Entrepreneurs are a breed a people who are innovative, hardworking, and never seem to settle for a business venture that is just ‘good enough.’ They always want more. This is true of Jerry and Naomi Hancock, a couple from Orem, Utah who had been making their living in food service making customizable food.
The two had a successful brand, but they felt they needed to add more revenue. They were not quite sure what the best way to accomplish that was, however, so they decided the best way to figure it out was to ask their customers what they wanted.
Jerry began conducting surveys and determined that what people wanted was ice cream, so the Hancocks worked with a flavor company and began conducting taste testing behind the scenes and holding focus groups. They also followed the guidelines laid out in a start-up book written by a business professor. The book outlined six factors by which to measure a product’s viability, and if the idea scored at least seven and a half, the rule of thumb was to go forward, and they consistently hit seven and a half, so they proceeded with their product idea.
Early in the process, they determined that they wanted their product to freeze after a customer ordered it, and two months later, they concluded that liquid nitrogen would be how they would do it. Two more years of testing, ensured they got consistent results. Within six months, in 2004, the first store was launched and used as a full-time testing ground. They changed the configuration and the counter several times until they got to where they are today.
After a few years in business, they decided to pitch their ice cream on the ABC reality television show Shark Tank. “We’d been around for seven years, that I felt like we needed some publicity,” Sub Zero Nitrogen Ice Cream’s Chief Executive Officer and Cofounder Jerry Hancock. “We had about fifteen stores, so we had some good traction, and we had brought on some partners initially that ended up not being very good for the brand, so we had to get enough publicity to get some traction to move past them.”
The two were not really expecting the Sharks to invest, although they would have taken the investment if offered, they just felt the benefit of being on the show for them would get the publicity they desired. “Shark Tank was a great experience,” said Hancock. “You know it had its ups and downs. You can really screw up and hurt your business if you don’t show well, so our big thing was to just get out there and be likeable.”
And likeable they were. They now have sixty stores in the franchise with revenues of $19 million, and there is no limit to where they want that number to reach. The growth plan is ten to fifteen stores per year, and that is what they would like to continue doing year over year.
The franchise locations are in many areas of the United States and even China. The company would still like to hit some key markets like Denver, Colorado, though.
“We’re growing fairly well in the east now,” said Hancock. “I think one place we really need to grow is the west. I think the Midwest has a lot of potential for us. Some of our top stores are in Indianapolis, so we have some growth that can happen there. Florida has been pretty good for us, but there’s a lot of copycats in Florida, especially Miami, and we’ve done well in Houston, but we need to break out and get other markets going in Texas.”
The most popular flavors are chocolate peanut butter, dulce de leche, and Oreo mint. Some of the flavors appeal to ethnic markets because some of the franchisees are immigrants and are influenced by the flavors of their home countries. Franchisees can adapt their own flavors in addition to the core flavors they are required to serve.
Being the driven entrepreneurs they are, the Hancock’s goals have never really changed since they started in the business: to grow. The only difference now is that they are working on being more analytical about the numbers and promotions.
The flip side of being so successful, however, is the problem of other businesses trying to ride the coattails of their success, steal the technology, and use the Sub Zero name.
“We’ve had a lot of that,” said Hancock. “We’ve got a patent on our process, and there’s been a lot of copycats, but it’s really expensive to go after people, so we haven’t been very successful at curbing that. I’m looking at that pretty heavily now because it seems to be more prevalent now than it has been in the past, so that has been a difficult issue to deal with.”
In addition to the issue of other businesses trying to take advantage of the name and success, the company also faces some challenges that go hand in hand with managing franchises. “Having the time to communicate with the franchisees on a regular basis. Making sure that we have a level of interaction with them to keep them motivated, and keep the marketing consistent on a local basis,” explained Hancock.
Just getting the franchisees to do any marketing at all has been difficult. People tend to get stuck in the stores, but local store marketing is a lot about being in the community, and sitting in a store placing ads is not what works. The Hancocks feel that franchisees need to get out and be more of a part of their communities.
“I think there are a lot more pros than cons to being a franchisee,” said Hancock. “There are a lot of marketing benefits because we have a PR firm and a graphic design firm, so the franchisees don’t have to hire those on their own, and they have the benefit of name recognition. The downside is just getting everybody to be on the same page. It becomes a diplomatic effort to keep everybody happy because everybody has different views, and in the end, they are individually-owned stores, so there is only so much we can do for them.”
There have also been other rewards to being a successful franchise operator.
“We understood early on that we could meet dietary needs better than anybody because it’s not frozen yet, so we’ve always embraced dietary needs, whether it’s lactose-free or vegan,” said Hancock. “Recently, P.E.T.A ranked ice cream shops as part of ice cream month, and we were one of three that got an A rating.”
Hancock went on to explain that people think of ice cream shops as making something for the masses but Sub Zero makes ice cream for each person, which makes it quite unique.
He also shared a story about a young girl who came into their store that was hyper-allergic and was fed by a feeding tube because of these allergies. He explained that she was able to come into the shop because of the customized service, and enjoy a frozen dessert made from unsweetened rice milk, flavored with product her parents brought from home. It was the first time she had ever eaten off of a menu.
The store later received a letter from the girl’s mother and she said that her daughter equated that one experience to being human again. For the Hancock’s, it is interactions like that which mean the most.
“The thing that I’m proud of is that we were the first to make a shop with liquid nitrogen where it’s front-facing, in front of the customer, where it becomes interactive,” said Hancock. “The use of liquid nitrogen adapts itself to education, so the thing that’s different about us from the copycats is that we’ve really tried to embrace the educational aspect. So we provide educational services, but we also sell ice cream. It’s not just a new take on ice cream or a new flavor but an entirely revolutionized way of making ice cream, per person, right in front of you.”
In addition to the ice cream, the company has begun exploring the customized soda market using the ice cream flavors with a soda fountain. Customers will be able to choose whatever flavors they like and twist them together to make their own flavored soda.
“We’re passionate about what we do. We try to pay attention to what the customer wants and make something especially for them. We’re not trying to just scoop ice cream or make something we think is good. It’s about their flavor profile, not ours,” said Hancock.
Hancock went on to explain that he is proud of the fact that this is very much an American company.
“I go through the cousin line of John Adams and John Hancock, so I try to stay true to our roots,” he explained. “I did retire from the National Guard, so I’ve spent twenty years with the air force, and the thing that’s been really kind of cool is that over half of our franchisees end up being immigrants… so it’s been really interesting to see the cultures and the work ethic of that first generation.”
There is no question that Sub Zero is in fact above average in every way.