How to open an ice cream shop – in this post, I am going to cover everything you need to know about how to open an ice cream shop from scratch. Opening an ice cream business from scratch isn’t the easiest thing to do, but with some planning and determination, it can be done. I know this because I have opened an ice cream shop from scratch. Like completely from scratch – my first lease for an ice cream shop had to be converted from a candle shop that was there previously. And, let me tell you ice cream shops and candle shops – they have nothing in common. So, without further ado let’s dig in – how exactly do you open an ice cream shop?
How Do You Open an Ice Cream Shop?
As a general rule, these are the steps to opening an ice cream shop:
- Business plan
- Secure financing
- Set up a legal entity
- Find location
- Negotiate lease
- Hire a contractor and draw up plans for the health department
- Buy equipment
- Buy supplies & utensils
- Buy ice cream & toppings
Are Ice Cream Shops Profitable?
Let’s start with why you may want to open an ice cream shop – to make money of course. As well as spread happiness one cone/cup at a time. As a general rule, a successful independent ice cream shop can make a 10%-20% net profit margin.
You can read more about ice cream shop profits here: Ice Cream Shop Profits – How To Run A Profitable Ice Cream Shop.
For the remaining part of this post, I will go through each of the above steps in detail.
1. Write Your Ice Cream Shop Business Plan
The first thing you need to do once you have decided to open an ice cream shop is put together your business plan. You will need a business plan for three reasons:
A. For yourself as a road map;
B. For potential landlords (to help secure a lease); and
C. For financing (if you aren’t self-funding the opening)
You can read more about how exactly to write an ice cream shop business plan here – Everything You Need To Know About Writing An Ice Cream Business Plan.
2. Ice Cream Shop Financing
Once you have written your ice cream shop business plan, the next step will be to secure the financing to open your ice cream shop. This of course raises the question – how much does it cost to start an ice cream shop?
How Much Does It Cost to Start An Ice Cream Shop?
As a general rule, whilst it is possible to start an ice cream shop for a five-figure sum, it will generally cost a six-figure sum to open an ice cream shop. The cost to start an ice cream shop is usually in the region of $100,000-$500,000.
You can read more about ice cream shop start-up costs here – How Much Does It Cost To Start An Ice Cream Shop?
As an FYI it cost me $180k to open my small ice cream shop in an expensive City.
Ways Of Financing an Ice Cream Shop
On average, for a first ice cream shop, there are three main routes most people take to finance opening it.
- They finance it themselves
- They approach banks for a small business bank loan
- They get investment from an investor/backer
I financed my first ice cream shop myself by selling a personal asset.
3. Legal Entity for Your Ice Cream Shop
At this early stage, you will need to start thinking about what legal entity you want your ice cream shop.
For example, do you want to set it up as an LLC or an INC.? This is something you need to discuss with your accountant and work out the best legal entity for you, as well as what requirements you need to fulfill to set it up.
Depending on your home state legal entities can take different amounts of time to set up, so you want to get this started as soon as possible.
4. What Is the Best Location for An Ice Cream Shop?
At this point, you have written your ice cream shop business plan and arranged the financing for it. Congratulations!
Now it is time to find the commercial lease from which to open your ice cream shop. Start reaching out to retail lease brokers (they will usually gain their commission from the Landlord’s side). At the same time, you want to start looking at listings on Loopnet. Start walking around neighborhoods and areas you are considering and see if you can see any empty units. Start arranging viewings of available retail leases to get a feel for what is available.
The most important decision you will have to make when starting your ice cream shop is deciding on the lease. Pick a bad lease and it could be game over. Pick a great one and you could have a winning business on your hands.
As a general rule, the best location for an ice cream shop fulfills the following requirements –
– High footfall all year round;
– School, park, and beach close by;
– In a wealthy area;
– Easily accessible;
– Easy parking;
– Restaurants close by;
– Minimal competition; and
– Great weather all year round.
You can read more about how to pick the best location for an ice cream shop here – What Is The Best Location For An Ice Cream Shop.
How Many Square Feet Should An Ice Cream Shop Be?
As a general rule, an ice cream shop should be 400 – 1000 square feet big. It is not advisable to go much bigger than 1000 square feet – you run the risk of not being able to cover the higher costs during slower periods.
My ice cream shop is 455 square feet (including a rather large staff restroom). We make all our ice cream from that location too. Yes, it is super compact – every inch of space is made the most of. And no, we don’t have indoor seating. But every winter when sales are slow, I am glad we signed a smaller lease.
