cream flavors to choose from, you also have a variety of toppings and syrups to make your ice cream even more decadent.
Maybe your idea is to stick to the original business model, have servers scoop ice cream, and prepare sundaes for customers. But have you also considered the self-serve business model? This model for ice cream shops is up and coming as more customers want to make their own sundaes and pay based on weight.
Also, don’t forget to consider the latest ice cream trends, such as dairy-free options: Oat, almond, coconut, soy, and rice-based ice cream. Since consumers are becoming more health and allergy conscious, there’s also a growing demand for low-sugar ice cream, low-fat ice cream, and low-carb ice cream options.
Checklist for Opening an Ice Cream Shop Business
Never start a business venture without a plan. A good place to start is with this checklist we’ve put together for how to open an ice cream shop.
Step 1: Form a Business Plan
Begin your entrepreneurial endeavor by forming a solid business plan. Not only will you need a business plan to open a new bank account, but your plan will also give you clarity on the exact steps you need to take to form your business successfully.
Find your target market.
Your target market can depend on various factors like location, product, and overall branding. For instance, if you want to serve alcoholic ice cream products, you would target 21+ individuals. However, you can always expand your audience depending on your services. Since ice cream is a treat catered toward kids and summertime fun, you can also serve tourists and families with kids as a bonus. Your target market should include factors like:
- Demographics (age, income, location)
Find a supplier.
Don’t rush this step by going with the first ice cream supplier you meet. Instead, we highly suggest you meet with several suppliers to find the one that will give you the best deal in terms of quality, quantity, delivery times, customer service, and pricing.
It goes without saying: People enjoy ice cream the most in the summer. That means you’ll have to decide whether you want to open your shop seasonally or year-round. If you stay open year-round, think through products more appropriate for winter months, such as hot drinks, candy, ice cream cakes, and other sweet treats.
How much can you charge customers?
You want to be strategic about your pricing. You might be tempted to price your ice cream services based on the competition. However, this is an unsustainable strategy because your competitors can change their prices anytime. Also, if you price too cheaply, customers might think your ice cream services are low quality. So instead of pricing based on the competition, price your ice cream services based on the unique value you provide to your customers.
How can you make your business more profitable?
To create a profitable business, you must find a way to stand out among your competitors. Create a solid brand by asking yourself: What can I deliver to customers that they can’t get anywhere else?
In addition, keep your expenses in check by picking your location wisely to minimize rent and investing in just enough equipment to get the job done. You can also create new revenue streams, such as selling ice cream at special events, catering, and selling merchandise.
Choose the name of your shop.
There are many fun ways to choose a memorable name for your shop. Here are some of our favorite tips on where to draw inspiration:
- Consider all the products and services you’ll offer.
- Think of location-specific terms unless you plan to expand your ice cream business in the future.
- Avoid names hard to spell, hear, or pronounce. You want your customers to be able to find you through Siri or Alexa voice search.
- Keep the shop name simple and easy to remember. Consider using words that start with the same letter. Also, try rhyming words.
- Consider using the owner’s name unless you intend to sell the business in the future.
Choose a location.
Ideally, you want to place your ice cream shop in the most convenient spot possible for your customer base. Look for the neighborhoods where your target customers live and work. Once you have a few location options, consider how easy it would be for them to find you. If your shop doesn’t have a big storefront, you’ll likely need to invest in a reasonable amount of signage (which often requires a permit).
You might also consider having an ice cream truck or cart instead of the traditional brick-and-mortar business. Having a truck can give you the chance to be more mobile, reduce overhead costs, and be the highlight of many children’s summer months.
Step 2: Form a Legal Entity
For an ice cream business, you likely only need to register as a sole proprietorship or limited liability company (LLC). A sole proprietorship is the least expensive and easiest business entity to start. However, you would become personally liable as the business owner if anything happened to the business. An LLC allows you to operate as a sole proprietorship with the liability protection of a corporation.
