The Inside Scoop on Owning an Ice-Cream Shop

Each had paid and borrowed between $145,000 and $325,000 to open a Baskin-Robbins — certainly not chump change, but still an option for entry-level entrepreneurs. (One Canadian franchisee, in ice-cold Ottawa, paid considerably less.)

Wall Street Journal
March 1, 2001

The Inside Scoop on Owning an Ice-Cream Shop
Dan Morse

I am leaning over the ice-cream freezer, wrist-deep into a three-gallon barrel of Quadruple Chocolate, when instructor Jonathan Beck offers encouragement. "You're smarter than the ice cream," he says, his mellow Southern California voice emerging from beneath his "31" flavors baseball cap.

For some reason, I feel better. Scooping ice cream, as it turns out, isn't easy. Various motions — semicircles, zigzags, straight drags — are required depending on the height and texture of the ice-cream surface. Vanillas and other flavors are firm, tough on the forearm. Chocolates tend to gum up into little ovals, and are less demanding on the arms.

The surprise of scooping was hardly the only eye-opener for 24 of us attending a July session of Baskin-Robbins's three-week Business Management Education Program in Burbank, Calif., mandatory for all new franchisees.

For those who thought ice cream was all fun and games, there were late-night cram sessions on Occupational Safety and Health Administration standards, the Family and Medical Leave Act and just how many ounces of frosting are needed to coat ice-cream cakes of varying sizes. To those who had hoped to be absentee store owners, the message is sobering: Workers quit, managers get sick and cake decorators move on. So, you had better be ready to knock out a dozen clown cones inside of 30 minutes.

The work can be nerve-racking. "We've all had moments of fear, 'What am I doing? What am I doing?' " Lynda Walker says while struggling to fashion rosebuds out of cake frosting.

A technical writer at Intel Corp., Ms. Walker, who is from Placerville, Calif., was one student in a diverse class that included an industrial welder, a former corporate finance manager who spent breaks reading the Economist, two accountants and the father of a National Football League defensive end in the midst of off-field diversification.

Of my 23 classmates, 16 are franchisees, the rest a combination of managers and corporate supervisors. Of the 16 franchisees, eight are natives of the U.S., five are natives of Asia and three are natives of Africa.

Each had paid and borrowed between $145,000 and $325,000 to open a Baskin-Robbins — certainly not chump change, but still an option for entry-level entrepreneurs. (One Canadian franchisee, in ice-cold Ottawa, paid considerably less.)

Like her classmates, Lynda Walker worried that the summer ice-cream-buying season was all but gone. She planned to boost winter sales by marketing cakes through Lake Tahoe-area marriage chapels. Lynda, 54 years old, had come to the training program with her son Russell, 34, who had just quit a job at Target and planned to manage their store. The two saved money by splitting the costs of a hotel room, studying as many as four hours a night for five different exams.

Others had an easier time in the classes, and after three weeks were as confident as ever of the profits ahead. Some even said the training wasn't challenging enough. Too much about ice cream and scooping, they said, not enough nuts and bolts of running a business — particularly the marketing techniques that are so important for franchisees.

For their part, the Baskin-Robbins instructors try to strike a balance between scoops and spreadsheets. Week One is devoted to operating essentials — what makes a traditional Baskin-Robbins banana split, for example. The trainees work four six-hour shifts in nearby stores. Week Two is mostly classroom work, focusing on developing and analyzing profit and loss statements, inventory and hiring decisions. As we enter Week Three, I am girding for some serious training in cake decoration.

The extent of franchisee training is all over the lot and varies according to the size of the chain. For instance, Dallas-based Airsopure Inc., which has 16 outlets, offers a three-to-five-day session on its indoor air-purification services. The other extreme: McDonald's Corp.'s Hamburger University outside of Chicago, which doesn't even accept students until they've completed four weeks of preparatory classes and typically had 18 to 24 months of nonpaid training at an existing McDonald's.

No one keeps national statistics on franchisee training, although the International Franchise Association estimates that its 702 franchiser members typically train people for two to three weeks.

