Ice cream is a beloved treat that people of all ages have enjoyed for generations (I personally indulge in it a few times a week during the summer). Many people dream of opening their ice cream shop, but they may wonder how much money they can expect to make. 

This depends on several factors, such as location, competition, and marketing strategies.

Some small, independent shops may only bring in $50,000 to $100,000 per year, while more extensive franchises can rake in millions in sales annually.

One of the most significant factors affecting an ice cream shop’s revenue is its location. Shops in high-traffic areas, such as tourist destinations or busy shopping centers, tend to make more money than those in quieter, residential neighborhoods. 

Additionally, shops that offer unique, high-quality products and excellent customer service are more likely to attract repeat business and generate higher profits.

Factors that Affect Ice Cream Shop Revenue

Ice cream shops can be a profitable business venture for entrepreneurs. However, understanding the revenue potential of an ice cream shop requires a deeper look into the factors that affect sales and profits.

One primary factor affecting ice cream shop revenue is the shop’s location. Shops in high-traffic areas, such as busy shopping districts, are more likely to attract customers and generate higher sales. 

Additionally, the size of the shop and the number of employees can also impact revenue. Larger shops with more employees can serve more customers faster, resulting in higher sales.

Another factor to consider is the menu offerings. Ice cream shops that offer a variety of flavors, toppings, and desserts, such as milkshakes and sundaes, can attract a broader range of customers and generate higher sales. Producing specialty items like gluten-free options can attract a niche market and increase revenue.

Finally, marketing and advertising can significantly increase ice cream shop revenue. Promoting the shop through social media, local events, and advertising can increase brand awareness and attract new customers. Offering promotions, such as discounts or loyalty programs, can encourage repeat business and increase sales.

Ice Cream Shop Concepts

There are different types of ice cream shops, each with its own concept and target market. Here are some of the most common ice cream shop concepts:

Traditional ice cream parlors: These shops offer classic ice cream flavors, usually served in cones or cups. They may also offer sundaes, milkshakes, and other ice cream treats. 

Gourmet ice cream shops: These shops offer artisanal ice cream flavors made with high-quality ingredients, often in-house. They may also provide unique toppings and mix-ins. These shops often have a trendy, upscale feel and appeal to younger, more affluent customers.

Frozen yogurt shops: These shops offer frozen yogurt that is lower in fat and calories than ice cream. Customers can choose from a variety of flavors and toppings. These shops often have a health-conscious feel and appeal to customers looking for a lighter dessert option.

Rolled ice cream shops: These shops offer a unique style of ice cream, where the ice cream is made on a frozen surface and rolled into thin layers. Customers can choose from a variety of flavors and toppings. These shops often have a fun, interactive feel and appeal to younger customers.

Seasonal vs. Year-Round

Ice cream is usually consumed in the warmer months of spring and summer, making it a seasonal commodity. As a consequence, the sales of ice cream tend to decline significantly during the fall and winter seasons. 

It is common for many ice cream shops to operate only during the peak season, opening around the start of spring and closing towards the end of summer. 

However, others opt to remain open throughout the colder months, hoping that offering high-quality products, having a loyal customer base, or providing a diverse menu will continue to attract customers despite the weather conditions.

Ice Cream Trucks

The food industry has been witnessing a growing trend in the popularity of food trucks, but the idea of mobile food service was first introduced by the ice cream industry. 

An ice cream truck cruising through a neighborhood is a classic sight that brings joy to children and is associated with summer days. Opting for a food truck instead of a traditional brick-and-mortar location offers the advantage of mobility, enabling the business to reach customers directly. This can lead to increased impulse purchases and lower overhead costs. 

However, ice cream trucks face some challenges, such as restricted space, parking regulations, permits, and insurance.

Traditional vs. Modern

The concept of self-serve ice cream shops is a recent trend in the ice cream industry. In the past, customers would typically order from a menu with limited options. 

