Starting an ice cream shop is indeed a sweet treat for your pockets given the growing demand for frozen treats all year round.
And while the idea of serving scoops of lip-smacking ice cream flavors is exciting, it is going to take a considerable sum of money to get your ice cream business started.
Now the question is how much? How much does it cost to open an ice cream shop for your unique concept at your chosen location?
Well, this guide has all the answers to your questions relating to ice cream shop startup costs. Additionally, you can calculate precise costs for your ice cream shop using our startup cost calculator.
So ready to play along with a few numbers? Let’s dive right in.
What is the cost of opening an ice cream shop?
The cost of opening an ice cream shop in the US varies between $26,000-$145,000. These costs are largely influenced by numerous factors such as location, equipment, inventory, and technology.
Ice cream shops on average enjoy a lucrative profit margin of 25% making it a highly profitable venture. To add on, some successful shops in the market are already making up to 35% net profit on their ice cream sales.
Average costs for starting an ice cream shop
Before we dive into details, check out this ice cream shop startup cost checklist. It will help you plan your startup budget and know how much financing you need to get started.
| Item | Average Cost |
|---|---|
| One-time Expenses | |
| Lease Deposits | $3,000-$12,000 |
| Construction and Remodeling | $5,000-$50,000 |
| Ice cream machine | $2,500-$25,000 |
| Display cases | $3,000-$10,000 |
| Storage freezers | $1,000-$10,000 |
| Inventory and supplies | $1,000-$10,000 |
| POS setup | $1,000-$2,000 |
| Registration fees | $150-$300 |
| Licenses and permits | $500-$2,500 |
| Insurance (annual) | $2,000-$4,500 |
| Professional fees | $500-$1,000 |
| Website setup and logo | $150-$500 |
| Signage boards | $200-$1,000 |
| Pre-launch marketing | $500-$1,500 |
| Total One-Time Expenses | $21,000-$128,000 |
| Recurring Expenses (Per Month) | |
| Rent or mortgage | $1,500-$3,500 |
| Utility bills | $1,000-$1,200 |
| Inventory restock | $500-$5,000 |
| Payroll | $2,000-$5,000 |
| Software subscription | $100-$300 |
| Monthly marketing | $100-$2,000 |
| Total Recurring Expenses | $5,000- $17,000 |
| Total | $26,000- $1,45,000 |
Using this ice cream shop startup cost checklist, you can plan your startup budget and get an idea of how much financing you will need.
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Let’s move ahead and identify how you will calculate your ice cream shop costs.
How to calculate the cost of opening an ice cream shop
You now have a list of potential expenses and a rough estimate of your startup costs. Let’s estimate your actual startup costs using these two proven methods.
The first, traditional method involves using a startup costs calculator to estimate the startup costs. However, the second, the Upmetrics method, is an innovative method that uses the Upmetrics financial forecasting tool.
Let’s understand both methods so that you can choose one that suits your requirements the best.
The traditional method—startup costs calculator
The calculator includes categories such as pre-trading, website setup, marketing, operations, and people. You can enter the estimated costs in each field and let the calculator estimate the costs for you.
Remember that many startup costs fall under recurring expenses, so cover those costs monthly, quarterly, or annually.
Calculate your startup costs using this calculator.
The Upmetrics method—financial forecasting tool
It is an intuitive and efficient method of calculating startup costs. Using Upmetrics will not just help you estimate startup costs but also help with financial forecasting.
All you need to do is enter your sales, costs, and other financial assumptions and let the tool calculate monthly/quarterly/ and yearly projections for you.
Pro-tip
Check out the financial forecasting tool for accurate financial forecasting. Once you have an accurate estimate of startup costs, you can easily identify funding requirements for your ice cream shop.
Raising funds for a new startup is certainly a nerve-wracking and time-consuming process, but having a solid ice cream shop business plan can make things a lot easier.
Let’s move ahead and discuss the factors that affect your ice cream shop startup costs.
Factors that affect Ice Cream Shop costs
Starting an ice cream shop can be a costly affair. From location to licensing costs, equipment, and inventory costs- let’s discuss the key components that build your startup costs.
1. Location
The location of your ice cream shop is going to significantly affect its startup costs. From the rent of your ice cream store to the cost of inventory, licensing, permits, and insurance- the cost for each of these heavily relies on the location of your business.
For instance, the salary of employees in New York is usually much higher than the national average. This means that your payroll expenses would be pretty high if you plan to open an ice cream business in New York compared to Texas, Nashville, or Arizona for instance.
Moreover, there is a significant difference in the cost of opening an ice cream parlor in different localities of the same city. That being said rental expenses are much higher in upper borough parts of a city compared to mildly-popular areas or downtowns.
The choices you make with the location will directly reflect in your startup costs.
Now, you simply cannot compromise on the location to save the rent and other expenses. After all, only a prime location will bring you foot traffic and attract the target market to your ice cream shop.
