How to start an ice cream business: from scoop to shop

Starting an ice cream business is an exciting venture that combines culinary creativity with business savvy. The market is valued in the billions of dollars, with a steady demand for frozen treats from families on an outing, dessert lovers after a meal, and summer crowds.

This guide will take you through the practical steps of validating your business concept, securing funding, obtaining necessary permits, and selecting the right location to help you launch a successful ice cream business in the U.S.

Step 1: Plan your business and validate your concept

Your first move is to research the local market. Spend time in potential neighborhoods to observe who is around and when. You can also use online surveys on platforms like SurveyMonkey to ask about flavor preferences and what people are willing to pay.

For demographic data, look at the U.S. Census Bureau's American Community Survey. This gives you insights into age, income, and family size in a specific zip code, which helps you tailor your menu and marketing.

Next, analyze your competition. Use Google Maps to find every local dessert shop. For deeper industry trends, check for market reports from IBISWorld or Mintel. Your local library might offer free access to these databases.

Estimate your startup costs

Speaking of costs, your initial investment will vary. A frequent oversight is an underestimation of specialized equipment prices and shop build-outs. It is wise to get multiple quotes before you commit to any large purchases.

Expect to spend between $15,000 and $50,000 on equipment like a batch freezer and dipping cabinets. Initial inventory might run $3,000 to $7,000. Permits and licenses can add another $500 to $2,000.

The location itself is the biggest variable. A rent deposit and build-out can range from $10,000 to over $100,000. Overall, a small shop could start around $30,000, while larger locations will cost significantly more.

Here are 3 immediate steps to take:

• Spend a weekend scouting three potential neighborhoods, counting foot traffic during peak and off-peak hours.
• Map all ice cream shops within a five-mile radius of your top neighborhood and list their best-selling flavors from online reviews.
• Create a preliminary budget spreadsheet with estimated costs for equipment, rent, and initial inventory.

Step 2: Set up your legal structure and get licensed

You should consider forming a Limited Liability Company (LLC). This structure protects your personal assets from business debts. You can file the paperwork with your Secretary of State for a fee of $50 to $500. Once registered, open a separate business bank account to maintain that legal protection.

With your business structure in place, you will need to focus on food safety compliance. The FDA sets federal guidelines, but your state and local health departments conduct the actual inspections and issue the permits you need to operate.

Key permits and licenses

Expect to secure several permits. A Food Facility Health Permit from your county is the most intensive, costing $300 to $1,000 and taking one to three months for approval. Start this process early, as many health departments require a plan review before you can begin construction.

You will also need a local business license, a seller’s permit from your state to collect sales tax, and food handler’s permits for every employee. These typically have faster processing times and lower fees, but are just as important for legal operation.

Here are 4 immediate steps to take:

• File for an LLC with your state's Secretary of State and open a business bank account.
• Apply for a free Employer Identification Number (EIN) on the IRS website.
• Download the food facility permit application from your county health department's website.
• Check your state's requirements for a seller's permit to collect sales tax.

Step 3: Secure your insurance and manage risk

Key insurance policies

You will need several types of insurance. General Liability is your foundation and covers customer injuries, like a slip and fall. Aim for a $1 million policy, which typically costs $400 to $1,500 annually.

Property Insurance protects your equipment and inventory. A frequent oversight is not including spoilage coverage for freezer failures. This add-on is a lifesaver if a power outage melts your entire stock of ice cream.

If you hire anyone, you must have Workers' Compensation. Rates depend on your state and payroll size. For an ice cream truck, you will also need a Commercial Auto policy. Premiums are a regular operational cost to factor into your budget.

When you look for providers, consider companies that focus on food businesses. You might want to check out the Food Liability Insurance Program (FLIP), Next Insurance, or The Hartford for quotes tailored to your needs.

Here are 3 immediate steps to take:

• Request quotes from providers like FLIP or Next Insurance for a general liability policy.
• Ask insurers about adding equipment breakdown and spoilage coverage to your property policy.
• Check your state's workers' compensation board website to understand your obligations as an employer.

Step 4: Find a location and buy equipment

Choose your location

Look for a space between 800 and 1,200 square feet. This gives you enough room for a small seating area, a service counter, and your back-of-house operations. Your location must have a "commercial use" zoning classification from your local planning department.