However, a modern wave of ice cream shops has emerged, offering customers the chance to create their desserts at different stations. These new shops calculate the cost of the ice cream based on its weight rather than charging a fixed price for predetermined options.

As you can see, each ice cream shop concept has its advantages and challenges:

• Traditional ice cream parlors may have loyal customers but need help attracting younger customers. 
• Gourmet ice cream shops may have higher profit margins but may be more expensive to sell. 
• Frozen yogurt shops may offer a healthier option but face competition from other health food stores. 
• Rolled ice cream shops may provide a unique experience but may require more specialized equipment and training.

The Break-Even Point for an Ice Cream Shop

The break-even point is among the most critical factors when opening an ice cream shop. This is where your revenue equals your expenses, and you start making a profit. Knowing your break-even point can help you set prices, determine how much you need to sell, and make informed decisions about your business.

To calculate your break-even point, you must know your fixed and variable costs. Fixed costs are expenses that stay the same no matter how much you sell, such as rent, utilities, and insurance. Variable costs, such as ingredients, labor, and packaging, change with the amount you sell.

Once you have your fixed costs and variable costs, you can use the following formula to calculate your break-even point:

Break-even point = Fixed costs ÷ (Price per unit – Variable costs per unit)

For example, your fixed costs are $5,000 monthly, and your variable expenses are $3 per unit. If you sell your ice cream for $5 per unit, your break-even point would be:

Break-even point = $5,000 ÷ ($5 – $3) = 2,500 units

This means you need to sell 2,500 units of ice cream per month to cover your expenses and start making a profit. If you sell more than 2,500 units, you will make a profit. If you sell less than 2,500 units, you will lose money.

It’s essential to keep in mind that your break-even point can change over time as your expenses and sales fluctuate. It’s a good idea to regularly review your financial statements and adjust your prices and costs accordingly to ensure that you are always making a profit.

Calculating Ice Cream Shop Costs

When running an ice cream shop, it is essential to understand your costs well. Knowing your expenses will help you set prices that are competitive and profitable. Here are some key factors to consider when calculating your ice cream shop costs:

Overhead Costs

Overhead costs include rent, utilities, insurance, and other expenses to keep your shop running. These costs can vary depending on your shop’s location and your space’s size. It is essential to factor in these costs when calculating your overall expenses.

Ingredients and Supplies

The cost of ingredients and supplies will also play a significant role in your ice cream shop costs. This includes milk, cream, sugar, cones, cups, and spoons. It is essential to keep track of the cost of these items and adjust your prices accordingly.

Labor Costs

Your labor costs will also be a significant expense. This includes wages for your employees, payroll taxes, and benefits. Investigating these costs is essential when calculating your overall expenses and setting prices.

Equipment and Maintenance

Finally, you will need to consider the cost of equipment and maintenance. This includes ice cream machines, freezers, and other equipment necessary to make and serve your product. It is essential to keep this equipment well-maintained to ensure it lasts as long as possible. Remember the type of equipment you use to operate varies depending on the ice cream concept you decide to go with.

Considering these factors, you can better understand your ice cream shop costs. This will help you set competitive and profitable prices, ensuring your business’s success.

Ice Cream Shop Start-Up Costs

Opening an ice cream shop can be a fun and exciting venture, but it’s essential to understand the start-up costs involved. 

Typically, opening an ice cream shop will cost between $20,000 and $50,000. However, this figure can vary depending on whether you buy or rent a location or purchase new or cheaper used equipment. 

Here are a few of the most significant expenses you’ll have to pay while starting an ice cream shop.

Lease or Ice Cream Truck Purchase.  Purchasing a food truck or opening brick-and-mortar for your ice cream shop will be a significant expense. Although you can lease a retail location, they will require up front deposits and space build-out, while a food truck might require 20%+ with the rest being financed.

Build Out/Pre-Opening Expense. Your space or food truck has to be prepared to welcome guests. Depending on your concept this can be quite costly, even if it’s just doing a light renovation to an existing space.

