Frozen beverages are widely considered a high-growth product category, for good reason.
51% of consumers said they ordered a frozen beverage in the last month, according to Technomic’s Beverage Consumer Trend Report, and 30% of consumers said they are purchasing frozen beverages now more than they were a few years ago.
According to Mintel's “Convenience Store Foodservice US, March 2018" report, convenience stores are broadening their drink menus by offering 64% more slush and frozen drinks, 41% more milkshakes and shakes and 38% more smoothies.
Frozen beverage sales are strong, and demand is expected to continue rising for the foreseeable future.
Not only are frozen drinks popular, refreshing, and tasty, they are also an extremely profitable product for retailers.
Commercial frozen drink dispensers require minimal ingredients, which gives them incredible potential to create a highly profitable product offering.
Frozen drinks can give you 20% greater margins than fountain drinks that use more water, and double what you'd earn from a canned beverage.
In addition, frozen beverages can command high prices and drive impulse purchases, as they are a premium product that can only be found from certain types of retailers, and they can’t easily be made at home.
Retailers can easily see gross profits of 70% to 120% with the right Frozen Beverage Program.
A growing number of retailers are implementing a frozen beverage program, due to extremely high profit margins, small footprint, and little required labor, skill, or training to operate.
One of the best parts of having a Frozen Beverage Program is you can take advantage of all the benefits, without the need to install lots of large, expensive equipment.
Frozen beverage dispensers have very low maintenance and downtime, no internal cleaning, and none of the bacteria buildup and health code issues that soft-serve ice cream and other frozen dairy products can bring.
Because of the fast-growing demand and ease of operation, frozen drink machines are used in more than 80% of the world’s convenience stores and gas stations. However, these are not the only industries to realize the clear benefits of offering frozen drinks. You can also find commercial frozen beverage machines driving traffic in quick service restaurants, movie theaters, amusement parks, large retail establishments, hotels, and even bars.
As the frozen beverage category has expanded to encompass a wider range of products, and equipment manufacturers have created affordable, easy-to-operate countertop machinery, more and more industries are investing in commercial frozen drink programs.
The simplicity of the product and profitability of the program make frozen beverages an ideal add-on to businesses in the C-Store, QSR, retail, movie theater, entertainment, and hospitality industries.
Here are 5 industries achieving high profits with minimal effort by implementing a frozen beverage program:
QuikTrip, the convenience store chain that has taken the Midwest by storm, has a large and fiercely loyal customer base.
Known for their cleanliness, excellent customer service, and fresh food options, QuikTrip’s are stocked with c-store staples as well as hot food and prepackaged meals. Their frozen drink menu consists of Freezoni® frozen carbonated drinks, smoothies, and frozen cappuccinos.
While Taco Bell is known for inventive, fast, casual Mexican food, in recent years, they have been able to generate a lot of demand and foot traffic by offering frozen beverages with exclusive partnerships, not anywhere else, such as their Mountain Dew® Baja Blast Freeze, Rockstar Energy Drink® Punched Freeze, Strawberry Skittles® Freeze, and Starburst® Cherry Freeze.
An ICEE® and a bag of popcorn have been Target shopping experience staples for many years.
Customers can expect the aroma of fresh popcorn and the fizziness of a tasty frozen drink as soon as they walk into the store. Some can argue that the snack combo is equally as iconic as the red shopping carts and dog with a bullseye. In fact, Target received many customer complaints when the retailer decided to remodel some stores and replace the classic café complete with pretzels, popcorn and a frozen beverage centers with new Starbucks® coffee shops.
Many movie theaters, such as AMC and Cinemark have taken a different approach to frozen beverages to grow their profit margin and satisfy customers.
In addition to having commercial frozen dispensers in their concession area, they have added alcoholic frozen beverages to the menu. Popular drinks include frozen margaritas, Frozen Rum & Coke, and Strawberry Daiquiris.
Main Event Entertainment offers a one-stop shop for fun with bowling, state-of-the-art arcades, laser tag, mini golf, dining and more.
The amount of activities and reasonable entry fee draw in crowds of all ages and keeps them entertained for hours.