I notice that the ice cream shops tend to go under and the ones with large square footage.
5. Drawing Up the Lease
Once you have found your perfect location and managed to secure it (with the help of your fabulous business plan of course) now it is time to get the lease drawn up. You will likely have to put down a security deposit to secure the lease.
For example, our security deposit was $25k – but we did get rent paid for out of our security deposit for several years according to a fixed schedule until it went down to $10k.
Negotiating a lease will require the assistance of an attorney with retail lease negotiation experience. Sites like UpWork or UpCounsel can be great to find attorneys for this type of remote work. You will want to use a terms sheet to set out any main terms and have the attorney check all drafts of the lease until it is agreed to by you and the Landlord.
If you find a lease that needs a lot of work done to change it to an ice cream shop, make sure you negotiate a rent-free period during the build-out.
6. Hire a Contractor to Build Out Your Ice Cream Shop
Congratulations, you have now signed a lease. The first thing you will need to do once you have signed the lease is hire your contractor and architect. Your contractor and architect will help you come up with the plan for the space, draw up the plans, submit them to the local health departments and carry out the build-out (plumbing, etc.) of your space.
Make sure to get referrals from previous jobs and get several quotes from several contractors before you decide on one.
Once you have hired your contractor the first thing you will do is decide on the layout and function of the space. How the back of the house and front of the house will need to be set out.
For the purposes of this post, I will assume the location was a non-food location, so it must be built out to be food compliant from scratch. Below are just some of the things you and your contractor will need to think through:
The biggest aspect of building out an ice cream shop is the plumbing. In most parts of the USA, you will need a three-compartment sink for washing up (and it must be of certain dimensions), as well as a hand wash sink and a mop sink. That is already 5 basins.
Our health department also required that we had an ingredient wash sink as we planned on having strawberries as a topping.
Getting the plumbing built in is usually the biggest construction part. It will also be the costliest part. This is because floors will need to be dug up and piping laid. Most ice cream shops will not require the ability to cook food (grilling, frying, etc.) which does reduce the build-out requirements. It can also take the longest as plumbing will need to be approved by the local building department until anything can be done.
Figure Out Where Freezers, Fridges, and Ice Cream Machines
When you are planning your plumbing and sink locations with your contractor you will also have to plan where your freezers, fridges, and ice cream machine will go. You therefore will need to know the dimensions of all pieces of equipment at this stage. You will also want to know any specific power requirements so that the proper wiring can be planned and put in.
Always plan for more plug sockets than you need. The more the better.
Storage and Shelving
At the same time, you will have to plan where your prep space and storage shelves are going to go. Most health departments will have a requirement for a certain amount of shelving and prep space.
Front Of House
You will then need to think about the front of the house with your contractor as this will also be in the plans that are drawn up.
If there isn’t one already, you may well need to have a divide built between the front of the house and the back of the house. We had to have a wall built diving our space into the front of the house (where customers are served ice cream) and back of the house (where ice cream is made).
You will also have to consider where the following will be placed:
- toppings counter
- serving counter
- cabinets/ storage at the front for cups etc.
- menu board
Once you and your contractor have decided and finalized the plans your contractor can get them submitted to the local health department and local building department. These are usually separate departments and separate institutions. Also, they both tend to have different requirements (that can sometimes conflict). This can draw out the planning approval process.
The progress of the build-out will then be determined by alterations required to the plans by the health and building departments as well as the speed at which your contractor hears back from these departments.
This stage unfortunately can be like a very long and slow tennis match – lots and lots of slow going back and forth. Hang on in there. In my experience, it can easily take 6 months to get plans approved, if not longer.
You will need to have both general liability insurance and employee liability insurance in place by the time you open. Other forms of insurance may also be required depending on where you are based.
It is a good idea to talk to your contractor about the insurance they will have in place during the build-out. It may the case that you will want or need your general liability insurance in place during the build-out. You should also check the terms of your lease regarding insurance requirements.
The main utilities you will need in place once your shop is open are electricity, water, and Wi-Fi. You will want to get the electricity and water utilities set up in your name at the start of the build-out as you will need to be paying for those during the build-out (unless the terms of your lease specify otherwise).
9. Equipment Needed to Open Ice Cream Shop
Whilst the build-out and health department approval process is taking place you can start to think about ordering the equipment you want. To be honest you really need to decide on the big pieces of equipment you want whilst the plans are being drawn up as you will need to know the dimensions of the equipment at that stage.