Ice Cream Shop Equipment. Investments in various appliances and equipment are needed to produce, store, and sell ice cream. The required kit includes ice cream makers, refrigerators, and freezers.

Ice Cream and Supplies Inventory. Before you open the doors, and finalize your menu, you must buy and test your offerings. This required buying ingredients, packaging, kitchen supplies and much more to be the ice cream powerhouse you want to be.

Employee Wages. Running an ice cream shop will require a handful of managers, employees, and staff who must be paid reasonable salaries and wages.

These staff will have to be employed before your doors are open, sometimes a number of weeks (managers could be hired months in advance to help with the store setup).

Pre-Opening Advertising. An advertising budget is needed to run marketing campaigns and bring new customers through the door for the first time. These costs generally are higher when you are first getting your brand out there.

POS System. A POS system streamlines the ordering process, inventory management, and sales reporting, making it an excellent investment for new ice cream shops. Sometimes, these can be structured as a monthly lease to reduce your up-front financial cost.

Permits and Licensing. Opening an ice cream shop requires you to receive several permits and licenses, some of which come with fees.

Creating a detailed business plan and budget is essential to ensure you have the necessary funds to cover all start-up costs. Consider seeking advice from a financial advisor or experienced business owner to help you create a realistic budget and plan for success.

Operational Costs

Running an ice cream shop requires more than just ingredients and equipment. Several operational costs must be factored in when determining profitability.

One of the most significant expenses for ice cream shops is rent. The shop’s location and the space size can significantly affect the monthly rent payment. In addition to rent, utilities, such as electricity and water, must be paid.

Another operational cost is labor. Ice cream shops require employees to scoop and serve the ice cream and clean and maintain the shop. The number of employees needed will depend on the size of the shop and the volume of customers.

Inventory/Cost of Goods is also a significant expense for ice cream shops. Inventory includes ice cream, cones, toppings, and other supplies. Shop owners must carefully manage their inventory to ensure they have enough products to meet demand without overstocking and wasting valuable food inputs.

Marketing and advertising are essential for attracting customers and generating revenue. Ice cream shops may need to invest in social media campaigns, local advertising, print ads, or other forms of marketing to promote their business.

Calculating Your Ice Cream Shop Revenue

Potential revenue is one of the most important factors when starting an ice cream shop. While there is no one-size-fits-all answer to how much an ice cream shop can make, you can follow some general guidelines to estimate your revenue.

Factors Affecting Ice Cream Shop Revenue

Before diving into the numbers, it’s essential to consider the factors affecting your ice cream shop revenue. These include:

• Location
• Size of the shop
• Type of ice cream (premium vs. standard)
• Pricing strategy
• Marketing and advertising efforts

Remember that these factors can vary greatly depending on your specific situation, so it’s essential to research and consider your unique circumstances when estimating your revenue.

Estimating Your Ice Cream Shop Revenue

Using industry benchmarks is one way to estimate your ice cream shop revenue. As mentioned, the typical ice cream shop in a high–traffic human location can make an average between $100,000 to $600,000 annually.

Generally speaking, an ice cream shop can make a profit margin of about 65% – 75% gross margin (profit before labor and overhead costs) if careful planning is done.

Another way to estimate your revenue is to look at your potential customer base. Consider the population in your area, the number of competitors, and the average spending habits of your target market. This can give you a rough idea of how much revenue you can expect to generate.

Tracking Your Ice Cream Shop Revenue

Once your ice cream shop is up and running, tracking your revenue is essential to see how you’re doing. Some key metrics to track include:

• Total revenue
• Gross Profit margin
• Profit Margin

To calculate your total revenue, you must add all the money that comes into your ice cream shop over time. You can do this daily, weekly, monthly, or annually. For example, if you have 100 orders a day at $5 each, that would be $500 a day in sales. This equates to $3,500 in sales a week or $15,500 a month (31 days of sales).