2. Ice cream shop space
Before anything else, analyze the space requirement for your ice cream store. Consider a variety of factors such as whether you would be seating customers, the menu, kitchen space requirements, and others to determine your space needs. Ideally, a 400-1500 sq. ft of space is spacious enough for ice cream shops to operate optimally.
Now, you can either rent or buy a commercial space for your ice cream store.
Renting is cheaper than buying. However, if you have the means and will to buy a space, you can expect to pay anywhere from $100,000- $1 million or sometimes even more depending on the location and size of the property.
According to Statista, the average per-square-foot rent for shopping center real estate in the US is $23.16. So, if you are planning to rent, you can expect to pay anywhere around $1,500-$3,500 and more on monthly rent.
Further, you also need to account for the lease deposits which are usually worth 2-3 months of lease rental expenses, i.e. $3,000-$10,000.
And lastly, make room for monthly utility bills that would span anywhere between $1,000-$1,200.
3. Renovation and Construction Costs
Another prominent expense for ice cream shop owners while setting up their ice cream parlors is the expense of renovations and remodeling. Now, unless you are buying or renting a space previously operating as an ice cream shop, you need to get some work done.
While undertaking renovations, prioritize the budget for essential repairs. This includes structural changes, utility connections, painting, furnishings, countertops, flooring, etc. In the simplest terms, all sorts of remodeling is essential for turning your shop concept into reality.
Generally, the remodeling expenses vary significantly with anything between $5,000-$50,000 and more.
Here’s a rough breakdown of these costs into different categories:
- Construction: $5,000-$15,000
- Furnishings: $1,000-$8,000
- Painting: $1,000-$5,000
- Electrical work: $2,000-$10,000
- Interiors and decor: $1,000-$5,000
Keep a budget in sight while undertaking the decor project.
4. Ice cream shop equipment
Ice cream shops need a variety of equipment and machines to manufacture and serve their ice cream products. This equipment costs a fortune and is a considerably big investment, especially if you plan to offer products from a diversified menu.
Here are a few machines and equipment that an ice cream parlour requires along with a rough estimate of its costs:
- Ice cream machine: You can find a variety of ice cream machines in the ice cream industry ranging anywhere between $2,500-$25,000 and more. The quality of your ice cream depends largely on the type of machine in use. It’s a worthwhile investment especially if you want to create a brand specializing in artisanal ice cream.
- Display cases: Comes in a variety of ranges, ranging from basic models to professional-grade models. The cost for display cases can span anywhere from $3,000-$10,000 giving you a wide range of choices.
- Storage freezers: Depending on your storage requirements, invest in freezers that can cost anywhere from $1,000-$10,000.
- Blast freezers: If the concept of your ice cream shop is to serve fresh ice creams prepared on-site, you need blast freezers that cost anywhere between $3,000-$50,000.
Apart from these, identify equipment essential for your menu and make provisions. You also need to invest in cleaning equipment for your ice cream shop.
All in all, the costs for purchasing equipment and machinery could span anywhere between $10,000- $75,000 and sometimes as high as $200,000 as well.
5. Inventory and supplies
One of the other important expenses while starting an ice cream parlor business is the cost of building an initial inventory. This includes all the ingredients essential for making ice cream. Depending on your ice cream shop menu, you also need cups, cones, toppings, and a variety of other ingredients to serve the ice cream.
Further, ice cream shops require a bunch of cleaning supplies, packaging containers, disposables, and cutlery before they start their operations.
The initial cost of building an inventory for your new ice cream shop can span anywhere between $1,000-$10,000. However, these expenses can be substantially large depending on the type and quality of ice cream you will sell.
Also, keep in mind that you need to keep restocking the inventory every month. The costs involved in restocking the supplies and replacing the damaged products can span anywhere between $500-$5,000.
6. Payroll
Do you plan to work behind the counters to sell ice cream or will you hire people to do that?
You don’t necessarily need a big team, however, you will need a few people to run the operations of your ice cream parlor business. Determine how many employees you need to hire to keep your small ice cream shop operational.
Most ice cream shops initially avoid making full-time hires. And even if they do, they would employ hardly an employee or two and schedule hourly workers for peak hours.
According to Indeed, the average hourly pay for an ice cream maker in the US is $9.14, and that for a store manager in the ice cream industry is $10.32.
Now, if you plan to serve artisanal or fresh churned ice creams, you would require a skilled professional for that. Considering the average salary of an ice cream maker in the US, you can expect to pay anywhere between $37,000-$58,000 to your skilled specialists.
All in all, the average payroll expenses for an ice cream parlor vary between $2,000-$5,000.
7. POS setup
Many ice cream shops undermine the value of a POS system in their business operations. Don’t be one of those businesses.
An efficient POS system helps manage everything from sales to inventory, employees, and customer relationships. Therefore, ice cream shops must have a reliable POS system to save time and effort on redundant tasks.