When you find a spot, it is time to negotiate the lease. Ask the landlord for a Tenant Improvement (TI) allowance, which is money they provide for your build-out. A frequent misstep is to accept the first lease offer without requesting concessions like this.

Purchase your equipment

With your location secured, you can focus on equipment. You will need commercial-grade machines that can handle high volume. Many new owners make the mistake of buying residential freezers, which are not NSF-certified and will not pass a health inspection.

Here are some core items and their typical costs:

• Batch Freezer: $10,000 - $20,000
• Dipping Cabinet (12 flavors): $3,000 - $8,000
• Walk-in Freezer/Cooler: $5,000 - $15,000
• Three-Compartment Sink: $500 - $1,500

You can find new and used options from suppliers like WebstaurantStore and KaTom Restaurant Supply. Always compare prices and warranty information before you purchase.

Here are 4 immediate steps to take:

• Contact your city’s planning department to verify zoning for three potential properties.
• Draft a list of lease negotiation points, including a request for a TI allowance.
• Price out a 6-quart batch freezer from two different online restaurant suppliers.
• Get a quote for a walk-in freezer installation from a local commercial refrigeration company.

Step 5: Set up your payment system

Choose your payment processor

You need a system that processes credit, debit, and digital wallet payments quickly. Look for low transaction fees and minimal hardware costs. A mistake many new owners make is signing up for a system with high monthly fees that eat into the profit on small sales.

For ice cream businesses that need to accept payments on-site or on-the-go, JIM offers a streamlined solution. With JIM, you can accept debit, credit, and digital wallets directly through your smartphone—just tap and done.

At just 1.99% per transaction with no hidden costs or extra hardware needed, it is particularly useful for selling at farmers markets. Other processors often charge 2.5% to 3.5% plus monthly fees, so the savings add up.

The process is straightforward:

• Get Started: Download the JIM app for iOS.
• Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone.
• Access Funds: Your money is available right on your JIM card as soon as the sale is done, with no waiting for bank transfers.

Here are 3 immediate steps to take:

• Compare the total transaction costs for two different payment processors.
• Download the JIM app to see its interface and features.
• Decide if you need a mobile-only solution for events or a fixed countertop system for your shop.

Step 6: Secure funding and manage your finances

Explore your funding options

SBA 7(a) loans are a popular choice for new shops. Lenders typically want to see a strong business plan and a personal credit score over 680. Loan amounts for a small ice cream business often range from $50,000 to $350,000.

You might also consider equipment financing. This type of loan specifically covers your batch freezers and dipping cabinets. Because the equipment acts as collateral, these loans can sometimes be easier to secure than a general business loan.

Calculate your working capital

You need enough cash to cover at least six months of operating expenses. This buffer pays for rent, payroll, and inventory before your sales become consistent. A frequent oversight is to budget only for the build-out and initial equipment purchase.

For a small shop, this working capital figure could be between $20,000 and $50,000. With that capital in hand, you can use accounting software like QuickBooks or Xero from day one to track every dollar and monitor your cash flow.

Here are 4 immediate steps to take:

• Contact your local Small Business Development Center (SBDC) for free help with your SBA loan application.
• Calculate your estimated operating expenses for the first six months to determine your working capital needs.
• Research two equipment financing lenders to compare interest rates for a batch freezer.
• Set up a consultation with an accountant to discuss your financial tracking system.

Step 7: Hire your team and manage operations

Build your front-of-house team

Start by hiring “Scoopers” or Team Members for customer service and cleaning. Pay typically runs from minimum wage to $15 per hour, plus tips. You will also want a Shift Lead to manage daily operations, with pay around $16 to $20 per hour.

Remember, every employee who handles food must have a state-issued Food Handler’s Permit. This is non-negotiable and a focus for health inspectors, so ensure your entire team is certified before their first shift.

Streamline your daily workflow

To manage schedules, you might want to use software like Homebase or 7shifts. These platforms help you avoid understaffing on a busy Saturday night. They also simplify communication with your team about shift changes.

Keep a close eye on your labor costs. A good target is to keep your total payroll between 25% and 35% of your total sales. Going above this range can quickly eat into your profits, a detail many new owners overlook until it is too late.

