By Jamie Hartford
Last year, Jerry Weiner, vice president of foodservice at Rutterâ€™s Farm Stores, debuted a unique item on the York, Pennsylvania-based chainâ€™s menu. Rutterâ€™s had recently introduced a dinner item built around waffles â€" chicken and gravy over waffles with mashed potatoes â€" and that got him thinking about other ways to use the cake-like treat. He found a supplier that offered bricks of Neapolitan ice cream, which he sandwiched between two waffles and topped with powdered sugar. The waffle ice cream sandwich was born.
Weiner kept the item on the menu for about nine months, including through the summer, but eventually took it off. "We did get a lift, but it wasnâ€™t enough to justify keeping it on the menu," he said.
Rutterâ€™s experience with the waffle ice cream sandwich is probably not unlike many convenience storesâ€™ experiences with ice cream and frozen novelties in general. Average sales per store hover around $20,000, and the category contributes about half of that to a storeâ€™s bottom line, according to NACS State of the Industry (SOI) data. Thatâ€™s enough to provide a lift in sales, especially from May through August, when ice cream and frozen novelty purchases tend to peak, but not likely to entice many operators to throw a lot of time or effort toward the category.
Still, most convenience stores (more than 93%) keep frozen treats on the menu, and for good reason. Profit margins for the items are high, almost 50%, according to NACS SOI data. The category also has high penetration among consumers, with more than 90% of U.S. households consuming ice cream or other frozen desserts, according to the International Dairy Foods Association.
At barely more than 1% of in-store sales, ice cream and frozen novelties are a small piece of the profit pie at the average convenience store, but there are exceptions to that rule. At one independent convenience store in Port Orange, Florida, for example, ice cream accounts for around 40% of total sales, even outpacing foodservice items such as pizza, subs and chicken wings, which account for roughly a quarter of the storeâ€™s sales.
That store, however, isnâ€™t just any convenience store. Twice a week, employees at Neighbors General Store & Ice Cream Parlor make homemade ice cream from family recipes right on-site. Flavors range from bubble gum and birthday cake to red velvet cake and Guinness. The store also sells typical convenience items, including lottery tickets, snacks and ice, but frozen treats are the priority.
Of course, not every convenience store can be an ice cream parlor, but operators looking to focus more on frozen treats can learn from Neighborsâ€™ example. Manager Russ Mason attributes part of the storeâ€™s success in the ice cream category to its location. Situated in a residential area and near a park, fire station, sports fields and dog park, the site is an ideal location to build an ice cream business. The store has a walk-up window, plus indoor and outdoor seating and bike racks, to encourage customers to stick around.
The store has also engaged with the community, partnering with the schools and local fire department on fundraisÂers and holding special events, such as a costume party around Halloween. "We wanted to have a safe, family-oriented location for kids to come," Mason said.
But in catering to families, NeighÂbors has made some sacrifices. To keep its squeaky-clean image, the store forgoes selling some of the more traditional convenience items, includÂing alcohol and cigarettes.
While most customers (around 70%) choose to eat their sweets on-site, thereâ€™s still a sizeable portion (about 30%) who take items to go, Mason said. For those who donâ€™t want to wait for a scoop, Neighbors offers grab-and-go options, such as six packs of its own ice cream sandwiches, drumsticks and ice cream pies and ice cream cakes.
At $4.99 for a pint and $7.99 for a quart, Neighbors ice cream is more expensive than the offerings at big box retailers â€" a fact some customers are quick to point out. To win them over, Mason says the store offers generous portions for indiÂvidual servings, and when all else fails, they offer up a taste to doubters.
"Theyâ€™ll say, â€˜I can get the same stuff at Walmart for $2 a pint,â€™ but once they taste it, they donâ€™t hesitate to buy," MaÂson said.
Besides Neighbors, other conveÂnience stores, too, have seen success with full-service ice cream. Chains such as Cincinnati-based United Dairy Farmers and Saratoga Springs, New York-based Stewartâ€™s Shops have long featured scoop shops inside their stores. Currently, Altoona, Pennsylvania-based Sheetz is reportedly testing its Sheetz Bros. Creamery concept, which features soft-serve ice cream and toppings.