As a general rule, the equipment that is often required to open an ice cream shop includes the following:
- At least one batch freezer (aka ice cream machine)
- Storage freezers
- Display freezer/scooping freezer
- Toppings counter
- Point of sale
You can read more about the equipment required to open an ice cream shop here – What Equipment Do You Need For An Ice Cream Shop.
10. Ice Cream Shop Signage
During the build-out process, you will also want to start to think about your outside signage. There may be approvals that are required for the signage (there were for our ice cream shop), and the signage process can take a few months. This means it is best to start thinking about it sooner rather than later.
Be sure to double-check if there are certain signage requirements in your lease. In our lease it was important to the landlord that we use the same signage contractor that made the others in the building as well as have the sign in the same style – so this was drawn into our lease. The signage for our shop cost more than we would have liked because of this – but we were aware of this requirement from pre-lease negotiations with our landlord.
11. What Permits Do I Need to Open an Ice Cream Shop?
The permits you will need to open your ice cream shop will depend on where you are based and local rules. But you will also certainly have to get at least the following:
- Health Department Permits: your local health department will have to sign off on your plans and the final location before you can open. They may well request for certain things to be added to the build-out (one of our requests was an extra wall to be built by the restroom). This can really add extra unexpected costs to the build-out so be prepared for it when budgeting. Once everything is built out and approved your local health department will grant you a permit to operate as a food business. This will then have to be renewed annually for a fee.
- Business license: you will need to obtain a business license for the city you will be operating in.
- Seller’s permit: Here in the US a seller’s permit is needed in relation to Sales Tax. Rules on Sales Tax will depend on your home State. For example, in California take out ice cream is generally not taxable. However, ice cream eaten at tables and chairs inside the ice cream shop is subject to Sales Tax. Any hot toppings added to ice cream (hot fudge, chocolate or caramel or hot brownie, or cookie pieces) will also cause the ice cream to become subject to Sales Tax. Make sure you understand what your local rules are on Sales Tax.
- Fictitious Business Name: You may well need a file a fictitious business name depending on your home state requirements. If you set your business up as an LLC as Best Ice Cream LLC but you want your business to be known as Best Ice Cream (i.e. without the LLC) you will need a fictitious business name license (at least here in California you do).
There may well be permits you will be required to get depending on where you are opening your ice cream shop.
12. What Supplies Are Needed for An Ice Cream Shop?
As your ice cream shop opening gets nearer and nearer you will need to start thinking about buying all the supplies and utensils.
As a general rule, the main supplies required for an ice cream shop are ice cream cups, ice cream lids, spoons, sample cups, bags, pint containers, marker pens, labels, and till roll. This is in addition to utensils such as scoopers, spoons, and spatulas.
|Dry Supplies Required For Ice Cream Shop||Utensils Required For Ice Cream Shop|
|Ice cream cups||Ice cream buckets|
|Ice cream lids||Ice cream scoopers|
|Sample cups||Toppings bowls/jars|
|Bags||Spoons for toppings|
|Marker pens||Chopping board and knife|
|Labels||Storage buckets and lids|
You can read more about the supplies and utensils required to open an ice cream shop here – What Supplies Do You Need For An Ice Cream Shop?
13. What things Should an Ice Cream Shop Sell?
Once you have the health department and building department sign off on the final space you can open – congratulations. You can buy in your ingredients, ice cream, and or toppings. You obviously should have decided on what ice cream you are selling whilst writing your business plan (are you reselling another brand or making your own) as well as the toppings you are going to offer. Usually, you aren’t allowed to store ingredients in your location until the health department signs off on the final built-out space.
As a general rule, all ice cream shops should offer the four basic ice cream flavors vanilla, chocolate, strawberry, and mint.
It is a good idea to also offer a few of the more “indulgent” American classic flavors such as cookies & cream, butter pecan, and peanut butter. Finally, offer a few unusual flavors which you rotate every week or so to add some variety to your ice cream shop menu. You will also want to offer a variety of optional toppings such as the following.
|Ice Cream Flavors||Toppings|
|Mint Choc Chip||Oreo pieces|
|Cookie & Cream||Mini pretzels|
|Peanut Butter||Sprinkles (rainbow and/or chocolate)|
|Butter pecan||Graham crackers|
|Some unusual & unique flavors||Chopped nuts|
|Peanut butter cups|
You may also want to offer drinks, waffle bowls, cones, and sundaes in your ice cream shop.
