Start a Shaved Ice Business

Start a Shaved Ice Business
Shaved Ice Truck in Downtown Huntington Beach

Shaved Ice Truck in Huntington Beach. The artwork on the truck captures the attention of kids and adults. Photo Cred (cc) David Parikh

Shaved Ice is a growing trend in the Ice Cream business.  Although a serving has a lot of calories, people don’t perceive it as bad as ice cream because it has no fat and no dairy products.  One way to look at it is that you are just selling frozen water with a little flavoring on it.  The gross markup on a shaved ice serving is huge.  But there are a lot of other factors involved.

Shaved Ice deserts originated in Japan.  The treat was brought to Hawaii by Japanese immigrants.  That’s why people perceive of it as a Hawaiian treat today.  Of coarse, there is a similar treat that originated in Baltimore MD –the snow cone or snow ball.  Because it was cheep to produce these treats were popular during the Depression, and during WWII.  So they are basically the same thing ice with flavored  corn syrup, except that the ice in shaved ice treats is shaved off a block of ice in front of the customer, and snow cones are made out of ice crushed by a machine.  The difference might not mean much to a four old kid, but to adults “shaved ice” seems more upscale to west coast consumers, and snow cones are more popular to east coast consumers.  And yes the flavors are different with Hawiian Shaved Ice having tropical flavors like Mango, Coconut, Pineapple, and Kiwi while snow cones have bubble gum, cherry, blue flavor …   But most vendors are not purists so they carry what people want.

We should note that it’s called “Shave Ice” not “Shaved Ice” in Hawaii, so you might see some vendors using that lingo.

We took a look at what you need to get started in this business Syrup, Ice, Location and Equipment.

Syrup

Syrup comes in 1 gallon bottles that are used to fill smaller 1 liter glass or plastic bottles.  The smallar bottles are what the customer chooses from, so most vendors have a variety of flavors with different colors.

Presentation of your Ice Treat More Important than Taste

The important thing is presentation as may affect your customer’s experience as much as the actual product flavor’s quality.  Especially for kids who gulp these things down, some adults who eat the product slowly to savor the taste will notice the quality.  But they will be a minority of your customers.  What the costumer perceives at the flavor may be more important that the quality of the flavoring as people become insensitive to taste at very low temperatures–such as that of ice. reference  So experienced vendors make a point of having a bunch of flavors, giving each flavor a special name such as “Austrian Cherry” instead of “Red,” and they confirm the customer’s choice by saying “I love that one” or “that’s my favorite.”   You can mix syrups or just re-name them so that your shaved ice is special in the customer’s mind.

Be sure to have on Hawaiian Shirts, and make it seem like you just got back from the Islands.  

Before you send for mail order supplies, you might find a better deal locally  at discount supply stores like Smart and Final  Restaurant Depot  and Sam’s Club . For instance, Sam’s sell 6 1/2 gal containers for about $34.00 so that’s about 11.33 per gallon; and a box of 4 1gallon bottles for $26 so that’s about $6.50/gallon.  (If you have a state re-sell license, you don’t need to pay sales tax on this because you will resell it.)  The more expensive brands like “authentic” syrup from Hawaii Malolo Brand are harder to find.

If you are looking for a good deal on syrup, the internet might not be the place to go.  We saw some for around $16.00/gallon plus shipping and sales tax.

Make Syrup Yourself

It’s not rocket science.  You can combine sugar and a soft drink mix (i.e. Kool-Aid) to create your own syrup.  ( Sugar based Sugar free Syrup –you will need to scale up.)   You can also add in special ingredients or blend flavors to make your syrup special.  Tell your customers that it’s “homemade.”  But keep in mind that this might not last as long or be as stable as the store pre-made syrups.

Where do you get the ice?

It’s just not possible to make a giant ice in your home freezer.  It would take too long; and where would your food go?  If you have a restaurant, you can have access to a ice making machine.  Otherwise, you can just buy the ice at a location near your set up.  Most grocery stores,  mini-marts, and even stores like Smart and Final sell ice in large bags.

