Bring on the desserts
The recession may be good news for dessert franchises. That may seem counterintuitive—wouldn’t people eat less dessert if they have less money? But Carvel President Gary Bales said ice cream sales actually pick up when recessions hit, at least at his company.
Bales said consumers consider trips to ice cream chains to be events. In tough times they frequently pass up other entertainment options and opt for going out for a sundae. “The ice cream industry tends to be counter-recession,” Bales said. “When people can’t afford to go to the movies or dinner, they use ice cream as the affordable luxury.”
If that is the case, then the $23 billion frozen dessert industry has the wind at its back. Dairy prices appear to have stabilized after farmers increased the supply in response to last year’s price hikes.
That’s not to say there aren’t challenges in the market. It’s not uncommon to find a high number of Dairy Queen, Cold Stone Creamery and Baskin Robbins units on the market. And many of these chains are facing some franchisee strife. In addition, they continue to face competition not only from new concepts with unique offerings, but by larger companies, like McDonald’s and Starbucks with its iced dessert drinks. Indeed, inroads by Starbucks and other coffee chains have prompted Carvel to recently introduce six new beverages, three of which are coffee based.
The beverages target convenience-oriented customers who would otherwise go somewhere else for their dessert fix. “One of the challenges for our category is this whole sense of convenience,” Bales said. “There’s a lot of intrusion into our category by fast-feeders. Some moms just want to grab a cone from the McDonald’s drive-thru. They don’t even have to unstrap their kids.”