Here are 4 immediate steps to take:

• Write job descriptions for a Scooper and a Shift Lead with specific duties.
• Check your state's requirements and costs for a Food Handler's Permit.
• Sign up for a free trial of a scheduling software like Homebase or 7shifts.
• Create a spreadsheet to track your projected labor cost as a percentage of sales.

Step 8: Market your business and attract customers

Create a grand opening buzz

Plan a grand opening event to generate initial excitement. You can offer a "buy one, get one free" deal or a free scoop for the first 50 customers. Contact local food bloggers and news outlets two weeks in advance with a press release for free publicity.

Build a local digital footprint

Focus your efforts on Instagram and Facebook. Post high-quality photos of your ice cream to make your flavors look irresistible. A good target is a 3-5% engagement rate on your posts. Also, claim and fully populate your Google Business Profile with your menu and hours.

Many new owners skip local ads. You might want to run geo-targeted Facebook ads with a small budget. Aim for a Customer Acquisition Cost (CAC) under $5 by targeting users within a three-mile radius of your shop. Encourage reviews to build trust quickly.

Engage with your community

Partner with a nearby business, like a pizza shop, for a cross-promotion. You could offer their customers a 10% discount coupon. Also, start a simple loyalty program from day one. A classic "buy 10, get one free" punch card is effective and costs very little to implement.

Here are 4 immediate steps to take:

• Draft a press release for your grand opening and list three local bloggers to contact.
• Set up your Instagram account and plan your first week of photo content.
• Claim and complete your Google Business Profile with hours, photos, and your menu.
• Design a simple "buy 10, get one free" punch card for your loyalty program.

Step 9: Price your menu for profit

Calculate your cost per scoop

To set your prices, you need to know your Cost of Goods Sold (COGS) for each menu item. Add up the cost of every ingredient in a batch of ice cream, then divide by the number of scoops the batch yields. Your target food cost should be 25-35% of the menu price.

Many new owners make the mistake of just copying competitor prices. This is a problem if your ingredients are more expensive. Always calculate your own costs first, then see how they compare to what others are charging.

Set your menu prices

With your cost per scoop figured out, apply a 3x to 4x markup to hit your margin target. If one scoop costs you $1.50 to make, a menu price between $4.50 and $6.00 is a solid starting point. This gives you room to cover labor, rent, and other overhead.

You can also use tiered pricing to increase the average sale. For instance, if one scoop is $5, you might offer two for $8. Price waffle cones and toppings separately, usually between $1.00 and $2.00, to protect your core profit margin.

Here are 4 immediate steps to take:

• Calculate the ingredient cost for a single scoop of your most popular flavor.
• List the prices for a single scoop at three competing shops in your area.
• Create a draft menu with tiered prices for one, two, and three scoops.
• Set prices for five potential toppings, like hot fudge and sprinkles.

Step 10: Maintain quality and scale your operations

Establish your quality standards

Your ice cream's texture depends on its overrun, which is the air incorporated during churning. Aim for a consistent 80-100% overrun. A frequent oversight is not measuring this, leading to icy or overly fluffy batches that customers will notice.

For service quality, monitor your online reviews weekly. You should aim for a 4.5-star average or higher on platforms like Google and Yelp. A dip in ratings is an early warning that something in your operation needs attention.

Plan your growth milestones

Use clear metrics to decide when to grow. For example, you might hire a new scooper when you consistently serve over 200 customers on a weekend day. Consider a second location after six straight months of 15% sales growth.

As you scale, manual tracking becomes difficult. You might want to look into inventory management software like MarketMan or Yellow Dog Inventory. These systems help you manage stock and control food costs across one or more locations.

Here are 4 immediate steps to take:

• Document the recipe for one flavor, including a target overrun percentage.
• Set a weekly calendar reminder to read and respond to all new Google and Yelp reviews.
• Define the sales and profit numbers that would trigger your search for a second location.
• Watch a demo video for an inventory management system like MarketMan.

Starting an ice cream business is a rewarding journey. Remember that success is not just about unique flavors, it is about the consistent quality and friendly service that turns first-time visitors into regulars. You have the roadmap, now go build your sweet success.

And when you are ready to make that first sale, a simple payment solution helps. JIM turns your smartphone into a card reader, so you can accept payments without extra hardware for a flat 1.99% fee. Download JIM to get started.