While choosing a POS system for your ice cream shop, find one that allows easy integration with other software. Also, ensure that the choice of POS provider offers reliable support and maintenance services.
Depending on the features and functionality you seek, the cost of POS software ranges between $1,000-$2,000 and more. This includes costs for hardware, software, and installation.
Apart from that, account for the monthly or annual POS software subscription fees ranging between $100-$300 monthly.
8. Licensing and Insurance
Getting your business legally compliant will take another spot in your ice cream shop startup cost list. This includes business registration, licensing and permits, and insurance.
The business registration for your ice cream parlor will cost anywhere between $150-$300. This will also get you a business license which will allow you to operate your shop in the state.
Further, acquiring necessary permits will cost you anywhere between $500-$2,500 and more. This includes food handling licenses, health permits, and zoning permits. Depending on your menu offerings and the regulations in your state, you might require a few more permits.
And lastly, the insurance. The overall cost for General liability, property, and worker’s compensation would span between $2,000-$4,500 and more depending on your coverage needs.
9. Professional fees
You would require a variety of professional services to start and operate your ice cream shop. This may add up to your already large startup cost list, however, these are the services worth investing in.
Most ice cream shops would require professional services in the following areas:
- Legal services: Helps with business registration, licensing, permits, and ensuring overall compliance. Legal services will cost you anywhere from $150-$500 for one-time work.
- Contractor services: Contractors and designers will turn your ice cream shop concepts into a reality. Their fees are substantially high ranging anywhere between $5,000-$50,000.
- Accounting: Helps with tax filing, account maintenance, bookkeeping, and other related tasks and would cost you $100-$300 every month.
10. Branding and Marketing
After spending thousands on your ice cream shop, you want to make sure that it reaches the target audience and attracts customers to your doorstep.
Now, considering the branding aspect, you would require a logo and website for your ice cream shop. The cost for a website would span anywhere between $150-$500.
Additionally, you need billboards and signage to brand your ice cream shop. The cost for this would span anywhere around $200-$1,000.
Also, consider the cost of advertising in local newspapers, magazines, and radio. The advertising budget would range between $1,000-$10,000 and sometimes even more.
If you are planning a grand opening or even a soft launch party for your ice cream shop, it would cost you $500-$1,500 usually.
And lastly, account for the online marketing channels that you would be targeting.
The monthly recurring expenses on marketing strategy could be anything that you like. However, 2-3% of monthly sales is a good budget to spare on marketing and promotional activities.
And that’s pretty much all the large expenses that will significantly make your startup costs. However, we will now look at a few tips that can help you start your business with a little less money.
Tips for reducing Ice Cream Shop startup costs
Starting an ice cream shop is an expensive affair. However, here are a few ways to bring down your startup costs considerably.
1. Buy used equipment
Ice cream shop equipment is quite expensive. Instead of getting everything new, try finding used equipment from the local or online marketplace. Buying second-hand equipment will save you thousands of dollars.
It doesn’t matter if you get new or used equipment as long as it is in good condition.
2. DIY Marketing
The advertising expenses can soar pretty high and are quite difficult to manage, especially for businesses starting new. Use your creativity and free resources to create marketing material for your ice cream shop. For instance, logo, social media copies, ad marketing, etc.
3. Start with an ice cream truck
Ice cream trucks are comparatively less expensive to start than an ice cream shop. Start with a small kiosk or truck and then shift to a larger shop as the business gains momentum.
Ice cream trucks have been gathering immense popularity in the US in recent years. So there is definitely a plus side to opting for a food truck option.
4. Buy pre-made facilities
Renovation and construction costs pile up pretty quickly. Instead of building new facilities, choose a location that was already operating as an ice cream shop or related business. This will help you save a significant amount on remodeling expenses.
5. Regulate your hiring plan
The payroll expenses for the first few months are going to take away a significant chunk of your operating capital. Instead of hiring people on a full-time basis, hire limited people on an hourly basis. This will help reduce not only your piling payroll costs but will also save the expenses on employee benefits and compensation funds.
6. pinterest decor ideas
Hiring a decorator can cost a fortune. Instead, try finding DIY budget decor ideas from Pinterest and get things done on your own. However, ensure that you don’t skimp on the look and feel of your ice cream shop.
There are creative ways to bring down your startup costs. It’s upon you to find the ideas that are feasible within your means.
Conclusion
And that’s it. By now you must have a rough idea of how much it costs to start an ice cream shop. What next?
Let’s now calculate the actual costs for your ice cream business using our startup cost calculator. Additionally, the Upmetrics business planning app will also help you write a stellar business plan that will give direction to your business strategies and objectives.
Let’s now turn your sweet dreams of serving churned ice cream into reality.
Use Upmetrics for Accurate Startup Cost Projections!
Looking to estimate your startup costs? Dive into Upmetrics! Our business plan software makes financial forecasting a breeze