This past summer the entertainment house got even cooler with the launch of ICEE beverages system-wide. All 41 locations around the U.S. were equipped with frozen machines and began to serve the iconic drinks in fan-favorite flavors such as cherry, blue raspberry, and sour grape.
Slush is the original frozen beverage, and they’re still popular today for dispensing flavorful favorites like frozen margaritas, frozen lemonades, and iced coffee slushies.
Although the machines require more regular maintenance than frozen carbonated beverages, they have a simple setup and are very easy to use.
Serve up delicious shakes for customers looking for a convenient dessert they can take with them out the door, or smoothies for health-conscious consumers looking for more something more nutritious to keep them energized throughout the day.
Unfortunately, due to the use of dairy, shake and smoothie machines often require much more maintenance and downtime, and higher ingredient costs than other options.
Not all frozen beverages are carbonated, but CO₂ makes up around 50% of the volume of the ones that are. At first, that might sound like “selling air,” but it actually adds something special to the drinks that you can’t get in any other kind of frozen drink: the injection of CO2 is what gives frozen carbonated beverages their unique, crispy texture.
Because 50% of the drink is CO₂ (air), this also makes frozen carbonated beverages, by far, the most profitable type of frozen drink you can sell. A frozen carbonated beverage program can bring you 70% to 120% gross profit!
Frozen carbonated beverage machines are also extremely easy to operate and maintain. Your store staff can save up to 1-2 hours of cleaning time compared to other equipment options that require frequent cleaning.
FBD’s Mult-Flavor technology can pour more flavors in a smaller space allowing you to create unique and innovative multi-flavor programs such as frozen lemonade, frozen coffee, margaritas, and much more, all of which drive repeat customers and more profits!
More reasons why frozen carbonated beverages are an extremely popular, exciting, and highly-profitable product offering:
Finding the best, most reliable equipment with superb customer support for your Frozen Drink Program is an important factor to consider in maximizing profit potential. Lower-priced options bring many headaches and additional costs that ultimately erode your profitability.
In addition, choosing the right frozen machine based on your business goals, locations, and store traffic will make a difference in how fast you see a return on investment.
With so many different equipment brands, beverage distributors, frozen drink machine models, and drink types, starting a frozen beverage program can seem intimidating.
To help simplify things and help make your decision easier, here are the top 5 things you need to consider before starting a frozen beverage program:
When it comes to your business’s needs, goals, and objectives, there are a couple of things you’ll want to consider:
Does your location get low, medium, or high amounts of foot traffic? Make sure your Frozen Beverage Partner offers equipment with the right capacity to meet the demand at your location. You don’t want to over-invest in equipment with higher capacity than you need, but you also don’t want to run out of product and lose sales due to equipment with capacity that’s too low.
How much counter space can you realistically devote to your Frozen Beverage equipment? Make sure to choose a Frozen Beverage Partner that offers equipment with the smallest footprint possible, in order to maximize sales-per-square-foot.
How many staff members do you have at any given time, and how much time can they realistically devote to operating your Frozen Beverage equipment? Make sure to choose a Frozen Beverage Partner who offers equipment that’s easy to operate and requires minimal maintenance in order to minimize training costs and downtime.
Is your Frozen Beverage Program flexible enough to adapt to your consumer’s constantly-evolving drink preferences? Are you prepared to deal with changing demand due to factors like seasonality? Can you keep up, even if competitors introduce new, innovative products that excite consumers? Make sure that your Frozen Beverage Partner can provide you the guidance and products to effectively meet all of your customer’s needs and preferences.
One of the most important factors that enable you to meet changing consumer demand is having Frozen Beverage equipment that is versatile enough to accommodate a large variety of different types of beverages, such as frozen energy drinks, coffee, tea, lemonade, alcoholic beverages, etc. Consider whether your Frozen Beverage Partner offers equipment that will enable you to swap out the types of beverages you can offer, without having to buy new equipment every time your consumer’s preferences change.