Step 3: Register for Taxes
Every new business must register with its state revenue office. In some cases, you may be required to apply for a permit to collect sales taxes.
Small Business Taxes
Good news! If you register your ice cream shop as a sole proprietorship, LLC, or S-corporation in Florida, you don’t need to pay state income tax! But if in the future you decide to convert your small business into a C-corporation, you will need to submit a 5.5% federal income tax.
Step 4: Open a Business Bank Account & Credit Card
When starting any new business, it’s really important to keep your business and personal finances separate. That way, it’ll be easier for you to monitor the income and expenses of your ice cream shop. Banking for your ice cream shop can be as straightforward as opening a free or low-cost business checking account and getting a business-dedicated credit card.
Step 5: Set Up Business Accounting
A reliable accounting system helps you stay on top of taxes and monitor your business’s cash flow. But you can always hire a bookkeeper if you don’t even want to think about it and save some time. They can also give you personalized tax advice so you don’t get in trouble with the IRS.
Step 6: Acquire Necessary Permits and Licenses
Florida and many other states require restaurants and food service businesses to get several licenses. The licenses you’ll need depend on the type of business you’re operating and where you’re operating your ice cream shop. To find out exactly what your applicable permits are, we suggest you go through this list of standard licenses and permits, then Google how to get these licenses where you’ll work.
All business owners must have this license to run any business in the U.S.
Employer Identification Number (EIN)
All business owners need an EIN to legally operate a business in the U.S. and pay federal and state government taxes.
“Doing Business As” (DBA) License
Some states, such as Florida, require you to register a DBA name if you plan to run your ice cream shop under a different name than the legal name on your business license.
Mobile Food Vendor Permit
You likely need this permit if you plan to operate an ice cream truck or ice cream cart. This permit isn’t hard to get as long as you comply with Florida’s food safety guidelines.
Food Handler’s Permit
Everyone working at the ice cream shop must have a food service license to serve customers. You must undergo food safety training and get certified to protect your customers from foodborne illnesses.
Ice Cream Vendor Permit
As if the mobile food vendor permit wasn’t enough! Some cities also require this permit to operate an ice cream truck or ice cream cart. You also likely need to pay an additional fee with this permit for mandatory inspection, plus an annual fee.
Building Health Permit
If you plan to have a brick-and-mortar ice cream location, you must get this permit from your local city. This permit requires an inspection to demonstrate that your ice cream shop is safe to serve food and drink to the public.
Your ice cream shop will need signs if the storefront isn’t easily visible from afar. If you plan on making signs, get this permit because many city governments regulate signage based on size, lighting, visibility, and location.
Ice Cream Shop Liability Insurance
Liability insurance for your ice cream shop provides you protection against claims if you, an employee, or a customer gets injured on your premises. Find an insurance provider who specializes in the food service industry.
Resale License for Sales Tax
Florida requires all businesses to register for a resale license because the state charges sales tax to the end consumer. The state doesn’t charge a fee for this license. Instead, you’ll submit your sales tax to the state annually.
Get this license if you plan to serve alcoholic beverages or use alcohol for your boozy ice cream. Not having this license while serving alcohol could seriously cost you – even getting your business shut down.
Ice Cream Shop Licenses and Permit Laws in the United States
Have all the necessary licenses so you don’t get in trouble with the law. When in doubt, check your local and state regulations online to learn more about the requirements. Educate yourself on all the rules and renew any expiring licenses so your ice cream shop stays in good standing.
Step 7: Get a Marketing Strategy Together
Once you get your licenses, it’s time to get the word out! Here is how you can attract the best customers and get them coming back for more:
Defining Your Brand
Creating a solid identity for your personal brand will not only create a memorable business, but it will attract the kind of customers that will keep coming back for more. You want to create a brand that your customers can relate to.
On the flip side of that, you want to feel connected to your brand in your own way. This will foster a feeling of fellowship between you and your customers. Some things you can do to define your brand are:
- Determine your goals
- Create a unique value proposition
- Tell a story with your brand
- Craft a brand statement
Promoting & Marketing an Ice Cream Parlor
There are many ways to market your ice cream shop, such as billboards, radio advertising, and flyers. But don’t miss out on building an online presence! Over 90% of Americans are on the internet, which means consumers these days are turning to online advertising to make most of their buying decisions. Consider various online marketing options such as social media, Google Business Profile, Yelp, OpenTable, and TripAdvisor.
Keep Customers Coming Back
Ideally, your products and services are enough to keep your customers coming back for more! Still, you can create even more incentives, such as offering limited-time discounts, buy one get one (BOGO) promos, and free scoops for special occasions. Digital punch cards are prevalent for rewarding your loyal customers.
Step 8: Create a Beautiful, User-Friendly Website
Have a user-friendly website ready, so your customers can find your locations and plan their orders. First, register your domain name and create a URL. Then you can start building your website on a free hosting service such as WordPress, Wix, or Weebly. If you want to invest in more features, Squarespace and GoDaddy are also affordable options to consider.
Step 9: Set Up Your Business Phone System
Give your customers the option to call the ice cream shop if they have specific questions. After signing up with a service provider, set your automated voice messages for the days and hours your business is closed. Create unique extensions for every phone in your shop. Most importantly, create a call flow strategy with your team so your staff is prepared to handle any customer phone interaction professionally.
Step 10: Hire Employees
Likely, you will open your first ice cream shop alone or with a handful of employees. But once your ice cream shop becomes popular, your team will max out on bandwidth. That’s when you’ll want to think about how to scale your business in a manageable way.
How and When to Build a Team
To figure out whether you need to hire more employees, think about how much you would need to pay your new employees and how much time you would free up to do other things for the business. Go through the wages, payroll taxes, workers’ compensation insurance, and employee benefits.
Once you’re ready to start building a team, here are a few things to keep in mind:
- Avoid hiring employees to wear many hats. Instead, hire specialized employees to complete a group of similar tasks consistently.
- We know if you’ve managed a business solo for many years, it can be difficult to pass off the reins. Avoid micromanaging. Instead, give your employees constructive feedback and many chances to master their skills.
- You don’t always have to provide your employees instructions in person. Document all processes in an employee manual for their reference.
Ice Cream Shop Start-Up Costs
Although the typical start-up cost for an ice cream shop is between $20,000 and $50,000, the cost highly depends on many factors. These factors include kitchen equipment, ingredient inventory, furniture, dining and cleaning supplies, store signage, and working capital to cover the first few months of labor, rent, and insurance. One smart way to save on purchases is by renting or leasing an ice cream shop that previously went out of business.
Frequently Asked Questions
What is the markup on ice cream?
A standard ice cream shop typically has a profit margin of about 25%, meaning for every $1 you spend on your ice cream shop, you get back $4 in profits.
How profitable is an ice cream shop?
Your profits can vary depending on the shop’s size, location, and positioning against local competitors. But as long as you focus on providing a unique experience for your customers, your ice cream shop stands the greatest chance of succeeding.
How do you sell ice cream to stores?
Ice cream shop owners typically decide to sell to ice cream stores after a spike in demand for their products. You can start selling to stores by contacting several ice cream store owners, grocery stores, and ice cream suppliers. Eventually, you’ll also need to consider the package design, the production process, and ensuring your products comply with FDA requirements.
Next Steps for Opening Up Your Ice Cream Shop
Don’t let the process of going through all these steps overwhelm or discourage you from fulfilling your passion for ice cream. Contact us at DeConna Ice Cream if you have any questions or need assistance with getting started with your ice cream shop. Once you get the boring stuff out of the way, you’re on your way to the exciting activities – crafting enticing recipes, creating an attractive atmosphere, and providing a memorable customer experience.