What is the best location for an ice cream shop? Are you currently looking for a lease to open your first ice cream shop? Have you been searching the internet looking at listing after listing and still cannot decide? It’s hard right!? What even should you be looking for? Where do you even start? The reality is that 23% of “restaurants” fail in their first year not because they don’t make great ice cream, but because they picked the wrong lease. Well, in this post I want to solve all of that and share with you what exactly makes the best location for an ice cream shop.
What is the Best Location for an Ice Cream Shop?
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
- Great weather all year round
Ice Cream Shop Leases – 101
Welcome To The Real Estate Business
Finding a lease for your ice cream shop must not be a heart-driven emotional process. You need to come at it level-headed, and purely business-focused. You see if you have decided you want to start an ice cream shop, what you have decided is that you want to make a real estate investment.
Wait. What? Real estate investment – what are you talking about?
Yes, a real estate investment. You see when you want to start an ice cream shop or any kind of restaurant what you are doing is making money by leveraging a space (the four walls that surround your shop). A space that then makes and sells ice cream.
If you want to be a successful ice cream shop you need to make sure you pick a good location and get only as much space as you need.
Rent – How It Will Impact Your Ice Cream Shop
Most ice cream shops fail because they lease a space in a bad location and/or lease a space that is too big for their needs. The result can be poor sales and high rent.
When you open your ice cream shop there are some expenses you can control – supplies and staffing being the main ones. You can also put in efforts to increase sales and increase prices. What you can not do is control your rent. The reality is if you have a few straight months of low sales and then rent to cover you will eventually run out of cash and go out of business.
The Pros of an Ice Cream Shop
The issue of rent is particularly an issue for full-scale restaurants that need bigger spaces with bigger rents. The main advantage of an ice cream shop is that they can work out of super small spaces, they don’t need seating and they only have very simple kitchens. This means you can take advantage of a lot of spaces that other types of food businesses simply cannot.
For example, my ice cream shop operates out of a 455 sq ft space. Out of this space, the restroom is 50 sq feet. This leaves around 400sq feet and that covers the front of the house and the back prep kitchen where we store everything and make ice cream. I am not going to lie it is s tight space, but it works perfectly.
What the main lesson – get your rent as low as possible and only use the space you absolutely need.
How To Get Started Looking for a Lease for an Ice Cream Shop
Step 1 – Research
The first step to finding any ice cream shop lease is research and preparation. The starting point is using sites like Loopnet to get an idea of what is available in the market. You want to get familiar with the following terms:
- Total Square Feet
- Total Rent
- $/Sq Feet – this is the $ cost of the lease per square foot.
- NNN or Gross Net Lease – this is what additional cost you will have to pay for trash, contributions to communal building maintenance, etc.
- Tenant Improvement Allowance – how much the Landlord is willing to provide towards improving the unit.
- Rent-Free Periods – how long the Landlord is willing to provide a rent-free period during the buildout.
- Deposit – what, if any, deposit is required by the Landlord for the lease.
Step 2 – Narrow Down the Location
The next step is narrowing down your location. You want to start driving and walking around every spot where you think you want your ice cream shop. Start walking around neighborhoods and areas you are considering and see if you can see any empty units.
When I looked for my first ice cream shop lease, I spent three months just walking and driving around visiting every single part of the county I wanted to open my shop in, dicated a different day to different spots and just walked and drove around a location to get a feel for units, rents, and the location.
Step 3 – Stalk the location
Once you have narrowed down an area you can think about reaching out to retail lease brokers. They will usually gain their commission from the Landlord so will cost you nothing. They also often have access to leases that are not always listed online.
Then you want to stalk your chosen location like a crazy person. And this is no joke. You need to be at the spot where you plan to open every day. Be there from the moment you plan on opening and closing your ice cream shop.
You’re doing this to gauge a sense of footfall. How many people are walking by your proposed location? What are its busiest times and days of the week? What are its quietest times of the day and week?
Footfall is so important because these are your immediate customers. These are the people you are most likely to be pulling into your ice cream shop. A low footfall is not good. It means that for your location to be successful you need to physically get people to travel over to you. A much harder task and one with a higher customer acquisition cost – especially if you are a newer business.
How to count footfall?
Counting footfall is simple. Buy a clicker and cliick every time somebody walks past a proposed location. It’s boring, but it will give you a much better idea of the location.
A few pointers when counting footfall:
- only count those people that are walking directly in front of your proposed location (if they are walking on the other side of the street or not directly in front then they do not count). If you plan to open in a mall (something I don’t encourage) don’t count people coming into the mall – count only those walking directly past your proposed location only.
- if you don’t have the time to count footfall for every day of the week then take a sample – count what you expect to be the quietest days and the busiest days of the week. In my experience, Tuesdays and Wednesdays tend to be the quietest days of the week, and Saturdays and Sundays are the busiest.
- Consider the time of the year. Ice cream is a seasonal business, for example, footfall in the Summer is going to be very different than in the Winter. Ideally, you want to be able to record footfall at the worst time – never count when it is the best time of the day or week because this will give a false impression.
Step 4 – Speak to Other Business Owners in the Area
One of the best ways to find out about an area is to speak to other businesses in the location. Comes up with a specific set of questions you want to ask other businesses. Examples of questions to ask include:
- How long they have been at that location?
- How is business at the spot for them?
- Who was the tenant before them?
- How did they find the location?
- What is their rent like?
- How busy is the location?
- What is the busiest and slowest day of the week?
- How many customers do they get in a day?
- What are their average daily sales like?
These may seem like probing questions, but you will be surprised at how willing some people are to share information if you just are friendly and start a conversation. Just be honest and explain you are thinking of opening an ice cream store in the location and wanted to get their thoughts on the area. If they don’t want to answer specific questions – that’s okay.