Lastly, you will need to consider equipment customizations. Do you need self-contained condensing, remote condensing, or water-cooled condensing? What color machines do you prefer? What kind of dispenser valves; SDV, DDV, domed, or pneumatic dispense? In addition, some machines have optional touchscreens and digital/video merchandising (so you can place eye-catching, video advertising directly on the front of the machine). Make sure to discuss all of these customization options with your Frozen Beverage Partner prior to purchasing equipment.
Complete Cost of Ownership: When it comes to budgeting, many business owners only consider the initial acquisition cost of new equipment. Unfortunately, lower-cost options tend to have much higher “hidden costs” that quickly erode ROI and profitability.
You can achieve much higher profitability if you invest a little more up-front with a higher-quality Frozen Beverage Partner that fully stands behind their products.
When considering which Frozen Beverage Partner to choose, look beyond merely the initial acquisition cost, and consider the entire cost of ownership, including:
While you’re calculating the total cost of ownership, make sure to also calculate just how much ROI your Frozen Beverage Partner can actually offer you.
Consider the following questions:
You can use our ROI calculator to estimate what profit margins you can expect, and how quickly you can expect to see a return on your investment.
If the equipment your Frozen Beverage Partner offers is low-quality, expect frequent breakdowns and high repair costs. Not only is unreliable equipment expensive to operate and repair, but it’s also incredibly frustrating for both business owners and consumers when product is unavailable for purchase.
Low-quality equipment not only breaks down frequently but even when it is working, it rarely works properly, leading to lower drink quality and decreased consumer satisfaction. Eventually, no more repairs can be done, and you have to completely replace the entire machine far sooner than you initially expected.
In addition, lower-quality equipment typically requires more maintenance, upkeep, and cleaning in order to function properly, which only increases downtime, labor costs, and lost revenue.
When choosing a Frozen Beverage Partner, make sure to inquire about the quality of the machine, specifically:
Read the 4 Sons Food Stores Case Study to Learn How They Reduced Equipment Downtime by 99%.
Another important factor to consider when choosing a Frozen Beverage Partner is how easy the equipment is to operate by both staff and consumers.
Carefully designing equipment that is easy to operate takes time and expertise. This attention to detail is typically only found in higher-quality equipment options. The slightly higher price is more than made up for in labor savings and increased customer satisfaction.
When equipment is easy to operate by staff, business owners don’t have to spend nearly as much time on training. In addition, maintenance, service, and repairs all become much easier and faster, which maximizes uptime and profitability.
When your equipment is easy and enjoyable to use by consumers, expect to see much higher customer loyalty, repeat sales, and word-of-mouth.
One of the most important, yet overlooked factors to consider when choosing a Frozen Beverage Partner is the support and service you can expect to receive after the sale, especially for the most expensive part; the equipment.
Choosing lower-priced Frozen Beverage Equipment might save you money initially, but those “hidden costs” add up quickly in the form of:
Make sure to select a Frozen Beverage Partner that offers short lead times, free, 24/hour technical support, a strong warranty, a wide network of service providers, and access to any spare parts you may need.
If you want to maximize your profit margins, and the equipment will be in daily, long-term use, owning a buying of equipment outright is almost always going to be the best option.
This is especially true if you go with a high-quality vendor that provides reliable and responsive service. High-quality, efficient equipment with the latest technology can enable you to achieve positive ROI in as little as 2 years, and continue generating high profit margins for many years after that.
Once the equipment is paid for, your ongoing costs are very small compared to paying a monthly rental or lease rate.
The downsides of ownership are the high, upfront costs and ongoing equipment maintenance costs.
Once you purchase equipment outright, you are committed to that equipment and responsible for maintaining it until you either sell it or replace it with another piece of equipment.
When it comes time to decide whether to purchase frozen beverage equipment new or used, keep these considerations in mind:
The physical appearance of your equipment communicates a lot about your business.
If your equipment looks old or broken down, what impression do customers get of the product inside and of your business overall?
How likely are customers to purchase a drink from a used, beat up machine vs a brand new, clean, shiny piece of equipment?
Used equipment that has been in heavy operation by another business will almost always need at least some work. Oftentimes, after you factor in repair costs and downtime (plus the added hassle), it’s just as expensive to buy used equipment as it is to buy it new.
