February Part 2 - Franchises for Lovers

Customers clammer for ice cream even in February

In 1934, Tom Carvel borrowed $15, filled a battered vending truck with ice cream just outside New York City, and drove off. The truck didn't get very far, but that didn't stop Tom Carvel. In 1947, Carvel became the nation's first retail ice cream franchise, known for producing premium soft serve and hand-dipped ice cream products. Today the company distributes its line of ice cream treats in 26 states, Canada, and Puerto Rico. Each Carvel Ice Cream store is an individual ice cream factory. All ice cream products sold in the store - over 200 menu items - are made in the store.

Carvel is famous for its ice cream cakes; it's been the key to success in this typically seasonal business. The idea for the cakes is just one of many innovations attributed to founder, Tom Carvel. After his truck broke down, he started building little free-standing walkup ice cream shops around New York. As you can imagine, the shops were very popular in spring and summer when people were itching to get outside. But the time came when Tom Carvel realized that if he was going to bring people into a franchised business, he needed to offer more than a shop that was open only a few months a year. He needed to find a way to provide a year round business, which meant coming up with products that would sell even through the winter months.

Jeff Sturgis, Regional VP Franchise Sales and Development, says, "Anyone can sell ice cream cones between Memorial Day and Labor Day. It's what you do the rest of the year that creates a successful business. Tom's idea for making ice cream cakes was pure genius. It really does generate year round business so it's no longer a seasonal thing. The cake sales for a typical Carvel store account for 25-30% of the overall business receipts. And by having the best ice cream, hopefully, you can sell more of those cones during the summer."

A special treat for Valentine's Day
Sturgis says that customers buy ice cream cakes for special occasions such as birthdays and anniversaries, which can happen any day of the year. "But one of Tom's great ideas was to create specific cakes for holidays to drive up sales. He figured out how to spike traffic around certain events including Halloween, Christmas, the Super Bowl, Valentine's Day, Easter, Mother's Day, and Father's Day. Those are the 7 big cake days for Carvel." Three of these events, including Valentine's Day, occur in the dead of winter.

All special event cakes are predesigned. Sturgis relates, "Tom created different molds for specific occasions such as heart shaped molds for Valentine's Day. There are other shapes that can also be used, but there are some core Valentine's designs that all franchisees are required to make. When franchisees go through training, they are taught how to make and decorate the cakes and other items." Sturgis says all franchisees are encouraged to display as much holiday specific product as possible and also to create something unique for the occasion. "Typically, you would probably see some novelties like little sundaes in heart shaped cups or ice cream cups with Valentine candy in them or maybe pink colored ice cream."

The challenge is to create new products that really set the brand apart. Sturgis says, "Ice cream is ice cream to a certain extent and some people think of it as just another commodity. We are trying to make sure people recognize that ice cream is not all the same; there are different things you can do with it. We are always looking at what new flavors we can sell and we are coming out with 3D cakes and some crazy, almost interactive cakes."

Whatever the Carvel management team is doing seems to be working exceptionally well. Four years ago, there were 352 Carvel stores. That was before the company was bought by Roark Capital, a private equity firm out of Atlanta, Georgia. Since the new management took over in January 2002, the size of Carvel has doubled. "We have about 560 stores open as of right now. There are another 140 in development with signed franchise agreements in various stages of construction or site location," says Sturgis. "So we are right around 700 units in the system." And that doesn't even count the grocery store distribution. Carvel manufactures and distributes a limited line of ice cream cakes that are sold in 8,100 grocery stores across the country. "Grocery store distribution is a different ballgame. It is just extra brand awareness for us and our franchisees."

Contact Information: Jeff Sturgis, Regional VP Franchise Sales and Development, Carvel Ice Cream, www.carvel.com, (954)785-5599.

Kilwin's motto: "life is uncertain - eat dessert first"

In 1947, Don and Katy Kilwin opened a small shop in the popular resort community of Petoskey, Michigan. It wasn't long before their own original recipe ice cream and handmade chocolates were a hit among the locals and visitors alike. Since then, Kilwin's has combined the best of that original store with modern business practices to build a growing franchise company. It is the only franchise that sells its own ice cream along with handmade chocolates.

Leanna Hart, Director of Franchise Licensing for Kilwin's, says, "The stores today look like old fashioned confectionery shops. We use dark hardwood for our cabinetry and the ice cream cases are laminated with matching dark wood. And like the original shop, most Kilwin's stores are located in resort towns though we are also starting to spread to densely populated middle class to upper class areas where boxed chocolates go over big."

Store operators continue to produce handmade chocolates and other sweet treats on-site. The featured item is Mackinaw Island fudge. The term refers to a technique that originated on Mackinaw Island, Michigan many years ago. With this technique, the fudge is poured onto a marble table and paddled into loafs rather than poured into containers right after cooking. "Paddling makes a much smoother fudge with a creamier consistency," says Hart. "We make about 20 different varieties of Mackinaw fudge with flavors like maple walnut, cherry walnut crunch, turtle, light chocolate, etc."

Other items made in the stores include caramel apples, caramel corn, peanut brittle, cashew brittle, and dipped or glazed fruit. "We like to do specialty dipped items, too," says Hart. "For example, we might put a little peanut butter between two Ritz crackers and dip that in chocolate or caramel. The marble tables, waffle maker, and pots of chocolate and caramel are all situated near the windows to provide some entertainment value to customers and draw in passers by."

Most of the time, Kilwin's depends on heavy foot traffic to drive customers to make what is usually an impulse buy. "We also like to position ourselves next to restaurants to pick up the dessert business." But there are certain times of the year when people go looking for great chocolate treats to give as gifts. Valentine's Day is one of those times. "Valentine's Day is just huge," says Hart. "It represents a big percentage of our chocolate sales for the year. We mostly sell gift boxes, which are wrapped in our special red or gold heart gift wrap. Customers can also choose from a variety of baskets filled with an assortment of our products. Baskets range in price from $25 a basket to $525 a basket."

Another good time of year for chocolate sales is Christmas. "Around the second week in November we see chocolate sales start to rise because people are getting them for hostess gifts for the season. We see this trend especially in Florida and the southern states," adds Hart.

Building up the South
Right now, Kilwin's has 52 franchisees with 14 new stores coming online this year. "This is the largest and fastest growth period that we've experienced for this company," says Hart. "We normally put in 3 to 5 stores a year." Hart attributes increased brand recognition for the sudden growth spurt, but committed and enthusiastic franchisees clearly have a lot to do with it. "The majority of my lead generation comes from our stores. In addition to a wonderful quality product, we have been fortunate enough to have some very solid franchisees. They are hard working people that understand our system and know what it takes to make it work. The majority of our store openings are a result of current franchisees wanting to open 2nd, 3rd and 4th stores. That is a very good recommendation! When your franchisees are happy with you, everybody's happy," proclaims Kilwin.

Kilwin's is currently aiming to expand in Florida and the Southeast. Half the new store openings for 2006 will be located in Florida, bringing the total for the state to 19. Hart explains, "The main reason for wanting to build up the Southeast is because we do our own distributing. We own our own semi trucks and we train our own drivers. The ice cream is manufactured in Michigan, but we have a warehouse in Del Ray Beach, Florida. So we are trying to stay within our distribution route, which is currently from Michigan down to Florida and then up the East Coast to Rochester New York.

Leanna Hart, Director of Franchise Licensing, Kilwins Chocolates and Ice Cream, http://www.kilwins.com, (239)495-2443.