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Icedelights

Essay by   •  July 15, 2019  •  Case Study  •  558 Words (3 Pages)  •  354 Views

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ICEDELIGHTS

OPPORTUNITY:

  • European-style cafe/ice cream shop selling beverages and frozen “homemade” desserts.
  • Advantage: Icedelights has mastered the process of freezing the ice cream and built an impressive organization. Franchise with the goal to maintain quality operation (slow growth) Standardize operations.
  • Competitors: Big players.
  • Trend: “gelati” Italian ice cream. However, no actual proof of how the Florida market is going to react (other Italian ice cream places are not successful).
  • Customers: Not clear demographics. They show a study on the population growth and income level in Florida, but no information about the demographics for potential/target customers. Further research is needed to find their target customers and where exactly can find them (stores-tourist areas, near working areas or Universities and schools or at malls or storefront).
  • A positive aspect is that the population growth in Florida is in the double digits compared with Boston. Average per capita income in FL is very good in most cities, almost as good as Boston.
  • Research on the Boston market should be done to be able to extrapolate to Florida. Results need to be tested in Florida to see how the market is going to react (start with a pilot store before committing to more. They are acting on impulse without proof of how the business is doing in Boston).
  • Competitive advantage: quality and low costs. No proof of sustainability in the long run (can they maintain the low cost and quality considering shipping?).
  • No real competition analysis. There is mention of limited gelati serving places and one of them has failed. Further analysis is needed to avoid the same mistakes.

BUSINESS AND MARKETING STRATEGY:

  • Strategy: Franchising
  • The risk for investors: they are taking a big loan to buy the franchise. Responsibility to investors and to repay the loans (25% of company away and an attractive return for investors).
  • High dependency on Icedelights to provide the product, without any assurance for timely delivery or quantity (no legal obligation to do so). If ID can’t deliver, they have the right to create their own production facility (risky). That would require further investment (financials are problematic). Can they maintain the quality of the product in their own facility? So, if ID fails they don’t have a backup plan to ensure the product in the stores.
  • They required 3 stores at first with $750,000 investment, but no strategic location (they don’t know where they could generate more traffic, or how much competition they have in those areas).

MANAGEMENT: Partners lack passion for industry, they just want to own a business. Their experience is limited to investment banking and finance but no industry, startup or entrepreneurial experience. Managers don’t have the knowledge to get the right real estate in Florida either.

ANALYSIS: We would recommend to not invest in this idea as there is no planning or research done before the negotiations. Without research, it’s not clear if there is a real opportunity in Florida for this type of business (no proof). There is already tension between them and their relationship is beginning to falter which jeopardizes the sustainability of the business in the long run.  Also, they are very dependent on the headquarters and they are just showing commitment but they are not obligated to proceed. If ICEDELIGHTS fails they don’t have any backup plan to continue with the business and their responsibilities with investors.

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