Here in the third and final week of the Baskin-Robbins's training — the only one I attended — I heard lectures, watched videos and took an exam. I learned the finer points of cake copyright infringement — always, for instance, place Barbie in her specific, designated cake-top location. Of course, I took full advantage of what, as near as I could tell, was an all-the-ice-cream-you-can-eat policy for trainees. The big question: Would I get to slip over to the nearby NBC studios, to which Baskin-Robbins sometimes supplies free treats, and see Jay Leno?

Day One
I almost drive by the Baskin-Robbins training center, which sits off a nondescript, treeless expanse of Southern California concrete. Inside, where about 360 future scoopers are trained in 15 different sessions every year, I settle in for an 8 a.m. lecture.

Within minutes, the company's corporate strategy is clear, even if not directly stated. With such premium competitors as Ben & Jerry's and Haagen-Dazs available at convenience stores and supermarkets nationwide, ice-cream shops must do all they can to attract customers, and therefore need to offer something unique. For Baskin-Robbins, that strategy includes making cake decorators out of folks like myself — within five days.

Lest you think that five days is a bit long for teaching cake decoration, consider this: "It's the livelihood of your whole business," says instructor Petra Ortega, emphasizing how cake sales can sustain a franchise through the winter. These desserts can account for as much as 35% of a store's annual sales volume, the class is told. (Overall, cakes are 22% of total sales for the average store, according to Baskin-Robbins executives.)

For those planning to simply hire a cake decorator, Petra turns our attention to the information packets that have just been distributed. Employing even a part-time cake decorator costs $3,536 annually over what it would cost to teach a minimum-wage worker to make the cakes. (And that's assuming you can find a decorator at $9.50 an hour.)

"If you don't get them up to $12 an hour, they'll go to grocery stores," pipes up new franchisee Doloris Coit, the only student with a pastry background. She and her husband, Randy, have invested $196,000 to open a shop near Death Valley, Calif.

Building these desserts, it becomes clear, is no piece of cake. Sure, they're not as detailed as wedding layouts. But the cakes melt, so they must be decorated in 15 minute intervals, with regular trips back to the freezer. (There's nothing worse than losing command of a lump of melting Rocky Road.)

By midmorning, we move over to the kitchen area, lining up behind four rows of work counters. Petra dons a headset and stands before us. There's a bird's-eye video camera over her counter. Video screens hang throughout the room. On the walls, picture-perfect cakes glare at us from promotions posters. We're all given a kit of basic decorating equipment, some of which is stored neatly in something that looks like a small tackle box.

Baskin-Robbins's ice cream cakes generally are built in four steps: cake base, thick ice cream upper section, ice-cream coating — sort of like a coat of primer — and finally a layer of ice cream frosting. To build the interior, you don't pack ice cream onto the cakes. Rather, you get a three-gallon tub from the freezer and wedge it into a circular bracket. Then, using a wire, you shear off solid, horizontal disks of ice cream. These are cut into proper sizes and laid on the base cakes.

Having little difficulty with the wire is Randy Coit, 42, a classmate with forearms the size of the mint chocolate chip roll cakes pictured in our workbooks. A welder and maintenance technician for CalEnergy Co., he has spent many days climbing through boilers and steampipes making emergency repairs.

The Coits have put $65,000 of their own money into their store, borrowing from Randy's 401(k) plan. They didn't have enough net worth to secure a Small Business Administration loan, so they're getting financing from the store's former owner, whom they'll owe about $3,000 a month for the next five years. "I think we're going to be all right," Randy says, while acknowledging their town of Ridgecrest (pop. 28,500) is suffering from the downsizing of a nearby Naval air-training center.

Doloris hopes to draw European tourists she says have been flocking to Death Valley. She says the desert backdrop could lure more from the entertainment industry. "Madonna's last video was filmed there [outside Ridgecrest]," Doloris says.

It's difficult to say how they — or any of my classmates — will fare. Rachele White, Baskin-Robbins's manager of training, says the average store brings in 180 to 200 paying customers a day and nets $800 in daily sales. Franchisees who fall significantly below those numbers — unless they have lower overhead — could be in trouble.

Day 2
"How long do you think it'd take you to die if you ate that whole thing?" classmate Andrew Hennan, 26, asks as I rip the lid off a 28-pound tub of "BUT-R-CREME."

Today, we learn frosting.

"The ingredients in here are basically sugar, sugar, sugar and oil, oil, oil," Petra says. (Actually, according to the tub's label, you'll want to throw in some diglycerides and Polysorbate 60.)