To calculate your gross profit margin, subtract your total costs from your revenue and divide the result by your total revenue. If your monthly revenue is $15,500 and your monthly food costs are $5,000, your gross profit is $9,500.

Calculate profit margin, then subtract your overhead costs (including labor) from your gross profit margin. For this example, let’s say that is $6,000 a month – $2,000 in rent and utilities, with another $4,000 in people cost (simplified for this example). This means your profit for a month is $3,500 (which is $9,500 – $6,000).

Ice Cream Sales Projections

When starting an ice cream shop, it’s essential to have a good idea of potential sales revenue. My financial models allow me to calculate exactly how much an ice cream shop will make, down to the penny.

The average annual revenue for an ice cream shop in the United States is around $100,000 to $600,000. However, this number can vary widely depending on location, seasonality, and other factors. For example, an ice cream shop in a popular tourist destination may have much higher sales during summer.

It’s also important to consider the cost of goods sold (COGS) when projecting sales revenue. COGS includes the cost of ingredients, packaging, and other materials used to make and serve ice cream. Generally, COGS should be around 25% to 35% of the total revenue of an ice cream shop.

Other factors impacting ice cream sales projections include marketing efforts, menu offerings, and pricing strategies. Offering unique and creative flavors, promoting special deals and events, and keeping prices competitive can all help attract and retain customers.

While there is no guaranteed formula for success in the ice cream industry, careful planning and realistic sales projections can help increase the chances of a good and successful ice cream shop.

Average Order Value for an Ice Cream Shop

One of the critical metrics for any ice cream shop is the average order value (AOV). This metric represents the average amount of money a customer spends per visit to the shop. It’s essential to track AOV because it can give insights into customer behavior and help shop owners make decisions about pricing, promotions, and menu offerings.

One way to increase AOV is to offer add-ons and upgrades to essential items. For example, offering a choice of toppings for an additional fee or suggesting a more significant size can encourage customers to spend more. Another strategy is to create combo deals that offer a discount for purchasing multiple items together.

It’s important to note that while increasing AOV can boost revenue, it’s also essential to maintain affordable prices that appeal to a wide range of customers. Finding the right balance between pricing and value is critical to building a loyal customer base and sustaining long-term success.

Calculating Ice Cream Revenue

Calculating revenue is essential to understanding the financial health of an ice cream shop. Several factors, including the cost of ingredients, labor, and overhead expenses, must be considered when calculating ice cream revenue.

One way to calculate revenue is by determining the average price per scoop of ice cream and the number of scoops sold daily. For example, if you sell an average of 100 scoops daily at $3 per scoop, your daily revenue would be $300.

It’s important to remember that revenue can fluctuate based on factors such as seasonality, location, and competition. Additionally, it’s essential to factor in the cost of goods sold (COGS) when calculating revenue. COGS includes the cost of ingredients, packaging, and other materials used to make and serve the ice cream.

Calculating ice cream revenue requires careful attention to detail and understanding the various factors that impact sales. By keeping track of sales data and regularly reviewing financial reports, you can make informed decisions about pricing, inventory, and other aspects of running your ice cream shop.

Gross Revenue for an Ice Cream Shop

An ice cream shop’s gross revenue is the total amount earned from sales before any expenses are deducted. The gross revenue of an ice cream shop can vary depending on several factors, including location, size, and the time of year.

The average gross revenue for an ice cream shop is around $100,000 to $600,000 per year. However, this number can vary widely depending on the factors mentioned above. For example, an ice cream shop in a crowded area like New York may have much higher gross revenue than a small town.

It’s important to note that gross revenue is different from profit. After deducting expenses such as rent, utilities, and supplies, an ice cream shop’s actual profit may be much lower than its gross revenue. An ice cream shop can make a profit margin of about 65% to 75% gross margin (profit before labor and overhead costs) if careful financial planning is done.

