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Chilling appeal

Concepts scoop market share


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Two more ice cream concepts enter the frozen field—Paciugo and Applegate Farms.

Ugo Ginatta spent nearly 30 years working in technology in his native Italy. But in 2000, he sold his company, moved to Dallas with his wife, and opened the first Paciugo.
The company has 26 U.S. franchisees committed to opening 59 stores. Additionally, Ginatta sold the franchise rights for Mexico. The first store opened there and is doing well, he says.

The moves are just the beginning for the Ginattas who believe their healthier—and tastier—version of ice cream will catch on across the country.
It’s not going to be easy. In addition to fast-growing Cold Stone Creamery and Marble Slab Creamery Inc., several other ice cream chains are selling franchises including Culver’s, Dippin’ Dots Inc., Carvel Ice Cream and Nucci’s Italian Ice & Gelato.

Applegate Farms Franchise Fee: $25,000
Royalty: 5 percent of gross sales
Investment: $137,650-$322,000
No. of stores: 7
No. of franchised units: 6

Paciugo
Franchise Fee: $30,000
Franchise Fee: 4.5 percent of gross sales
Investment: $175,700-$372,600
No. of stores: 19
No. franchised: 10

 


But Ginatta is not intimidated. “I think we are a different business,” he says of his gelato product in comparison to traditional ice cream that Americans are used to ordering. “I don’t think our customers, given the opportunity, would walk into one of those stores.”

Paciugo has more than 250 flavors of gelato, all of which have less fat than traditional ice cream and many of which are fat-free. The flavors range from Pumpkin Pie and Rocky Road to several natural fruit flavors.

Ginatta is looking across the country for franchisees.

“We expand when we find people that are compatible to us,” he says. “We need compatible people.”

Ginatta admits to being surprised by the challenges of finding real estate and negotiating deals. But he’s still glad to be establishing his business in the U.S. rather than overseas because governments are more willing to work with businesses to help rather than hinder growth and because the demographics are improving rather than getting worse.

“What you can do in 10 years here you probably need three or four generations in Italy,” Ginatta says.


Farming it out

While he hasn’t experienced starting a business overseas, Jason Street also is expanding a small ice cream company, Applegate Farm, through franchising. Street worked at his aunt and uncle’s ice cream shop in Upper Montclair, N.J., for two summers during college and for a while after graduation before looking for full-time work.

He didn’t have to go far.

His family members had been so impressed with his work that in 1994 they decided to sell him the company.

“I kept thinking ‘this is an April Fool’s joke,’” Street says. “I think maybe they saw my work ethic over the prior years and realized this was maybe their opportunity to step back and retire a little bit.”

For the next few years, he operated the store and put together the processes necessary to begin considering expansion. He opened a second outlet in 2001 and awarded his first franchise a year later. Now Applegate Farm has seven stores in operation, including one company-owned site. While Street is looking to expand, he’s not in a hurry. For 160 years, Applegate has been a small, family-owned operation that started out as a dairy farm. The ice cream is still homemade. And he realizes he still has a lot to learn about the business.

“Our goal is to take our time,” Street says. “I feel that a lot of franchisors tend to fail because they grow too quickly. I’m learning to be a franchisor.”

He wants to be able to work with his franchisees to ensure their success, in turn helping maintain his own stability as well.

“I don’t see the point in rushing,” he says. “I’m 36 now—no rush.”

Outside of their home markets few have heard of Applegate Farms or Paciugo yet, but five years ago the same would have been said of both Cold Stone and Marble Slab, says Howard Waxman, publisher and editor of Ice Cream Reporter magazine in New York.
Paciugo has an easier road because there are few companies offering the Italian ice cream. But both growing chains are on trend. Waxman says entering the ice cream industry is hot right now, often because retirees who realize they want to start a business to stay active find it an attractive option.

“People are jumping into it,” he says. Applegate Farms

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