The typical franchisee will go through about 130 tubs of BUT-R-CREME a year, or nearly two tons of frosting.

Andrew and I struggle through practice sessions of writing "Happy Birthday" with a frosting bag. "If someone gave me that on a cake, I'd send it back," Andrew says, looking at his work. I don't think mine is much better, with shaky, block-style lettering that looks like it could suffice for a ransom note.

Nearby, 33-year-old Eric Erickson does better. He's run a Baskin-Robbins/Dunkin' Donuts combination store in Atlanta for the past year. Prior to that, he had slogged through United Parcel Service of America Inc.'s domestic-financing division. He tracked how much UPS was earning off large clients that had customized delivery programs — Gateway 2000 computers, for instance. Each week, Mr. Erickson spent one full day writing a memo detailing what he did the other four days. In 1995, a downsizing buyout was proffered, and Eric bailed.

He plans to open another Baskin-Robbins/Dunkin' Donuts combo store as well as a single Dunkin' Donuts store in the Atlanta area. Looking around the class, he predicts some will struggle. Too many are buying existing units, which wouldn't all be for sale if they were performing terrifically, he speculates. Franchising "isn't for everyone," he says.

Creating a break for myself, I wander upstairs to a laboratory where a group of technicians and chemists invent and taste new flavors of ice cream. I meet Patricia DeGrazzio, head of R&D. Her proudest concoction: Chocolate Raspberry Truffle. Favorite flavor: Kahlua 'N Creme. Second-favorite flavor: Vanilla. Biggest challenge: Halloween colored ice cream, i.e. getting the orange and brown flavors to blend.

Day 3
I hit my dessert-decorating zenith by building a fairly normal clown cone. Kiddy scoop of vanilla ice cream for the head. Green frosting for the eyeballs. Maraschino cherry for the nose. Red frosting for the mouth. Orange frosting for the hair.

"That's sellable," Jonathan says as he walks by. (Clown cones generally sell for $1.79, and use only 36 cents worth of ingredients.) It doesn't seem a lot of money for the effort that goes into making it. As classmate Jasbir Grewel of San Diego tells me: "Everything you have to do with your hands here. … It seems like a lot of work."

She and her husband, Harjeet, own two 7-Eleven Stores, a chain that they say disclosed 12 months of detailed financial records before they joined. Ms. Grewel says they didn't get such numbers from Baskin-Robbins. "The corporation, they don't tell you everything," she says.

Indeed, 7-Eleven discloses more financial information than typical franchise companies. Baskin-Robbins, like most other franchise companies, says earnings claims can be misleading because of so many variables: differing markets, differing store sizes and differing abilities of the operators.

"It's difficult to accurately depict how any particular franchise will do," says company spokesman Greg Pitkoff.

Classmate David Bassiri of Baltimore sought his own documents before buying a Baskin. He says one seller was reluctant but eventually handed over figures that seemed quickly compiled. "They didn't even add up right," says David, 28.

Then he found a Baskin-Robbins in Laurel, Md., where the owner, Bud Noyes, showed him five years of corporate tax records. David studied the gross income, expenses, payroll and depreciation figures. He also reviewed the owner's lease and W-2 forms. "He wasn't hesitant at all to show me everything," says David, who eventually quit his bookkeeping job, put up $75,000 and agreed to pay the owner more than $100,000 over the next five years.

David has hired a manager, whom he brought to the Baskin-Robbins training school. Over the next two months, he expects to spend about 70 hours a week in the store — building cakes and scooping ice cream – before handing over the day-to-day operations to his manager.

Day 4
My classmates and I are speculating about tomorrow's exam. What's going to be on it? Who's done all the reading? How much are you going to study tonight?

This will be the fifth exam of the three-week session. When students fail — scoring less than 75% or 85%, depending on the test — they must return for part of the training. And that means more travel costs and lodging expenses.

So far, four students have come up short on previous tests. Since I'm not buying a store, my pressures aren't so great, but my pride is at stake. So I cram between frosting exercises, bending under the counter to review my notes. What's the proper ice cream tub-cutting temperature? (-5 to +5 degrees Fahrenheit) How many ounces of frosting are required for a 9-inch round? (12)

Other students study more earnestly, even forming study groups. Lorrain Carlin, 50, says she's studied as much as six hours a night for the past three weeks.