You can read more about what things an ice cream shop should sell here – What Supplies Do You Need For An Ice Cream Shop?
14. Ice Cream Shop Launch
You will need to think about how you want to launch your ice cream shop once you have gained all the final approvals. There are two options for your ice cream shop launch:
A Soft Launch
A soft launch is exactly as it sounds. Once you are ready to open you just quietly open your doors one day and begin serving customers without any fanfare. You may also begin with shorter opening hours whilst you and your team get used to everything and slowly increase them.
The advantage of having a soft launch is that you and your team figure everything out, start to get systems in place and make mistakes and learn from them – without having lots of eyes watch your make mistakes and learn.
I would recommend a soft launch. You and your team won’t know what you are doing at first and honestly, you will be grateful for the slower pace of incoming customers as you get used to everything. You can always throw an opening party later down the line once you have everything figured out, your team fully trained up, and systems in place.
A Hard Launch
A hard launch is when you get lots of press in the lead-up to opening. You then throw a big opening party the day you open – usually with free ice cream (or a special offer). This big opening party will have been advertised and promoted heavily in the lead-up to it.
The issue with a hard launch is that you and your team probably will not be able to handle many customers straight away. An influx of customers immediately whilst you are still figuring everything out can lead to negative customer reviews, customer disappointment, and stressed staff members.
I would recommend a soft launch to be followed by an opening party a month or two later.
How I Launch My Ice Cream Shop
In case you are wondering I opted for a soft launch for my ice cream shop. And am I glad I did? To say that the first few weeks were a learning curve would be an understatement and I am super glad there were not tones of people in our store straight away to watch us making mistakes and learning.
How To Open An Ice Cream Shop – The Final Lick
How to open an ice cream shop. Opening an ice cream shop is not going to be a quick process. It took us over 10 months to open our first ice cream shop from the moment we signed the lease to opening the store. This didn’t even include the 3 months it took it to find our lease. It is a long and, at times, frustrating process. However, the more prepared you are the better.
To speed things up as much as possible, make sure you understand the permitting process as much as possible. Understand the rules so you are not relying on your architect to communicate with planners. Make sure you know all the equipment you want in advance and all their dimensions. And most importantly, make sure you have an idea of how your ice cream store will operate. Understanding this will mean when it comes to drawing up plans you can quickly and easily let your architect know how things are meant to work.
Finally, build in at least an extra 6 months into any open schedule you have and make sure you account for any build-out period in your lease. You only want to start paying rent when you start making money. Make sure there is a rent-free period or at a minimum a reduced rent rate during any build-out period.
Time To Learn Some More
Want to learn more on your path to ice cream entrepreneur success. Then check out some of my other articles.
- What Are the Challenges In An Ice Cream Business
- How Do I Start My Own Ice Cream Business
- Ice Cream Shop Profits – How To Run A Profitable Ice Cream Shop
- How Much Does It Cost To Start An Ice Cream Truck
- How Much Does It Cost To Start An Ice Cream Shop
- Ice Cream Shop Accounting – Everything You Need To Know
- Can I Make Ice Cream At Home And Sell It
- What Are the Different Types of Frozen Desserts?
- Is Vegan Ice Cream Profitable
- What Equipment Do I Need For My Ice Cream Truck
- How To Pick A Generator For Your Ice Cream Truck
- How Profitable Is An Ice Cream Truck?
- Everything You Need To Know About Working In An Ice Cream Shop
- Everything You Need to Know About Writing an Ice Cream Business Plan
- Everything You Need To Know About Rolled Ice Cream
- Everything You Need To Know About Soft Serve Ice Cream
- Vegan “Ice Cream”
- Everything You Need To Know About Batch Freezers
- What Equipment Do You Need For An Ice Cream Shop
- What Supplies Do You Need For An Ice Cream Shop
- What Is The Best Location For An Ice Cream Shop
- How To Start An Ice Cream Truck
- Do Ice Cream Shops Make Money in the Winter
- How To Make An Ice Cream Shop Stand Out
- How Do You Become An Ice Cream Distributor
- Everything You Need To Know About Ice Cream Delivery Apps
- Everything You Need To Know About Gluten-Free Ice Cream and Toppings
- What is the Mark-Up on Ice Cream?
- What Scoopers Do Ice Cream Shops Use?
- What Are the Best Toppings and Sauces for Ice Cream?