Coolhaus, which sells uniquely flavored and cleverly named ice cream sandwiches, bars and treats, was able to gain distribution at more than 1,500 gourmet markets in more than 40 states within just a few years of launching in part because it created a loyal grassroots following by selling its branded products first out of a food truck, Case said.
She explained that she and her co-founder, Freya Estreller, first distributed their frozen desserts out of a single food truck in 2008 because it was less expensive to own and operate than a storefront, it allowed them to market their treats directly to consumers and empowered them to build capital without fronting the cash needed to secure mass manufacturing and distribution agreements that often are necessary to sell in major retailers.
As the company created a name for itself on the festival and pop-up circuit, it was able to expand to 11 food trucks in three states, two storefronts in two cities and create a distribution network that reached more than 1,500 gourmet markets in more than 40 states and food service, Case said.
Reflecting on her experience in the different retail channels, Case noted that each offered pros and cons, but that by combining them Coolhaus was able to tap into the best of each world to fuel its rapid growth.
Food trucks provide PR
Specifically, she explained the trucks helped the young company build brand awareness by traveling to different festivals and events where the company could reach new consumers who had not previously heard of the ice cream maker, Case said. She added operating trucks reduced the need for extensive separate advertising because they were moving billboards and went to the consumers, rather than requiring the firm to ask the consumers to come to them.
The food trucks also are “very nimble, and great data collectors” to test new flavors and the receptiveness of consumers in different neighborhoods – information Coolhaus used when it decided where to establish its two store fronts and when it creates new products.
While the trucks are a great marketing and PR strategy, they do not offer a significant growth opportunity on their own because they do not encourage steady, repeat purchases or instill in consumers a sense of permanence that justifies them actively seeking out and traveling to the truck, Case said.
They also don’t encourage large purchases, she noted. The consumer who tracks down a food truck is willing to spend $5 on one ice cream sandwich, but is not going to spend more to stock their freezer to share with friends and family later.
Storefronts created stability
The company’s two store fronts are better adapted for repeat customers because they are always in the same place, have stable hours and double as cultural centers where consumers can easily meet with friends and family to share a dessert while catching up, Case said. In addition, opening the stores allowed Coolhaus to expand its menu to include a wider variety of products that either did not fit in truck or were not conducive for on-the-road service, such as milk shakes, coffees and a larger selection of flavors at once, she said.
The stores also helped the company create more cohesion among its employees, because it served as a headquarters where the staff could meet, get to know each other and become invested in the company beyond just a source of a paycheck, Case said. “The trucks sometimes feel like ships passing in the night, which don’t allow employees to interact with one another,” she added.
The downside to the stores, however, is they are limited in how many consumers they can reach and there is no clear exit strategy in terms of selling them for a profit or royalties when Case and her partner are ready for the next adventure.
Mass retail offers scalability & a clear exit strategy
Moving into traditional mass retail allowed Case and her co-founder to address these shortcomings and create a sense of scale and stability by allowing the brand to reach consumers at a national level, but without the overhead costs of opening more storefronts or operating more trucks, Case said.
She explained consumers in traditional retail stores range from the office worker who wants to buy an individually-wrapped treat during an afternoon break to families who are stocking their freezer for the summer months with pints and three-packs of bars.
Traditional retail distribution, including grocery and food service, “is huge for us, and is very scalable with a clear exit strategy through either acquisition or by going public,” said Case, who added she currently loves what she is doing and has no immediate plans for selling the brand.
Ultimately, she concluded, the company’s multi-retail approach “is a great growth model” that gives the firm many options for future development and allows consumers from all walks of life with a variety of needs to enjoy Coolhaus.
Editor’s Note: Interested in learning more about the different paths to retail, including the pros and cons of DTC online sales, convenience stores and healthy vending? Then join us at Food Vision USA in Chicago Oct. 27-29 when we talk with HUMAN Healthy Markets, NatureBox, 7-11 and Door-to-Door Organics to find out what food shopping will look like in 2020. Find out more HERE.