Finding blocks of ice might be more of a problem.  Some of the machines listed below work off blocks of ice, and you may want to hand scrape the ice to make more of a show for your coustomers.  There are still some ice houses around OC which serve the hospitality industry.  Blocks are sold to make ice carvings.  For example:  ABC ICE House in south county, cold star ice in Santa Ana

Shaved ice Equipment

  • Sams Club has all the equipment and supplies that you will need to get started.  They have a nice looking Cart and matching Ice Shaver.  They would fit into the back of a truck or van.  The cart in an online only item that goes for about $600 and a matching Ice Shaver that can do 500lbs of ice an hour for around $620.  Go to samsclub.com and search for “Gold Medal” and “Sno”  goes for $620.  This runs off of a standard electrical outlet.  Assuming you buy an ice chest and a few other things, you could be equipped for less than $1,500.  They also have the supplies you need.   We also notice some ice shavers that were called commercial for around $150 on sites like ebay.com.  But you need to be careful, because machines that are for home use overseas might be branded as commercial.  They may not have the capacity to keep up with customer demand.  If it takes too long to shave ice for a product, people will just walk away.
  • IceShavers.com These are a bit higher quality machines manufactured by Swan.  They are designed for commercial use.  Some of the other machines seem to be designed lighter use.  Their ice shavers go from $700-$2,000.  They have one interesting machine that is operated by a hand crank.  This could be ideal for areas where you have no access to electrical power.
  • Southern Snow Shaved Ice Machine http://shaved-ice.com/shaved-ice-machine-videos.htm.  AKA New Orleans Shaved Ice.  As the name implies, this is from the South.  For about $1,800, you get a machine that can shave a lot of ice.  It works off 12.5lbs  blocks of ice, not ice cubes.  They also sell trailers that run off a standard 120 outlet or off car batteries.  A new trailer costs about $21,000 with everything plus transport to Southern California and California DMV tag fees.  The problem we see with these units is that they use blocks of ice.  You cannot just buy ice at the supermarket if you run out.
  • O.biz   This is the business website of overstock.com.  They sell shaved ice machines in their Business-to-Business site, so these might not pop up on their regular website so you need to know where to look.  On o.biz click on the concessions link and search for SNO and then search for ICE.  The day we looked we found machines that were less expensive then even Sam’s Club!  But the deal depends on what they are currently selling.  And they don’t charge sales tax so that’s an automatic 8% savings.  They also had carts and syrop.
  • Hand Scrapers.  The idea is that you make more of a show by shaving the ice off a large block of ice.  We could not find any hand scrapers on the market other than the Campeon Ice Shaver but it might not be sufficient for making a lot of shaved ice.  Some other people have suggested that you use a large  wood plane, but we don’t know about that.  The professional ice carving tools are rather expensive, as the steel needs to be very hard and withstand water and cold temps.  For a couple of hundred dollars you can get a professional ice chisel that is curved (see Forschner / Victorinox Ice Chisel for example.  We found this on online, but you might want to get a bigger model.  You will be selling what most professional ice carvers through away.) so hat the ice comes off in shaved.  And don’t forget it will need to be sharpened.

Whichever you choose be sure to get extra blades and a blade sharpener.     

Location

Caution  We noticed one of the sellers above state that this was a low overhead business because you do not have to pay rent.  Just pull your truck or trailer to a school, park or other location with kids, and you can make a lot of money.  This might work in other parts of the country or Canada, but in California this type of activity is restricted.  Generally you cannot sell on the street.  Also there are restrictions about selling within a certain number of feet from a school.  Check with your city for details.

And you can get in big trouble for doing business out of a private parking lot.  You need a written agreement from the landlord, a city business permit, and liability insurance.  Otherwise you could get cited for trespass, code violations, and even mess up your credit history for a decade by getting an eviction (UD) on your record.  

Location is one of the most important factors to your success.  Renting retail space probably wouldn’t pan out, so the best options are: Church carnivals and festivals, farmers markets, Kiosks in Malls, Craft Fairs, and Swap Meets.  It might be a good idea to find a location before you make an investment in a equipment or a trailer.

List of Swap Meets,

List of Arts and Crafts Fairs

List of Farmers Markets 

 

Franchise and Turn Key Oportunities

Tropic Sno tropicalsno.com/Opportunities.aspx They can sell you the complete business package.  It’s not a franchise.

