5 Factors that Make Ice Drinks a Profitable Product Category with High ROI
When making the decision to add a new product line to drive foot traffic, generate revenue, and increase profits, there are many challenges to overcome, such as:
- Evolving Customer Demands: Driving foot traffic and generating sales and profit requires the ability to meet the changing demands of consumers in an evolving retail landscape.
- Increasing Competition: If your competitors are able to meet the changing demands of consumers better and faster, with exciting and innovative products, you will be unable to compete.
- Products with Low Margins: Products with thin margins that do not excite consumers, generate foot traffic, word of mouth, loyalty, or high profits.
- Hidden Equipment Costs: Using equipment with inferior design typically requires more maintenance, upkeep, and cleaning which only increases downtime, labor costs, and lost revenue.
Fortunately, ice drinks continue to be one of the most popular items among consumers, and are also extremely easy and profitable to sell for retailers.
How Much Consumer Demand is There for Ice Drinks?
One of the first considerations when deciding to offer a new product is consumer demand, both short-term, and into the future.
When it comes to ice drinks, there is plenty of market data to suggest that sales are strong, and demand is expected to continue rising for the foreseeable future:
- Beverages, in general, account for $1 out of every $5 consumers spend away from home, according to Technomic Inc.'s 2017 Away-From-Home Beverage Study.
- More than half of consumers surveyed by GasBuddy said they buy a beverage at a gas station at least once a week, and 20% do so daily.
- 51% of consumers said they ordered a frozen beverage in the last month, according to Technomic’s Beverage Consumer Trend Report.
- 30% of consumers said they are purchasing frozen beverages now more than they were a few years ago, according to Technomic’s Beverage Consumer Trend Report.
- Because of the fast-growing demand and ease of operation, ice drink machines are used in more than 80% of the world’s convenience stores and gas stations.
- Convenience stores are broadening their drink menus by offering 64% more slush and ice drinks, according to Mintel's “Convenience Store Foodservice US, March 2018" report,
However, convenience retail isn’t the only industry to realize the clear benefits of offering ice drinks. You can also find commercial ice drink machines driving traffic and revenue in quick service restaurants, movie theaters, amusement parks, large retail establishments, hotels, bars, and even cruise ships.
Examples of popular carbonated ice beverages include:
- Slurpee (7-Eleven)
- FREEZONI (QuikTrip)
- Frutista (Taco Bell)
- KOOLEE (Kum&Go)
- Numb Skull (RaceTrac)
- Hyper Freeze (Cumberland Farms)
5 Factors that Make Ice Drinks a Profitable Product Category with High ROI
According to the Convenience Store News Market Research in 2018, the average in-store gross margin percentage is the highest for frozen dispensed beverages, at 65%.
However, with the right ice drink program, you can achieve upwards of 70%-120% gross profit!
You can us
e our ROI calculator to estimate what profit margins you can expect from an ice drink program, and how quickly you can expect to see a return on your investment.
The high profitability of ice drinks is due to 5 main factors:
1. Higher Foot Traffic
When it comes to fun and exciting products that draw customers in, and also maximize profits, few products beat ice drinks.
A recent study found that having a large amount of variety in your food and beverage offering is the 4th most important factor consumers consider when deciding to visit a retailer.
Adding an ice drink program is a smart and easy way to expand your product offerings and lure in customers to purchase frozen drinks and other food items to accompany it.
Another advantage of featuring ice drinks on your signage is the wide variety of eye-catching flavors and colors that these drinks come in.
In addition, these colorful, eye-catching beverages are perfect for snapping a picture of and sharing on social media. Both word of mouth and social media sharing attract new customers to your store, without you having to spend valuable marketing dollars.
Whether its an attention-grabbing, branded dispenser, colorful displays at the point-of-sale, promotional signs and window wraps, or even branded cups and lids, ice drinks give you a plethora of new ways to stand out and drive foot traffic to your store.
2. Lower Ingredient Costs
Commercial ice drink dispensers require minimal ingredients and have the potential to create a highly profitable product offering.
Carbonated ice drinks are, by far, the most profitable type of frozen drink you can sell (70% to 120% gross profit).
This extremely high level of profitability is mostly due to the fact that 50% of a poured, frozen carbonated beverage is CO₂ (air) and 40% is water.
In comparison, a frozen uncarbonated beverage from an open bowl system is 60% water, 15% expansion, and 25% syrup. Without carbonation, syrup usage increases and profits decrease.
3. Less Cleaning, Maintenance, and Downtime
Keep the water on and the syrup and CO₂ full, and our ice drink machines can pour beverages for a whole year before you have to do any routine maintenance on them.
The main reason our units can go a full year without maintenance is because it is a closed, sealed system with a stainless steel cylinder and high acid product which, combined with CO2, will not allow bacteria to grow.
In comparison, open bowl systems must be cleaned and maintained weekly, leading to dramatically higher downtime and lost revenue. Advanced technology keeps our machines running efficiently with minimal upkeep.
Our carbonated ice drink machines are built with high-quality materials and parts, and are designed to last 7-10 years. In comparison, an open bowl system will only last 3-5 years, on average.
4. High Capacity with a Small Footprint
Running out of product means lost revenue and lower profitability. High capacity ice drink dispensers ensure you have enough product during peak times with high foot traffic and customer demand.
Even a smaller dispenser, such as the FBD 37X series, can pour 105 cups per hour compared to only 48 cups per hour with a standard, open bowl system.
In addition, ice drink dispensers typically take up very little space, allowing you to maximize sales-per-square-foot.
Our 15X Series, for example, maximizes counter space with the smallest footprint in the industry – up to 31% smaller and 56% lighter than other multi-barrel units.
5. Unique, Fun, and Memorable Customer Experience
Carbonated ice drinks allow you to create fun customer experiences with colorful interactive visual merchandising and unique products.
Innovative, self-service options provide customers with exactly the kinds of memorable experiences that can help set you apart from your competitors.
With our Multi-Flavor machines, for example, customers can have endless fun creating their own concoctions and experimental mixes. These fun, unique, and memorable experiences not only drive repeat purchases, they also give your customers something to talk about with their friends.
Take advantage of this opportunity to help consumers quench their thirst with these enticing frozen concoctions, and increase your location’s foot traffic by offering consumers beverages that provide a memorable experience.
Ready to learn more about starting your own highly-profitable, Ice Drink Program?
FBD Frozen is trusted by 80% of the world’s frozen beverage retailers.
We have the reliable equipment and responsive support team to help get your profitable, ice drink program started today!
We work hand-in-hand with you to create an ice drink program that addresses your specific capacity and footprint needs and meets shifting market demands. Whether dealing with seasonality, new technology, or changing market trends, FBD’s team of experts will help you adapt your ice drink program to maximize your margins.
With over 532 unique equipment configurations, we can completely transform the interface of our machines, whether crew-served or self-serve, to align with your marketing needs.
Whether you run a movie theater, a convenience store, a quick serve restaurant, a bar or an institution, we have the reliable equipment and responsive support team to help you get your profitable ice drink program started today!