The start-up cost of an ice cream shop varies depending on your ice cream shop’s concept, such as the brick-and-mortar, stall, truck, or bike cart. Each concept differs in size, target market, menu, additional food offerings, applicable equipment, mechanism of operations, business schedule, and start-up cost. Let’s get started and sort out the big costs to start up an ice cream shop.
Six big costs to start up an ice cream shop include the ice cream concept, soft-served or scooped ice cream products, type of lease (built out or not), equipment condition (brand new or used), and POS system. Starting up an ice cream business costs between $10,000 to $150,000 or even more depending on the concept size, location, equipment, offerings, and manpower.
Now, let’s delve into each one of these requirements to help us decide what type to choose and where to spend our start-up capital.
Ice Cream Concept
As mentioned, each business concept has a corresponding start-up cost. However, these figures are estimates only because a lot of factors affect the accuracy of ice cream start-up capital. These figures aim to give you an idea of the amount needed to venture into ice cream vending.
- Ice Cream Shop- $150, 000
- Ice Cream Stall- $25,000- $60,000
- Ice Cream Truck/Van- 20,000- $40,000
- Ice Cream Bike Cart- $10,000-$15,000
- Franchise or the Non- Franchised
When talking about start-up costs, one of the first things you need to establish is whether you’re going for a franchised or a non-franchised line.
A franchise is a popular business model wherein the owner or franchisor sells the right to use his business model to the franchisee. First-time business owners tend to choose franchises because they’re more convenient. You’ll just need to pick the location, hire employees, and manage the business. The rest are provided by the franchisor, including branding, training, equipment, and products.
Ice cream franchise expenses range from $32,000 to $45,000 and you need to pay for annual royalty fees and marketing costs. You are also required to undergo franchise training, where they will teach you everything you need to know. However, you will shoulder the transportation and accommodation costs for the training, which is around $5,000.
On top of that, you are tied to your franchisor’s policies including high-performance expectations and you won’t have the freedom to improve marketing strategies as everything needs pre-approval. In short, your business is directly affected by your franchisor’s business decisions.
Four Reasons Why Ice Cream Trucks are Profitable
- Soft Serve or Scooped
Deciding whether to go for a scooped or soft-serve ice cream directly impacts your startup costs.
Soft-serve ice creams are softer and smoother than traditional ice cream. It is produced using soft-serve machines which are also responsible for its twirling form. The machine is also used to create frozen yogurts, custards, sorbets, and other frozen goodies. The catch? Soft serve machines are expensive and could cost around $14,000. On top of the machine cost, you also need to add drains in conformity with the Health Department’s requirements and plumbing once you opt for the water-cooled machine.
Soft-serve machines are suitable for ready-to-use ice cream mixes. However, they are not recommended for self-made recipes as they can cause the machine to malfunction. You also need to render close attention when using a soft-serve machine as it is not a plug-and-play type. Lastly, the machine requires a minimum of 1 hour of cleaning and another 1 hour of re-assembling the parts together after cleaning. That’s how complicated soft serve machines are. On the other hand, scooped ice cream is less expensive and less complicated.
Built-out Lease or Not
The type of lease is not a concern for mobile ice cream stores such as truck and bike carts; this only applies to physical ice cream shops. The estimated cost for a lease is around $1250 to $3500. However, this is just a rough estimate because the location and size of the store play a vital role in the lease cost. For instance, a storefront in New York City is expected to be more expensive than a storefront in Tennessee.
You have 2 options to choose from. The first is to choose a lease that has been previously owned by an ice cream shop. It’s easier to set up your store since the previous shop has already established their local target market, designed and built suitable for ice cream store business, and requires less advertising. You’ll simply have to apply for a change of ownership from your local health office, add a few personalized designs, and set up your store according to your chosen concept.
The second option is picking a lease that needs gutting and remodeling. Usually, these types of leases happen on storefronts that used to be a shop of different niches eg. boutiques, gift
shops, etc. Aside from redesigning it to suit your business, you also have to transform it to be food compliant on top of the licensing and permits that you need to secure. The rough estimate for this type of lease and renovation is around $180,000.
- Brand New Equipment or Used
Used equipment is cheaper than brand-new ones. However, it’s not always a good idea to settle for used equipment because it comes with a higher risk of breakage. The same goes for brand-new equipment; just because it’s new doesn’t mean it will last long. Always conduct research on what brands and models are the best in terms of functionality and durability.
It’s recommended to invest in the right and durable equipment because they’re the money-making machine of your business. Once it shuts down, your operation will stop. Large-scale ice cream equipment costs around $32,000 to $66,000 depending on the brand, size, features, and model.
The trick in choosing the right equipment is to identify your local market to identify the possible foot traffic. If you believe that your market is big, it’s ideal to choose large equipment that can manufacture multiple ice creams in a few minutes. But if you’re expecting a smaller customer influx, you can choose the smaller one to save on costs.
To give you an idea of how much each ice cream equipment costs, we’ve provided estimates below:
- Batch Freezer – $10,000- $19,000
- Hardening and Holding Cabinets- $4,000- $7,000
- Merchandiser- $5,000- $7,000
- Soda Fountain- $2,000- $6,000
- Soft serve machine- $7,000- $20,000
- Dipping Cabinets- $1,200- $7,000
- Topping Counter- $4,000- $6,000
- POS System
To work smart and save time, you need to have an efficient POS system in place. It aids in organizing the order-taking process and conveniently helps in inventory management, and sales auditing. A POS system costs around $1200.
Conclusion
The ice cream business requires a decent amount of business capital to make it happen. The biggest costs to start up an ice cream shop includes your ice cream concept, soft-served or scooped ice cream products, type of lease (built out or not), equipment condition (brand new or used), and POS system.
It’s not enough to rely on the consistently high ice cream demand to pursue your dream business. You also need to understand the ins and outs of the business including the overhead start-up costs. By understanding your start-up cost, you will be able to budget your business capital and play your concept within your budget range.
Age Groups that Consume Ice Cream Breakdown
Frequently Asked Questions
If you want to reduce your ice cream start-up cost, you need to do it right from the get-go. Smart planning goes a long way. Create a detailed business plan and revise it according to your preferred concept, budget, predicted foot traffic, and how you envision it to be. Next, look for a good location with plenty of foot traffic but has an affordable lease. Then, choose the necessary equipment that is suitable for your concept, store space, expected foot traffic, and budget. If you want to save more, re-adjust your plan, eliminate unnecessary expenses, and make sound business decisions.
Your expenses in starting up an ice cream business depend on your concept, location, size, and variety of offerings. Here are other big expenses you need to consider:
Security Deposit- $30,000
Architect Build-Out Costs- $72,200
Other Kitchen Equipment- $8,000
Basic Fixtures- $6,000
Outdoor Signage- $8,000
To learn more on how to start your own ice cream/gelato business check out my startup documents here
This blog post is provided for informational purposes only. The information contained is not intended to constitute legal advice or to substitute for obtaining legal advice from a qualified attorney.
Hi! I am Shawn and I am a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop to an import and export business to an online review business plus a few more and now I create online ice cream/gelato business resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet a ice cream/gelato business owner, I see myself. I know how hard the struggle is to retain clients, find good employees and keep the business growing all while trying to stay competitive.
That’s why I created Ice Cream Business Boss: I want to help ice cream and gelato business owners like you build a thriving business that brings you endless joy and supports your ideal lifestyle.