Kona Ice ownakona.com  To buy a franchise, it costs $1,500, and they charge a fee of $3,000/year.   Editors Note  We have been corrected by one of our readers.  See comment below.  Our writer had origionally gotten the information from their website, which has changed to reflect real world costs.  Our reader said he called and it costs something along the lines of $115,000 to get started.  $15,000 for the Franchise Fee, 3,000-4,000 annual fee, plus you need to buy the truck from them and supplies from them.   The Kona is a Tennessee company (who would have figured) that is eager to expand in Southern California.  They sell exclusive areas that your truck can work in.  In an Orange County Register Article, a Kona Truck Owner Eric Wilford, the concept is a success because of “Orange County’s high disposable income and parents who care about their schools’ finances as important factors in his success.”  He went on to discuss one of Kona’s advantages–fundraising for schools and youth sports.   “Kona Ice gets most of its business at schools, youth sports leagues and other nonprofits that get 20 percent of revenues from franchisees’ sales at their events and fundraisers.”   According to the article, it costs say it costs about $99,000 to get started with a Kona Truck and training.  .  Unlike most franchises, they do not charge a royalty based on gross sales.

Snowie www.snowie.com/buildings/building_10ft.html This company out of Salt Lake City offers trailers ready to go with their machines.  For a 10′ trailer, it costs about $32,000.

 Used Equipment

This opportunity is being sold to a lot of people as a high margin, low cost business.  But that means that there are a lot of people who want to get out.  Check out Craigslist and ebay for used equipment and trailers.  People have been sold on this opportunity, and thought it would be the perfect weekend business; but it has not worked out as well as they had dreamed.  And they may be tired of paying for a storage space, would like the garage back, or are tired of their wife complaining about that ugly thing in the front yard.  So you can get a deal if you are lucky and one of these unhappy owners has just put it up online.

You can put together a nice package, and it will cost less than the turn-key and franchise opportunities above.  You can always go to a sign and graphics company to get your truck or trailer wrapped, and it’s not hard to install a shaved ice machine.   Vinyl graphics should cost less than a few hundred dollars.  In our opinion, a trailer is the most cost effective way to go.

Search on Craigslist and ebay for CONCESSION or CONCESSIONS and Trailer or Truck.   We found some trailers with a buy it now price around $3,000, but most had a buy it now price around $8,000.  Note that most of these on ebay were in the mid west.  We found noticed some deals for less than $4,000 on craigslist by typing in concession in the search box.  (On craigslist be sure to search in LA and San Diego as it only pulls up what was posted in Orange County.)

So you will pay abut $11,00 for a used trailer that will look as good as a new one selling for $30,000 +.

In terms of concession trucks, they are like RV’s, they price will crash when they reach a certain age.  It is hard to get traditional financing anything mobile–car truck RV–that’s more than 9 years old.  That’s because banks look at them like cars–after so many years they are worn out; and for obvious reasons they don’t want to finance something that is headed to the junk yard before the loan is paid off.  So if you have cash, you might be able to get a deal on a used concessions truck.  But you will have to have deal with storage when you are not using the truck, maintenance, and higher taxes.

Government Regulations

Well, it would be nice if you could buy one of these things and then just start business.  But there are a few government regulations that you need to deal with.

Resell permit The State of California will want you to collect sales tax from your customers.  Note that you can just charge normal prices like $3.00 and say that $3.00/(1+sales tax rate) were your sales if you don’t like dealing with coins.  If you sell at a fair or swap meet a resell permit will be required to rent.  See our government regulations page for more info.

City Business Permit  You will need a city business permit for each city you want to sell in.

Click here to see where you can go to get a city business permit and Resell permit form the California FTB Scroll about half way down the page.

Health Permit The Orange County Health Department needs to inspect all trailers and trucks selling food.  This is a MFF Permit and they have a page describing how to get it here: http://www.ocfoodinfo.com/mobile

Food Handler Card Per the OC Health DepartmentAnyone who works on a food cart, truck or trailer needs to have a California Food Handler Card from an American National Standards Institute (ANSI)   Basically it’s a two hour class and you or your employee must pass a test.  We found one school  http://www.tapseries.com/ in California that can get you a card.  We don’t know how much this law is enforced.

Resources

This series of you tube videos will show you how to make shaved ice products http://www.youtube.com/user/PFBTropicalSno?feature=watch

Let us know if there are any good books out there and we will put them up our readers.

© 2012 OCBusinessStartUp.com

1 Comment

  1. Your comment about Kona Ice starting franchise fee is incorrect.
    You say “Kona Ice ownakona.com To buy a franchise, it costs $1,500, and they charge a fee of $3,000/year.” However, I looked into them and it is $15,000
    and they will not let you sell in your assigned territory without a truck which turns this into $99,000.
    Also you can not buy their Kiosk or other “options” unless you have a truck first.

    I was very interested, but the cost of entry was too much.

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