The Ice Cream Parlor Business - Is it the best investment option in the food business in India today?

Posted by fshsfhsfh on Friday, May 27, 2011


Based on what I know, I believe that starting an ice-cream parlor (similar to Corner House in Bangalore) is one of the best investment options in the food services business currently in India, especially for first generation entrepreneurs with minimal investment capital radily available to them.

The attached link will give you the financial model for this.

https://docs.google.com/spreadsheet/ccc?key=0ArRHiZ3ki5n9dE9WNkNQdXVxVHJLN3BWWTZuVTdraVE&hl=en_US#gid=0

My big reasons for this:
1) Real Estate Costs are Lower: A small space is sufficient (300-400 sft) - so even a really prime location won't cost you as much to rent and of course the rental deposit will be lower, thus reducing the overall initial investment you will need to make.
2) Food Wastage and Pilferage is easy to contain: Wastage will be minimal without any pressure on forecasting volumes. Most ice-cream suppliers provide ice-creams that have a shelf-life of 6 months. So if you have a good freezer, you can store the ice-cream. Plus you can easily track the quantity of ice-cream bought with the number of ice-creams sold and contain pilferage. See note on this below.
3) Easier Labour Management: An ice-cream shop does not require a lot of skilled labour. 1 or 2 good/trusted guys with a few more helpers thrown in will do the job and keep your place up and running throughout the day. Making sundaes etc. is a easy skill to pick up in a couple of days.
4) Easy avaiability of ice-cream: There are quite a few ice-cream makers in each city and they will be happy to supply ice-cream at ridiculuously low prices (a gallon - 4 litres of ice-cream at around 160-200 bucks). Most manufacturer's ice-creams taste the same - except for folks such as Naturals and Orchard Fresh.
5) Tremendous scope to creatively serve ice-cream that appeals to different segments. e.g. servings for kids in cartoon cups. The ambience of the parlor can also be creatively designed based on your concept.
5) India's ice-cream consumption is very low (outside of Gujarat) compared to most other countries, thus offering tremendous growth potential. A Google search should return a few research reports on this.
6) Amul, Unilever India (Swirls - Walls Ice-cream), Vadilal (Happinez), Nirulas, Naturals, Dairy Day (Scoops), Amritha Dairy (Natural Fresh Chennai) etc. are trying to grow the ice-cream parlour business very aggressively. So if these big guns are so bullish about the market opportunity, that validates the idea quite a bit.

Note on storing ice-cream in a freezer: If you have wondered why the Walls ice-cream you pick at your grocery store doesn't taste as good as the ice-cream at Corner House or at an ice-cream parlor, here are the reasons:
1) The parlors store ice-cream in a freezer that can be set at the most optimal temparature range for ice-creams (temparature at which the ice-cream will not become icy or too soft). Grocery stores use freezers for all kinds of frozen food and set a generic temperature.
2) Fresher ice-cream stays fresh - the parlors typically buy ice-cream atleast once a week - so most ice-creams you get there are quite fresh and hence tastes better. The packaged ice-cream you buy at grocery stores have probably been manufactured atleast a month or two before you buy them - they do have a printed shelf life of 6 months.

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