Still, the reality is that offering scoop service is labor intensive and most conÂvenience stores simply arenâ€™t cut out to be ice cream parlors. But that doesnâ€™t mean operators that canâ€™t fully commit to the category should write it off.
While ice cream accounts for the majorÂity (53.7%) of food, drug and mass merÂchandise (FDMx) retail sales in the froÂzen desserts category, other segments have been gaining share, according to Mintel. Frozen novelty sales increased 15% in FDMx outlets from 2006 to 2011, and at 40.9% of the frozen desserts category, theyâ€™re closing in on ice cream.
"I think itâ€™s a single-serving thing," said Colin Wright, trade relations coÂordinator at Turkey Hill Dairy, a manuÂfacturer of ice cream, frozen yogurt and other frozen treats based in Conestoga, Pennsylvania. "A lot of people have a hard time with serving size. When they fill their bowl [with ice cream] they give themselves too much, but with a single-serve [item] they can limit their calorie intake."
Another trend, according to manuÂfacturers, is pint-sized offerings. "Itâ€™s a great size for consumers who frequent convenience stores," said Carl Breed, director of marketing for Brenham, Texas-based Blue Bell Ice Cream, a maker of ice cream and frozen novelÂties. "If youâ€™re hungry enough, you can eat the whole thing. Itâ€™s a not-too-big, not-too-small product."
Wright says Turkey Hill has also seen success with pints in convenience stores, in part because the company offers flavor options, such as Chocolate Nutty Moose Tracks and Cinco de Mayo, not available in its larger size containers. He also suspects pints do well in convenience stores because theyâ€™re portable.
Youâ€™d have to have been hiding under a rock for the past few years not to notice the frozen yogurt craze thatâ€™s been sweeping the country. Initially spurred by upscale quick-service chains, the frozen yogurt trend â€" especially the tart varieties popularized by Pinkberry and Red Mango â€" is starting to trickle down to convenience stores.
"Weâ€™ve been approached by [conveÂnience store] companies," said Kindra Svendsen, marketing coordinator with G.S. Gelato & Desserts, a Fort Walton Beach, Florida-based supplier that recently launched Yogurtiamo, a line of soft-serve tart and non-tart frozen yogurt. "I think theyâ€™re looking for a point of differentiation in their stores."
In FDMx outlets, frozen yogurt sales increased 24% from 2006 to 2011, more than any other segment of the ice cream and frozen novelties category, according to Mintel. A reÂport from the market research company attributes that in part to frozen yogurtâ€™s "built-in better-for-you-image thanks to positive associations with regular yogurt," which has apÂpealed to health-conscious consumÂers, and Svendsen agrees.
"I definitely think that people have the perception that frozen yogurt is a healthier option," she said.
Pinkberry, Red Mango and other fro-yo chains have bolstered that imÂage by offering toppings such as fresh fruit pieces to accompany their prodÂucts. Svendson says fresh fruit may prove too labor-intensive to work in convenience stores but that dried ceÂreals, syrups, granola and crushed candies could work.
G.S. Gelato also offers soft-serve geÂlato, a milk-based cousin to ice cream, which, as the name suggests, is cream-based. "Itâ€™s a less fat, all-natural prodÂuct that uses fresh fruit and has no preservatives or fillers like ice cream," Svendsen said. As ice cream sales stagÂnate, she predicts alternatives such as gelato will see growth. "It could be the next tart frozen yogurt," she said.
Another up and comer could be Hawaiian shave ice, which NeighÂbors offers in addition to its ice cream products. With finer ice than that of a snow cone, Hawaiian shave ice is a water-based product flavored with different syrups. Mason says those items, sold in keiki (mini) through big kahuna (large) sizes priced from $1.99 to $6.99, are especially popular with kids.
As the weather heats up, hereâ€™s hopÂing your frozen treat sales do, too.
Jamie Hartford is a freelance writer based in Los Angeles. Read more of her work at jlhartford.com.