Summer ice cream stands hold their own against chains

5/13/2001

IT'S NO WONDER Jim Matuszak raves about what a fun business he finds his seasonal ice cream stand.

By day and all winter, he works as an accountant, figuring taxes and billing his clients for his time. But on summer evenings, he sells ice cream in a Maumee neighborhood near where he grew up to a parade of children and adults on bicycles, skates, and scooters.

“At the end of every night with an ice cream store, nobody owes me anything. It's all cash through the window,” he said of his Toozer's Time Out on Key Street.

“Everyone there is treating themselves and in a good mood. They walk away happy instead of with a tax return.”

Ice cream stands, if well run and in a good location, aren't just a hobby business, however. For well established operators, they are the key to six months' vacation a year.

“We work our year in six months,” said Marcy Netterfield, owner of Netty's on Dorr Street and co-founder of the local chain of seasonal stands.

Even in an era when year-round giants in the ice cream store business - such as Friendly Ice Cream Corp. and Baskin-Robbins, Inc. - have closed stores and are working to reinvent themselves, many independent seasonal stands seem to be doing just fine.

The number of ice cream and frozen-custard stands in the country has held constant at about 18,000 to 18,500 for about five years, said Lynda Utterback, publisher of The National Dipper, a free, 17,000-circulation trade publication. In the mid-1990s, numbers melted as newly opened stands selling only frozen yogurt closed when that fad faded.

About half of the country's frozen-dessert stands are seasonal, she estimated, but many have sales similar to those that are open year-round.

Across the country, year-round stands probably average $300,000 to $350,000 in annual sales and seasonal stands take in $300,000, she said.

Local operators say annual sales at northwest Ohio and southeast Michigan stands range from $50,000 to $500,000.

Soft-serve ice cream is typically more profitable than hard ice cream, Ms. Utterback said. But that's only for busy stands.

Convenience stores with a small ice cream counter tend to dip hard ice cream, which can be stored for months at very cold temperatures. Soft-serve ice cream is good only two to three weeks after the manufacture date, and when business is slow the cost of operating the machines eats up the profits.

Stands often figure prices on a rule of thirds, said Marcia Helman, owner of Lickity Split in South Toledo and a partner in Penguin Palace in Maumee. One-third is to pay for ingredients; one-third is to pay for hired labor, utilities, and taxes; and one-third is profit for the owner.

The path to pocketing those profits - instead of pouring them into paying off the building and equipment - usually involves scrubbing down an ice cream stand every summer night for years.

Building a business from scratch often takes many seasons. And buying an established stand, complete with all the equipment, takes years' worth of profits.

Stands with $50,000 in annual sales often sell for about $50,000, Mr. Matuszak said. Those with $400,000 in sales, however, can go for $500,000.

Trying to pay off such investments more rapidly by extending the season just doesn't work, owners of seasonal stands say.

Even in August, which often has the hottest days of the summer, business drops off compared with that of April, May, and June. By late summer, children's ball teams have completed their seasons and families are saving for school clothes and preparing for fall.

Humid days when temperatures are well above 90 degrees can be quite poor for ice cream stands, which do the best on sunny days with temperatures in the 70s and 80s.

Many stands operate by the maxim that almost all of their profits for the year will be made by late July. By September, business is down by two-thirds from its peak, Mrs. Helman said.

Marty and Jacky Pauken learned that the hard way at their Jacky's Depot in a former rail station in Maumee. The Paukens got into the ice cream business in 1986 because it was seasonal and they hoped to travel during the winter.

But they thought they would stay open longer the first year.

“We sat down here night after night and maybe had $5 or $10 in sales, running compressors and not even paying the electric bill,” Mr. Pauken said.

It isn't unusual for electric bills in ice cream shops to run $900 to $1,000 a month - a figure that so stunned Mike Scott in his first few months of operating Kaylee's Cones & Deli in southwest Toledo that he had his meters checked.

Part of the reason is that many seasonal stands operate in buildings that are not energy efficient, said Mrs. Helman, whose Lickity Split was once a service station. So was Mr. Matuszak's Toozer's.

The other reason is that soft-serve ice cream machines and the other equipment in shops have motors and compressors that turn on and off many times a day.

Such equipment is expensive to buy as well. A new soft-serve machine can cost $20,000, Mr. Matuszak said. A store with $50,000 in annual sales needs one machine. A store with $400,000 in annual sales needs several.

Because of tight labor markets, service for machinery and delivery of ingredients have often been among the biggest headaches to seasonal stand owners.

Mr. Pauken said his wife recently ordered 10 cases of mix and got 10 cans of whipping cream.

Store owners say finding teenagers to work - sometimes for less than minimum wage - is no problem, even though many fast-food restaurants and stores pay more.

“This place renews your faith in youngsters,” Mr. Pauken said of Jacky's 14 young employees.

Prime benefits offered by many seasonal stands are flexible hours and the opportunity to work only a few hours a week. Another is food. Most of Mrs. Helman's workers eat dinner on the house and leave with a treat in hand.

Although many employers find 14-year-olds too young, youngsters that age are often hired at seasonal stands.

One advantage to that, Mr. Matuszak said, is parents and other relatives are usually proud or protective of youngsters working their first job and often stop by, typically making a purchase.

Increased concern about healthful diet does not appear to have cut into ice cream consumption, according to the U.S. Department of Agriculture.

“I think a lot of people pay lip service to health consciousness,” Ms. Utterback, the publisher, said. “When they want dessert, they've made the decision to have dessert, and they don't care how many calories are in it.”