You may be able to find relatively new, gently-used equipment, but more often than not, the used options that are available need costly repairs, are nearing the end of their lifecycles, and will need to be replaced soon, anyways.
When you purchase new equipment from a reputable vendor, responsive support and a strong warranty are included in your purchase. High-quality vendors will stand behind their product. This means helping you get the equipment installed and running at your location, and helping you fix any issues that may come up during the life of the equipment’s operation.
If the equipment proves to be defective, a reputable vendor will simply repair or replace it, according to their warranty.
In addition, when you buy equipment new from the manufacturer, every piece of equipment should be fully inspected at the factory for flaws and defects.
When you buy equipment used, the responsibility to inspect it for flaws is on your shoulders, and you often have no way of knowing what condition the equipment is really in.
When you buy new equipment, one of the biggest advantages is that you are getting the “latest and greatest” when it comes to technology.
This technology typically makes the newest versions of equipment smaller, easier to use (requiring less employee training), more efficient, more durable, and more profitable than older versions.
While it might be slightly cheaper up-front to buy used equipment, if that older piece of equipment lacks these technological advancements, it could actually end up being more difficult and expensive to operate in the long-run.
You may not be completely sure whether you want to commit to ownership or a long-term lease, and you might only need the equipment for a very short or undetermined amount of time.
Here are a few such situations where an equipment rental might be the best option if you need the maximum amount of flexibility and don’t want the burden of maintaining equipment yourself:
The first few years in business are crucial and extremely difficult. In the beginning, it’s important to track costs carefully and keep overhead to a minimum.
Frozen beverage dispensers often cost thousands of dollars to purchase outright, and could be out of your budget for a while. When you’re just getting started and have limited cash flow and credit, renting can be a great option to consider.
Not every business needs a frozen beverage dispenser year-round. You might only need it for a specific event or season. Regardless, it doesn’t make financial sense to invest so much money up-front if you’re only using the machine temporarily.
You might be unsure if a frozen beverage dispenser is right for your particular business or circumstance. If you don’t want to make a permanent commitment, and would rather try out a frozen beverage machine for a few months to see if it generates the profits you are looking for, renting might be a good option for you.
If you discover that your frozen beverage machine is successful and you are seeing satisfactory profit margins, you can later make the decision to purchase a machine and make frozen beverages a permanent option at your location.
The downsides of renting are that you may not be getting the newest equipment, and you are limited only to the equipment available in a renter’s inventory.
In addition, you will most likely pay a higher monthly rate than if you obtained a loan or a long-term lease.
Leasing is often a good “middle ground” between renting and outright ownership.
Leasing allows you to continually get the newest equipment with the latest technology, while only paying a flat monthly rate. The monthly rate to lease equipment long-term is usually cheaper than the monthly rate to rent the equipment, but higher than the monthly rate you would pay on a loan.
Unlike equipment rentals with flexible, undefined timeframes, leases have set, specified terms (typically 12 months).
While you are usually responsible for at least some maintenance on leased equipment, you are leasing new equipment that will require less maintenance than owned equipment later in its lifecycle, so you will likely save on long-term maintenance costs.
If you are ready to make a long-term commitment, but are unable to afford the large, up-front cost or make a large down payment on a loan, an equipment lease may be your best option.
The downsides of leasing are that you are paying a long-term, monthly rate for your equipment and are usually responsible for at least some maintenance, but at the end of the lease term, you still do not own the equipment.
Once the lease is completed, you must either return the equipment, arrange to purchase the equipment, or lease another piece of equipment and continue paying a monthly rate.
At FBD, your business becomes our business. We work hand-in-hand with you to adjust your Frozen Beverage Program to your specific capacity and footprint needs, and to shifting market demands.
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.
Our Frozen Beverage Program has the lowest total cost of ownership in the industry, and is trusted by 80% of the world’s frozen beverage retailers.
We have parts available for every single model and unit we’ve ever sold
Whether you run a movie theater, a convenience store, a quick service restaurant, a bar, or an institution, our expert team can advise you on the best way to set up a profitable frozen program, specific to your unique needs.
Schedule a call to have one of our experts help you: