How selling ice cream might increase your profit margins to new heights
Posted by Slices Concession on
If you own a small business you may be able to increase your profits significantly by investing in an ice cream or yogurt machine and offering quality products to your customers. If your small business is a restaurant, deli, convenience store, or coffee shop you may benefit substantially by serving ice cream or frozen yogurt. You just need to ask yourself two questions before starting:
Am I willing to please my customers?
Is there an equipment supplier that can help me find all the tools I need to successfully sell quality ice cream to my customers?
If you answered yes to both of the questions above then keep reading below,
The first thing we are going to want to do is a food cost analysis. We need to do this because it would not make sense to sell something if we are not going to make money from doing it. There are six basic steps to a food cost analysis, which are the following:
Food Cost Analysis
1) Select what type of soft serve frozen product you want to serve.
There are many types of soft serve ice cream products to choose from out there. They go from water based non-dairy mixes, which are the most affordable; to the higher end, more quality high butterfat content dairy products. The high butterfat dairy products have a very rich creamy taste. The average cost of a high butter fat dairy product mix is about $0.30 per 5 oz.
2) The next thing we have to decide is if we want to sell a single or multiple flavors.
We have to decide this early on because this determines how many supplies we have to buy to be able to make all the flavors we need. Although we will have to spend more on equipment on the beginning if we decide to sell multiple flavors, it will pay off in the long run with a higher sales volume. Ice cream shop profit margins are so high, we benefit immensely from a high sales volume. The average price of ice cream flavoring syrup is about $0.06 per 5 oz.
3) What type of cones are we going to offer?
Most shops offer basic cake cones. Offering different types of cones is a great way to offer greater value to the customer but it is not necessary. For our cost analysis we will use cake cones since they are the most common type of cone used. The average cost of an ice cream cake cone is about $0.05 (each cone).
4) The price we will charge.
This is one of the most important parts of our cost analysis since it affects demand for our product so much. Remember you cannot charge premium price for a product if it is not a quality product. Your customers will know if you are selling a subpar product for an unfair price. If we charge quality price, we must use quality equipment and ingredients for our product. Our price point is affected by our location and the amount of competition around us. A butterfat dairy mix product made with quality ingredients can go anywhere from $1.75 to $3.50. For our cost analysis we are going to stay conservative and stick to the lower end of our price range. The average price for a cone of ice cream is about $1.85.
5) How Can I Sell?
Typically a restaurant or store with a well-run ice cream program will sell to about 10% of its customer base. So if we have 250 customers per day we could be looking at potential sales of 25 per day. If you have more customers you could be looking at a larger amount of sales! For our cost analysis we are going to keep it conservative and go with the minimum. Average of 25 sales per day.
6) Innovate and Maximize your Sales.
If we have the ability to make our own ice cream, we can offer more than just cones. We have endless opportunities. We can add value to the customer and offer milkshakes, Banana Splits, Sundaes, yogurt etc. For our cost analysis we are only going to use milkshakes because they are the most popular and to keep it conservative. Average of 25 shakes sold per day
- Total Cost= .41 per Cone
- Selling Price= $1.85
- Profit Margin= 77.83%
- Total Profit= 1.44 per cone
- Profit on Cones Sold= $36.00 per day
- Profit on Cones and Shakes= $72 per day (Same cost and price for shakes as cones)
- Profit per Month= $2,160
- Profit per year= $25,920 (Operating year round)
As you can see, the ice cream business profit margins are insanely high. The next step in this process is up to you. Make the move into making more money and becoming a better business. If you would like more information on machines and how they can help your business watch the following video.
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* Follow all local and national health codes. Always refer to local and national rules. This article is just a suggestion.
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