Step 5 – Find the previous Tenant
This may be a bit more difficult to do and isn’t always necessary. That said if you can find the previous tenant see if you can ask them why they left the location. Speaking to them may also be a great way to see what the Landlord is like – i.e. if they are somebody you would want to deal with.
Types Of Locations
One decision you will have to make is whether you want a lease in one of the following areas:
- (A) shopping center
- (B) residential area, or
- (C) tourist area.
Let’s run through each in turn.
A. Choosing An Ice Cream Shop Lease in A Shopping Center
If you choose a lease in a shopping center, you will get a certain degree of guaranteed footfall. However, I wouldn’t recommend signing a lease in a shopping center, especially after COVID-19.
When COVID-190 lockdowns struck shops in the shopping centers were hit particularly hard. Shops in shopping centers are essentially at the whim of decisions made by the shopping center owners – shops based in shopping centers have less independence and depend completely on the footfall that the center can attract.
Also, shopping centers, particularly indoor ones, have decreased in popularity in recent years.
Furthermore, you are limited to the hours of operation of the shopping center. In my experience, ice cream shops work the best opening around 12 noon/1 pm and going until late in the evening. The evening from 8 pm onwards (post-dinner) is always our busiest time. These types of hours usually are not the same for shopping centers.
B. Choosing an Ice Cream Shop Lease in A Touristy Area
The advantage of choosing a lease for your ice cream shop in a tourist area is that your summer sales are likely to be amazing. Be aware though that your winter sales may be very slow in the off-tourist season.
Also, you want to be particularly cautious with “popular tourist areas”. Just because a location may have a high tourist footfall does not necessarily mean that it is a good retail location. The issue with tourist spots is that they are often “go-to” locations – i.e., they attract people, but only to certain stores. This may mean high footfall does not result in high sales.
Further, popular tourist locations tend to mean higher rents. It can also mean fewer repeat customers – the core of your business. For example, 52% of our customer base is repeat customers.
C. Choosing an Ice Cream Shop in A Residential Area
The advantage to choosing an ice cream lease in a residential area is that you will be able to build regular repeat customers who visit your shop regularly for most of the year.
The only thing to note is your sales during school holidays (if it is a family area) may be impacted due to residents vacationing. However, your sales in a residential area are likely to be more consistent than those in a touristy area. Also, weekdays during the day may be slower in residential areas. Therefore it is so important to build a repeat customer base in these types of areas.
Other Considerations for Choosing The Best Ice Cream Shop Location
Below are some specific other considerations to consider when looking at a potential lease –
- Schools – are there any schools close by? Having a lease close to a school can be great for sales – you can get an amazing after-school rush.
- Parks – is there a park close by? A park close to an ice cream shop can boost sales, especially in the summer months.
- Local GDP – is the lease in a wealthy area where residents have disposable money for treats such as ice cream? Wealthier locations may charge higher rents, but they also tend to be more resistant to changes in the economy. You will also be able to charge higher prices in such locations.
- Beaches – is there a beach close by? Beaches close to an ice cream shop can help boost sales, especially in the summer months.
- Easily accessible – can the location easily be accessed by both car and foot?
- Parking – is there a car park for customers at the back of the location? If not, can customers park easily on the streets outside? You want to make parking as easy as possible for your customers. Ideally right next to your store.
- Restaurants – are there restaurants close by? It is an American concept to go for dessert somewhere else after having a meal in a restaurant. Our ice cream shop is a few doors down from a very popular restaurant and we get many customers coming in for ice cream after having eaten there. Restaurants also attract people. The more restaurants the better.
- Competition – how many competitors are close by? Whilst it wouldn’t be the best idea to sign a lease with three other frozen dessert stores close by, I am a firm believer that there is always room for the best. I opened my ice cream shop opposite a large franchised frozen yogurt store, and my ice cream shop thrived despite it.
- The Weather – what is the weather like? Obviously, the warmer the weather the more sales you will get at your ice cream shop. For example, there can be micros climates in certain places – for example, in LA there are micros climates all over LA. Choosing a lease in one of the colder microclimates over one of the warm ones could make all the difference.
Warning Signs to Look For At Popular Locations
There are a few signs you can look for in “popular” locations which can tell you whether or not it is a good spot or not. Think of these as warning signals. These are as follows:
- Lots of Units for Rent: Are there lots of empty units for lease on a street? If there are this may be a red flag. Lots of empty leases mean the business there before having gone out of business or left. Find out why.
- Are People Travelling to The Location for a Particular Reason: For example, is there a particularly popular store or location that is attracting people to the area. If they are traveling to a specific store – would they be willing to come to you afterward or would they just leave the area?
What is the Best Location for An Ice Cream Shop? – The Final Lick
What is the best location for an ice cream shop? In choosing a location for an ice cream shop, you need to balance getting a great location (one that fulfills all the above criteria) and getting a great (low) rental rate.
My personal rule is to always go for a small unit in a great area with a wealthier demographic.
This means I choose spaces in predominate residential locations, but that still receive tourists (especially in the summer months). I choose wealthier areas. Ones that tend to be a 10-minute walk from the beach and opposite a school. Ideally, there will be parks and recreational spaces close by, and the weather will be consistently warm all year round. There will be lots of parking and dedicated spaces for our customers. And, finally, it will be easy to access by car and foot.
Yes, this is a long shopping list of requirements, and you won’t always be able to get all of these. However, it gives me a starting point of reference for being able to assess any lease and that is what is most important. It also helps takes out the emotion and excitement when it comes to picking a lease.
What will your requirements be?
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
- How To Open 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?