One way that ice cream shops can increase their gross revenue is by offering a variety of products and services. For example, in addition to selling ice cream, an ice cream shop may offer coffee, baked goods, and other snacks. Some ice cream shops also provide catering services for weddings and corporate functions.

Ice Cream Shop Profit Margins

Profit margin is the percentage of revenue that a company keeps as profit after all expenses have been paid. For ice cream shops, profit margins vary widely depending on several factors, including location, size, and menu offerings.

One factor that can impact profit margins is the cost of ingredients. Ice cream shops that use premium ingredients may have higher fees, affecting their profit margins. However, these shops can charge higher prices for their products, which can help offset these costs.

Another factor that can impact profit margins is overhead costs. Rent, utilities, and labor are all expenses that can add up quickly for ice cream shops. Shops that can keep these costs low may achieve higher profit margins than those with higher fees.

Finally, menu offerings can also impact profit margins. Shops that offer a variety of products, such as ice cream, sorbet, and frozen yogurt, may attract a broader range of customers and generate more revenue. However, offering fewer products can lead to higher ingredient and labor costs, impacting profit margins.

Should You Open an Ice Cream Shop From Scratch or Buy an Established Ice Cream Shop?

When considering opening an ice cream shop, one of the first decisions is whether to start from scratch or buy an existing business. Each option has advantages and disadvantages, so weighing them carefully is essential.

Opening from Scratch

Starting an ice cream shop from scratch allows you to create a unique brand and menu and control every aspect of the business. You can choose the location, design the layout, and select the equipment and suppliers that best fit your vision. However, this option requires a lot of time, effort, and money to get started.

You must find a suitable location, secure financing, obtain permits and licenses, and purchase equipment and inventory. You must also develop a marketing strategy to attract customers and build a loyal following. It can take several months or even years to get a new ice cream shop up and running, and there is always the risk that it may fail to be successful.

Buying an Established Ice Cream Shop

Buying an existing ice cream shop can be a quicker and easier way to enter the market. The business is already established, with a customer base, reputation, and sales track record. You can also benefit from the previous owner’s industry experience and knowledge.

However, buying an established ice cream shop also has its challenges. You must research the market and competition to ensure the business is profitable and has growth potential. You will also need to negotiate a fair price, obtain financing, and deal with any legal or financial issues related to the sale.

Additionally, you may need to change the menu, branding, or operations to align with your vision and goals. This can be a delicate process, as you don’t want to alienate existing customers or damage the business’s reputation.

Ultimately, deciding to start from scratch or buy an established ice cream shop depends on your goals, resources, and risk tolerance. Both options can be successful if executed properly, so it’s essential to research and make an informed decision.

How Much Do Ice Cream Shop Owners Make?

Running an ice cream shop can be profitable, but the owner’s income can vary greatly depending on several factors. 

The average ice cream shop has a profit margin of 15% to 25%.

This means that if the average ice cream shop generates $100,000 to $600,000 annually, that the profits for the ice cream shop owners make a range of profits as outlined below:

	Low Profit Margin (15%)	High-Profit Margin (25%)
Low annual Sales ($100K)	$15,000	$25,000
High Annual Sales ($600K)	$90,000	$150,000

Some small, independent shops may only bring in $50,000 to $100,000 per year, while more extensive franchises can make millions annually.

This means that small ice cream shops will profit $15,000 annually, while larger ice cream shops could make up to $150,000 or more annually.

It is important to note that owning an ice cream shop requires significant investment and hard work. The owner must purchase or lease a storefront, equipment, and supplies, hire staff, and manage day-to-day operations. However, with dedication and a solid business plan, owning an ice cream shop can be a rewarding and profitable venture.

Time to Scoop Your First Ice Cream Cone

Now that you understand the potential profitability of an ice cream shop, it’s time to dive into the fun part: serving up delicious treats to your customers. 

Remember that running an ice cream shop can be hard work, but it can also be advantageous. With the right strategies and a commitment to quality, you can build a successful business that brings joy to your customers and community.