There will be no official grading of the desserts, although our "final cake" is subject to classmate evaluation. Petra comes by with completed order forms, the same as a customer would fill out. I draw something called a Crazy Candy, to be made with sponge cake and chocolate-chip ice cream.

I shape some decent edges with my frosting knife, moving the Crazy Candy into the deep freeze. Once that's done, a celebration is called for, so I serve myself a scoop of Quadruple Chocolate. It's 8:40 in the morning.

We spend the rest of the morning constructing pastry flowers and building tiny, frosted beach umbrellas and a new type of clown. Late in the morning, Jonathan rounds up some of the top students to help haul free ice cream and cakes to the nearby Tonight Show studios. The payoff for trainees: a quick tour of the studios, occasional tickets to the show, and sometimes a quick meet-and-greet with Jay himself. I tag along.

As we pull into the NBC studios gate, Jonathan opens the window and says, "It's a pie this time."

"Thank you, sweetie," the guard says, taking the box.

We hang on to the bulk of our load, carrying armloads into the studios. We wind our way through corridors, eventually reaching Jay's inner circle, where we drop off the goodies. Sure enough, here comes Mr. Leno. "Gentlemen! Gentlemen! Men of ice cream!" he says heartily, stopping long enough for a group photo before ducking into a meeting.

On the way back, Jonathan suggests we don't brag to the rest of the class. But word soon gets out of the Leno sighting, and many request a copy of the picture.

Meanwhile, Lynda Walker is more concerned about decorating cakes. She still can't master the frosted roses, golf-ball-size flowers that are supposed to have 10 tiny leaves. "I was thinking I could do this," she says.

She also has concerns from her first week of training. During a shift in a nearby Baskin-Robbins, 30 customers packed into the store while only three workers staffed it. Lynda says two customers yelled after waiting for more than 15 minutes. She hopes that Lake Tahoe — being a resort area — will offer a more relaxed set of customers.

Her son, Russell, stands next to her, also practicing — and showing more promise as a decorator. New franchisee Willie McGinest, who spent years working as a Suzy Q foreman for Hostess, walks over to encourage Lynda.

"You've got him," Willie says, pointing to Russell. "You've always got him."

Day 5
"Here's some for breakfast," Jonathan tells me, handing over two extra Hershey's kisses in addition to the eight needed to complete my Candy Crazy. (The final cakes were made over two days as we built other cakes and desserts.)

I finish the cake and survive colleague evaluation, mostly because classmate Jeff Anderson is a generous sort of guy. He cites me for "uneven sides," "crooked corners," and borders that "exceed beyond [the] cake board," but it could have been much worse.

It should be noted that my classmates, for the most part, are building much more appealing cakes than mine. In that sense, the company's strategy of training decorators seems to work. My poor performance can be blamed, in large part, on having to forgo frosting exercises to interview my classmates.

Shortly after noon, tensions mount as we move back to the classroom and Jonathan passes out the decorating exam. There are 25 questions. Miss four or more, and you're coming back for another session of decorating class. As friendly and helpful as they are, Petra and Jonathan aren't easy judges. No sliding by with a 74 or 84.

I make one silly mistake and get tripped up on a frosting dilution question, but end up posting a 92. Only one student fails, a franchisee who already has to stay for additional operations training. Russell and Lynda Walker both pass: he with a 96, she an 88.

A short graduation ceremony follows. Jonathan puts in an audio tape of commencement music, which skips into silence several times. He and Petra distribute diplomas. Trainees who answered the most classroom questions get specific awards.

Some of the students — feeling cooped up and sick of decorating cakes — are eager to leave. Others are worried about saying goodbye. Dawn Fecher, a 40-year-old from Texas, and Lee Ravji, a 45-year-old native of Uganda by way of Canada, have shared a hotel room since their third day — after deciding they always studied together anyway, so they might as well save some money. The two women have become close friends, the way people don't always have time to do when raising families and forging careers.

Finally, Petra and Jonathan hand out their business cards, insisting their students call them if problems arise.

"Go make some money," Petra tells the class, "and have some fun."

—Mr. Morse is a reporter in The Wall Street Journal's Washington, D.C., bureau.

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