How to start up an ice cream parlour

Ice cream is a treat that everyone loves, especially when the weather's hot and sunny. You'll find all you need to start up and run your own ice cream parlour in our practical guide.

• Research your target market
• Decide what to sell
• Seasonal trends
• Fairtrade
• Pricing policy
• Buy an existing business

Research your target market

It's important to research your market thoroughly, to find out what sort of business is likely to attract customers and how much demand there is likely to be for your business.

Estimating demand

You'll want to make sure there's enough demand for your ice cream parlour. The ice cream retailing trade is catered for by a number of different types of outlets, many of which are non-specialist retailers. You may face some competition from:

• other ice cream parlours, cafes and kiosks
• farmers selling ice cream made from their own milk
• ice cream vans
• supermarkets
• newsagents, c-stores and other retailers

Have a good look at existing ice cream parlours, cafes and other ice cream retailers to establish:

• what they sell and the prices they charge
• whether the premises and fittings are modern and smart
• whether their outlets are busy

Where possible see how much you can find out about them from their websites and from review sites such as TripAdvisor.

Your market

Your customers will be mostly members of the public. Depending on your location and the time of year, a lot of your customers may be tourists, day trippers and holiday makers. While there has been an increase in the popularity of adult and premium ice cream, it is likely that children will be key to the success of your business.

Why will customers choose your cafe

Customers may choose to buy ice cream from you for a number of reasons, such as:

• your location. If your parlour is close to a beach or tourist attraction you may find that you have no problem in attracting customers
• the appearance of your parlour. A smart, clean outlet is likely to attract more people. An attractive outdoor seating area can boost trade during the summer months
• the ice cream that you sell. This may be key in attracting customers away from your competitors. You may decide to differentiate yourself from your rivals by selling ice cream that you make yourself or selling particularly sophisticated plated dishes, for example

Check out future developments

The location of your parlour is very important and ideally, there will be lots of passing trade and ample parking nearby. Check that there are no plans to build new road systems which would mean that traffic would bypass your shop, nor any proposals to impose parking restrictions nearby which may reduce the number of potential customers.

Find out what people want

There is a huge variety of ice cream flavours available (some parlours have up to 70 different flavours) and there are different ways of serving ice cream. You may find that certain flavours and dishes are not popular with customers so you should take these off the menu if they are not selling. You may consider providing your customers with feedback slips, especially in the first few months of trading, to see what you are getting right and what, if anything, you are doing wrong.

If you are planning to make your own ice cream and wholesale it to other caterers and retailers, you could contact prospective trade customers to find out whether they would buy from you and if so what type of products they would like. It might be worth offering them some samples to try.

Research current trends, plus legal and tax issues

• Sector trends for ice cream parlours
• Legal issues for ice cream parlours
• VAT rules for ice cream parlours

Decide what to sell

The type of products that you sell will depend to a certain extent on the nature of your outlet. You might, however, sell some or all of the following:

• plated ice cream dishes and sundaes
• other plated desserts
• cones and wafers (both to eat in and take away)
• small and large tubs
• lollies and choc-ices
• cakes and other pastries
• hot and cold drinks

Keep in touch with trends in the industry and make sure that you are offering what customers want. For example, over the last few years, there has been a steady increase in demand for frozen yogurt as part of the trend towards healthier eating. As well as looking for healthier ingredients, consumers are also looking for more unusual flavours, such as salty caramel, honey and ginger and such like. Bear in mind too that there is a move generally to reduce the amount of sugar consumed by the population. Some ice cream manufacturers have responded by reducing the sugar content and using less fattening ingredients, as well as reducing portion sizes.

Within these general trends, it has been noted that consumers have been cutting back on the quantity of ice cream they buy, with the worst affected product being family packs, and people have traded up to premium and luxury products, particularly desserts. The most popular flavour was chocolate. Despite the reduction in ice cream sales overall, one area of growth was children's ice creams and lollies.

You could also sell some more general cafe type products, such as sweets, chocolate bars, sandwiches, simple meals and so on. If you offer a full menu you might decide to sell alcoholic drinks too (you'll need a licence for this). Consider whether you will offer Fairtrade products such as chocolate and nuts as ice cream toppings - and perhaps Fairtrade teas and coffees.

If you have any trade customers who purchase your ice cream on a wholesale basis (for example pubs, cafes and restaurants) you may decide to package your products in a different way, such as in larger tubs or in multi-packs.

Seasonal trends

Ice cream manufacturers have for some years been trying to 'de-seasonalise' demand for ice cream, so that sales are spread more evenly throughout the year. Nevertheless, you are still likely to be much busier in late spring and summer than during the winter months.

Depending on the nature of your business, you can probably expect to make as much as 70% of your total annual ice cream sales between the beginning of April and the end of September, with June, July and August being your busiest months. However, some ice cream businesses have been quite successful in attracting customers year round, although in some cases they have done this by broadening their menus to include a range of other snacks, drinks and meals which are much less seasonal.

Unfortunately, your sales will be affected by the weather, over which you have no control. Sales are affected by:

• hours of sunshine
• temperature
• rainfall

As you would expect, sales of ice cream are most buoyant in a warm, dry, sunny summer. A cold, wet summer, on the other hand, can have a very severe effect on your sales for the year. So try to be realistic when you make your cash flow projections - don't assume that every Saturday in July will be hot and sunny.

On a week-to-week basis, it may well be helpful to keep a close eye on the weather forecast - particularly the weekend forecast. The Met Office website includes regional and local five-day forecasts for the UK. Weather forecasts like this can be very useful, but it's probably best to treat them as a guide rather than as a guarantee!

Fairtrade

Recent years have seen an increase in consumer demand for ethical products that help producers and farmers in the developing world. You could meet this demand by offering a selection of Fairtrade products such as chocolate, nuts and honey as ice cream toppings and teas and coffees. This would show your customers that your business is ethically aware and committed to fighting global poverty. Offering Fairtrade products can also be a good way of differentiating your business from its competitors.

What is Fairtrade

Fairtrade guarantees a fair deal for producers and farmers in the developing world by making sure they receive a fair price for their goods and products. Fairtrade items are generally slightly more expensive than similar products - but more and more consumers are happy to pay a little extra to help producers become self-sufficient. All Fairtrade products are marked with the easy to identify Fairtrade Mark and there's a huge range available.

How does it work

The Fairtrade system works by paying producers a set minimum price for their goods, giving them a living wage. On top of this, producers also get an extra sum of money to invest in their business or community. This is called the 'social premium'.

In return, Fairtrade producers must meet certain standards. These are set by Fairtrade International. As an ice cream parlour, it's unlikely that you'll deal directly with producers - you'll probably purchase your Fairtrade goods from a UK supplier.

Licensing

Outlets such as ice cream parlours that sell food and drinks which already carry the Fairtrade Mark don't need to be licensed by the Fairtrade Foundation. But if you plan to use the Fairtrade Mark in any of your advertising you'll need to have it approved by the Foundation.

Where to get Fairtrade goods

Only licensees, such as manufacturers and importers, that are registered with the Fairtrade Foundation can apply the Fairtrade Mark to a product. You'll probably purchase your Fairtrade marked goods from a registered wholesaler or catering distributor in the UK. More and more suppliers are offering Fairtrade products so it's worth asking your current suppliers if they have a Fairtrade range available. The Fairtrade Foundation website has a list of registered wholesalers and catering distributors that sell Fairtrade marked products to the food service industry throughout the UK.

Pricing

When you buy Fairtrade certified food and drink products from a registered wholesaler or catering distributor, you can probably expect to pay a little more than you normally would for similar products. The slightly higher trade prices cover the set price and social premium that are paid to the farmer or producer, as well as supply chain costs and the cost of certification and product licensing.

Although trade prices for Fairtrade products are higher, you can probably charge your customers a little bit more for them. You may benefit from extra sales, too. The Fairtrade Foundation isn't involved in setting retail prices, so the mark-up you add is entirely up to you. While you'll want to cover your costs and retain a healthy profit margin bear in mind the purpose and aims of the Fairtrade movement when you set your prices. The Fairtrade Foundation makes it clear that profit margins on Fairtrade items shouldn't be higher than on similar products.

Promoting Fairtrade goods

Offering Fairtrade products can be an attractive selling point for your ice cream parlour and can help to attract ethically aware customers. So it's important to make sure that potential customers know about the Fairtrade products you serve.

The Fairtrade Foundation is responsible for promoting Fairtrade in the UK and can provide useful materials and advice to help you to advertise your Fairtrade products. Any materials that include the Fairtrade Mark, such as signs or promotional posters, must be approved by the Foundation.

The Fairtrade Foundation organises a Fairtrade Fortnight each year to promote the Fairtrade system. This could be a good time for you to raise awareness of the Fairtrade food and drinks you offer. For example, perhaps you could have leaflets printed promoting the benefits of Fairtrade and highlighting the Fairtrade drinks you serve or ingredients you use.

Where to find out more

The Fairtrade Foundation is part of the international Fairtrade movement and oversees all aspects of Fairtrade in the UK. For more information on Fairtrade, the range of products available and how you can get involved visit the Fairtrade Foundation website.

Pricing policy

Getting the price right is very important. You must make sure that the difference between the cost price and the selling price is enough to cover all of your operating costs, including your own drawings. You may have to price in line with your competitors or run the risk of losing custom, although as ice cream is considered as a treat, it is unlikely that many of your customers will shop around for the keenest price.

Some of the things that you sell may have recommended retail prices suggested by the manufacturer. These include ice lollies, choc-ices and other similar 'wrapped impulse products'. You don't have to stick to the recommended prices, but these can be a useful guide when setting your own prices.

If you stock ice cream that is of the highest quality or comes in a variety of unusual flavours, you may be able to charge a higher price. There are no recommended retail prices for plated dishes such as ice cream sundaes and desserts - you will have to work out what each dish costs you and then add a mark-up to cover your costs and profit. The size of the mark-up will depend on what you feel the market will stand. You may be able to charge premium prices for elaborate dishes containing additional ingredients such as fruit or nuts - you can add considerable value to several scoops of ice cream at little cost by presenting them attractively as a delicious-looking sundae or dessert.

Special offers and discounts

If you have any trade customers who buy ice cream wholesale, you will probably offer them a discount as a matter of course. How much discount will depend on your pricing policy and on how much local competition there is. You could offer further discounts for buying goods in very large quantities.

Buy an existing business

You might decide to buy an existing ice cream parlour rather than start your own venture from scratch. Buying a going concern can mean that the products, customers, regular sales, staff, premises and equipment are already in place. Also, the premises will already have an A3 licence permitting the sale and consumption of food and drink

Check out their current food hygiene rating - you can search for these on the Food Standards Agency website. And check whether the business has a listing on the TripAdvisor review website, and if so what customers think of it. A poor reputation and rating can be difficult to turn around.

But buying a business can be a hazardous, expensive process unless you have the right skills and experience on your team, including legal and financial know-how. Establish a genuine trading and financial position, so that the price you pay for the business is not too high.

Franchises

Franchising can be a good 'halfway house' between starting out from scratch and buying an existing business. If you purchase a franchise you'll still be setting up your own business, but you should benefit from the experience, resources and perhaps the name of a business that is already successful.

There are a few franchises available for ice cream parlours - a web search for 'ice cream parlour franchise' should turn up some potential opportunities.

Although different franchise schemes vary in detail, most feature the following key points:

• as a franchise holder, you'll remain self-employed but you'll use the identity (corporate colours, logos, trade name and so on) of the franchisor
• in return, you'll pay the franchisor a fee - this might be a one-off investment, a monthly charge, or a combination of both
• both you and your franchisor will have to fulfil certain obligations and maintain certain minimum standards

You may have to buy some, most or all of your stock, ice cream mix and/or ingredients from your franchisor.

Some franchisors will provide you with training, as well as help with advertising and marketing and advice and support on a range of business and technical matters.

Details of the above points are set out in the franchise agreement or contract, which both you and your franchisor will sign. The agreement will also deal with other matters, for example, any territorial exclusivity due to you and the minimum period for which the franchise will run.

Before entering into a franchise agreement, it's advisable to check the terms carefully to be sure that you're getting a reasonable deal. Go through the contract with your solicitor before signing anything. Try to find out more about the reputation of the franchisor's business - both among past and present franchisees and among members of the public.

More information about franchising is available on the Franchise Info website. Information is also available from the British Franchise Association (BFA).